1995 (10) TMI 84 - AT - Central Excise

Summary

Issues Involved:
1. Clubbing of clearances of three firms for Central Excise duty.
2. Allegation of dummy concerns to evade duty.
3. Legal status of separate entities.
4. Invocation of larger period u/s 11A for demand.

Summary:

1. Clubbing of Clearances:
The appeal challenges the order directing payment of Rs. 5,92,220.63 as differential Central Excise duty and a penalty of Rs. one lakh. The issue involves the clubbing of clearances of a proprietory firm and two limited companies. The Collector held that these firms were essentially one entity under the financial control of Shri Binod Kumar Maheswari, thus justifying the clubbing of clearances.

2. Allegation of Dummy Concerns:
It was alleged that the two limited companies were dummy concerns floated by Shri Binod Kumar Maheswari to evade Central Excise duty. The Collector found that the companies had common shareholders from the Maheswari family, shared financial transactions without interest, and operated under the same management and employees, indicating they functioned as a single entity.

3. Legal Status of Separate Entities:
The appellant argued that each entity was legally separate, with distinct registrations, licenses, and assessments by various authorities. The Tribunal cited several cases, including G.D. Industrial Engineers v. CCE and Alpha Toyo Ltd. v. CCE, to support the view that common management or shared resources do not automatically make separate legal entities dummies unless there is evidence of financial flow-back or non-existence of the entities.

4. Invocation of Larger Period u/s 11A:
The Tribunal noted that the Show Cause Notice did not clearly specify the omissions or commissions justifying the invocation of the extended period u/s 11A. However, since the appeal was allowed on merits, the Tribunal did not elaborate further on the time-bar issue.

Conclusion:
The Tribunal concluded that there was no sufficient evidence to prove that the two companies were dummy units or that there was any financial flow-back to Shri Binod Kumar Maheswari. The clearances of the three entities could not be clubbed together. Consequently, the impugned order was set aside, and the appeal was allowed.