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2004 (6) TMI 475 - AT - Central ExciseSSI exemption - Value of clearances - Clubbing of clearances for Central Excise duty - Clandestine removal - Use of brand name and clandestine clearance - Whether the clearances of different units should be clubbed for the purpose of levying Central Excise duty - HELD THAT - In the present matters the main submissions of Revenue about the common funding and financial flow back is that funds in all units were provided by family members and friends and the unsecured loans were arranged by D.R. Goel. From the Summary of Financial arrangement given by the learned SDR we observe that there is no mention of arranging unsecured loans for M/s. Summerking Electrical (P) Ltd. nor is there any material to show that there was financial flow-back from other units to M/s. Summerking Electrical (P) Ltd. The main contention of Revenue is that unsecured loans were arranged by D.R. Goel. Arranging of loans from family members and friends cannot lead to a conclusion that all the units do not exist. It is a common practice to arrange loans/finances for near and close relatives venturing into business. As regards use of brand name and clandestine clearance we are of the view that matter should go back to the jurisdictional Adjudicating Authority for re-adjudication in view of our holding that all units are having separate and independent existence. The Adjudicating Authority has to decide as to whether there was any clandestine clearance of the goods and if so which unit or units indulged in clandestine manufacture and clearance and if yes whether they exceeded the exemption limit provided in SSI exemption notification. Similarly the question of use of Brand Name has to be decided by the Adjudicating Authority in accordance with law. We however make it clear that the Adjudicating Authority will be at liberty to impose any penalty on both these counts if necessary. We now come to the appeals filed by Revenue. The prayer regarding imposition of penalty on 7 other persons and demand of interest u/s 11AB of the Central Excise Act do not survive in view of our Order holding the manufacturing units as independent of each other. The issue regarding clandestine clearance of goods has been remanded and the Revenue is at liberty to plead before the Adjudicating Authority regarding non-accountal of goods reflected in the testing records in RG-1 and their removal without payment of duty. Similarly the Adjudicating Authority will decide afresh about the demand of duty on cooler pump and its motor. All the appeals are disposed of in the above terms.
Issues Involved:
1. Clubbing of clearances and duty liability. 2. Financial control and mutuality of business interest. 3. Use of brand name and clandestine clearance. 4. Imposition of penalties and confiscation of machinery. Summary: 1. Clubbing of Clearances and Duty Liability: The Commissioner clubbed the clearances of multiple units and confirmed the demand of duty against M/s. Summerking Electricals Pvt. Ltd., holding that D.R. Goel engineered the creation of all units to evade duty and misuse SSI exemption. The Tribunal found that three units (Summerking Enterprises, Domestic Aids, Hindon Electricals Pvt. Ltd.) started before M/s. Summerking Electricals Pvt. Ltd., and their clearances should not be clubbed with M/s. Summerking Electricals Pvt. Ltd. as they had separate factories at different places. The Tribunal concluded that the clearances of only Sarvottam Appliances and Weather Makers could be clubbed with M/s. Summerking Electricals Pvt. Ltd., but their value did not exceed the SSI exemption limit. 2. Financial Control and Mutuality of Business Interest: The Tribunal noted that the common funding and financial flow-back were essential for clubbing clearances. The Revenue's argument that D.R. Goel arranged unsecured loans was insufficient to prove financial control. The Tribunal cited the Rajasthan High Court's ruling in Renu Tandon v. UOI, emphasizing that mutuality of business interest and financial flow-back must be established. The Tribunal found no evidence of financial flow-back or common funding among the units. 3. Use of Brand Name and Clandestine Clearance: The Tribunal remanded the issue of brand name usage and clandestine clearance to the Adjudicating Authority for re-adjudication. The Adjudicating Authority was instructed to determine whether any unit exceeded the SSI exemption limit and whether there was any clandestine clearance of goods. The Tribunal also clarified that the Adjudicating Authority could impose penalties if necessary. 4. Imposition of Penalties and Confiscation of Machinery: The Tribunal set aside the penalties imposed on various firms and individuals, as well as the confiscation of plant and buildings. The Tribunal held that the units were independent entities and eligible for SSI exemption. The Tribunal also remanded the issue of penalties related to clandestine clearance and brand name usage to the Adjudicating Authority for fresh adjudication. Conclusion: The appeals were disposed of with the Tribunal setting aside the demand of duty, penalties, and confiscation, and remanding certain issues for re-adjudication by the Adjudicating Authority.
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