TMI Blog1988 (5) TMI 193X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 reaching the exemption limit of Rs. 5 lakhs on 13.9.79. On 21.11.79 they intimated the range officer about their intention to stop their manufacture of electric motors and to surrender their licence. On 24.12.79 the Preventive Officers of Central Excise seized one electric motor from the premises of M/s. Balamurgan Industries on the suspicion that they were manufacturing the goods without making proper declaration. They further discovered that Balamurii cleared 44 motors from the same premise? between 21.11.79 and 24.12.79. The Department then believed that Balamurgan and Balamurii were two separate units clearing the goods from the same factory availing exemption limit of Rs. 5 lakhs pre-clearance benefit under Notification No. 71/78 separately. The said notification provided that where a factory produces specified goods cleared at different times of any financial year by different manufacturers, the value of specified goods so cleared from such a factory in any year at nit rate of duty shall not exceed Rs. 5 lakhs. Therefore, the Central Excise Department issued show cause notices to both Balamurgan and Balamurtion5.12.81 and 12.3.82 respectively asking them to show cause why t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to have stopped their manufacture on 21.11.79. 11. M/s. Balamurli Industries did not apply for Central Excise licence nor did they inform the department even as late as on 22.12.79 the day on which central excise officers visited the factory; even though they had already manufactured and cleared 44motors In their name between22.11.79 and 21.12.79. 12. Even before actual cancellation of the licence of M/s., Balamurugan Industries i.e. on 13-12-1979 M/s. Balamurii Industries had started their manufacture." 6. Aggrieved both the firms filed appeals before the Collector of Central Excise (Appeals). He confirmed the lower orders but on a different ground, namely, that as Balamurgan had closed down their business and leased out their premises to Balamurli, this position deprives both the appellants of the benefit of the notification in view of the proviso envisaged in clause 1 (c) of the Notification No. 71 /78-CE. 7. For that reason he upheld the Asstt. Collector s order. Hence the present appeal. 8. We heard, Sh. N. C. Sogani, the Ld. Consultant for the appellants and Sh.A.K. Rajhans, the Ld JDR for the department Sh. Sogani submitted that the Asstt. Collector issued a sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first clearance of such excisable goods for home consumption up to an aggregate value not exceeding rupees five lakhs and cleared on or after the 1st day of April in any financial year by or on behalf of a manufacturer, from one or more factories, from the whole of the duty of excise leviable thereon, subject to the following conditions, namely....". (Emphasis supplied). Notification No. 80/80 In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944 and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) 146. 71778- Central Excises, dated the 1st March, 1978, the Central. Government hereby exempts the excisable goods of the description specified in Column (3) of the Table hereto annexed (hereinafter referred to as the specified goods ), and falling under such Item Number of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), as is specified in the corresponding entry in Column (2) of the said Table, and cleared for home consumption on or after the 1st day of April in any financial year, by or on behalf of a manufacturer from one or more factories..... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctfully take 'note of' he Supreme Court's judgment in McDowell and Co. Ltd. v. Commercial Tax Officer reported in Income Tax Reports page 148, Volume 154 (1985). Recollecting an earlier judgment of the Supreme Courts in Jiyajeerao Cotton Mills Ltd. V. CIT EPT (1958) 34 1TR888. The Supreme Court recorded the following observations:- Every person Is entitled to so arrange his affairs as to avoid taxes but the arrangement must be real and genuine and not a sham make-believe.... 13. Recalling, with approval, pronouncements by the Gujarat High Court and by Viscount Simon the court observed as follows :- The Gujarat High Court in the case of CIT v. Skarlal Balabhai (1968) 69 ITR ;t,86 (Guj), said (page 200): Tax avoidance postulates that the assesses to In receipt of amount which is really and in truth his Income liable to tax but on which he avoids payment of tax by some artifice or device. Such artifice or device may apparently show the income as accounting the another person, at the same time making it available for use and enjoyment to the assesses is in a case falling within Section 44D or mask the true character of the income by disguising it as a capital receipt as i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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