2015 (3) TMI 128 - AT - Central Excise

Clubbing of clearances - Imposition of penalty - Seizure of goods - Held that - impugned order has fully taken into accounts the facts like unity of control financial flow back absence of manufacturing facility at M/s. CPMPL common employees and office and rent-free space given to M/s. CPMPL and after a detailed discussion supported by judicial pronouncements has clearly established the sustainability of the allegation that clearances of two units are to be clubbed as M/s. CPMPL was merely a dummy unit of M/s. CE. The adjudicating authority also established on sustainable basis that the brand name Chirag did not belong to the appellants but actually belonged to others who have been mentioned by name in the impugned order. Mr. Praveen Parashar s application to get the said brand name registered in his name had not been approved. That the brand name happens to be the same as the name of a son in the family does not make the brand name belong to them. As M/s. CPMPL is found to be a dummy unit the seizure and subsequent confiscation is also clearly sustainable as has been brought out by the adjudicating authority. As regards penalty on Mr. Praveen Parasher it is seen that he is the proprietor of M/s. CE and therefore as penalty on M/s. CE has been imposed separate penalty on Mr. Praveen Parasher is not warranted. But in the present case Mr. Praveen Parasher was the main person and was the master mind behind the whole modus operandi (beyond his role as proprietor) as has been clearly brought out in the impugned order. Therefore penalty on him is not only attracted but also warranted. Ms. Hemlata Parasher as Director of Mr. CPMPL knowingly participated in the entire modus operandi and she as Director allowed M/s. CPMPL to knowingly and willingly provide cover by pretending to be a SSI manufacturer though they did not have any infrastructure for doing so. So liability of Ms. Hemlate Parasher to penalty is not questionable. Adjudicating authority should have dealt with the appellants contention that the value of the traded goods and the goods exported are not includible for the purpose of computation of the impugned demand. Therefore with the consent of the ld. AR we waive the pre-deposit set aside the impugned order and remand the case for de novo adjudication only for the limited purpose that the appellants contention that the value of the traded goods and the goods exported needs to be excluded for the purpose of computing the impinged demand should be considered with a view to (re) computing the demand and also penalties to the extent they (i.e. penalties) get impugned upon by the (re) computation of s demand. - Decided partly in favour of assessee.

Summary

Issues:
1. Whether the clearances of M/s. CPMPL are to be clubbed with clearances of M/s. CE.
2. Whether the goods manufactured by the appellants had the brand name of another person.
3. Whether the seizure was legal and proper.

Analysis:

Issue 1: Clubbing of Clearances
The appellants argued that the brand name belonged to them as it was a family member's name. However, the tribunal found that the impugned order correctly established the unity of control, financial flow back, absence of manufacturing facility at M/s. CPMPL, common employees, and office, concluding that M/s. CPMPL was a dummy unit of M/s. CE. The tribunal also determined that the brand name 'Chirag' did not belong to the appellants, supporting this with the fact that an application to register the brand name in their name was not approved. The seizure and confiscation were deemed sustainable as M/s. CPMPL was identified as a dummy unit, and the argument against seizing semi-finished goods was dismissed as legally baseless.

Issue 2: Brand Name Ownership and Seizure
Regarding the penalty on Mr. Praveen Parasher, the tribunal noted his role as the main person and mastermind behind the operation, justifying a penalty on him beyond that imposed on M/s. CE. Similarly, Ms. Hemlata Parasher, as Director of M/s. CPMPL, was found liable for penalty due to her active involvement in the deceptive practices. However, the tribunal observed that the adjudicating authority failed to address the appellants' argument regarding the inclusion of traded and exported goods in the computation of the demand.

Issue 3: Penalty and Computation of Demand
Despite finding no major flaws in the impugned orders, the tribunal acknowledged the need for the adjudicating authority to consider excluding the value of traded and exported goods from the computation of the demand. Consequently, the tribunal waived the pre-deposit, set aside the impugned order, and remanded the case for reevaluation solely to address the appellants' contention regarding the exclusion of certain goods from the demand calculation. The adjudicating authority was instructed to recompute the demand and penalties accordingly after allowing the appellants an opportunity to present their case.