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2022 (2) TMI 896 - AT - Central ExciseSSI Exemption - clubbing of clearances of two units - dummy units - Use of trade name of other company - evidence for flow of cash between the two units, present or not - mutuality of interest - Department has merely relied upon rental agreement to allege that there is cash flow between the units - levy of penalty on Managing Director under Rule 26 (1) of Central Excise Rules, 2002 - HELD THAT:- The goods manufactured by both the units are different. M/s.TLPPL is engaged in producing laboratory products in the nature of laboratory furnaces, laboratory tray driers etc. M/s. TLGW is engaged in producing glass beakers and jars used in laboratories. The products being entirely different, it cannot be said that the trade name of one unit was used to market the products of the other unit - Further, there is no evidence brought forth from the records that the clearances made by one unit [M/s.TLGW] are in fact the goods clandestinely manufactured by M/s.TLPPL. Needless to say, when the products are entirely different, it cannot happen. The department has mainly relied on the rental agreement entered into between the two units. Being separate entities, there are no discrepancy in such rent agreement. There is proof that they have reflected payment of rent for the whole year by M/s.TLGW to TLPPL in their annual financial statement. Payment of rent cannot be considered as fund flow in respect of goods manufactured and cleared by the unit. There is no iota of evidence to show that the raw materials were purchased in the name of M/s.TLGW and that these raw materials were used for manufacturing goods which are cleared by TLPPL - it is found from the records that both the units are separately registered with the Central Excise department. One is the Private Limited Company and the other is a Proprietarship firm. Merely because the members of the family are owners of these two units, it cannot be said that there is mutuality of interest. In fact, there is no specific allegation that TLGW is a dummy unit. The department has proceeded to club the clearances of both these units without raising such allegation. It is found that the department has miserably failed to establish any mutuality of interest or cash flow between both the units. Further, there is no show cause notice issued to M/s.TLGW which the department alleges to be a dummy unit. Appeal allowed - decided in favor of appellant.
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