TMI Blog2009 (12) TMI 384X X X X Extracts X X X X X X X X Extracts X X X X ..... ]. - Heard both sides. 2. The brief facts of the case as recorded by the original authority are as follows :- "M/s. Sri Lakshmi Industries, D.No. 25/20, Konar thoppu, Irvathanallur (for short SLI) is engaged in manufacturing RTS Grills falling under tariff heading No. 7308.40 and other EB line materials. Shri M. Gunasekaran is the proprietor of M/s. SLI. M/s. Sri Ganga Engineering (for short SGE), 25/20, Konar thoppu, Irvathanallur is an SSIs unit situated adjacent to M/s. SLI, whose proprietrix is Smt. G. Ganga, W/o. Shri M. Gunasekaran (proprietor of M/s. SLI). 2. Based on intelligence that M/s. SGE did not have facility to manufacture and were clearing the goods manufactured by M/s. SLI, in the name of M/s. SGE as if manufactured by them, the Central Excise officers attached to HPU visited the above units on 7-3-96. 3. During the visit, the officers noticed that the units are situated in adjacent places and both units were having power connection and machineries for manufacture of RTS Grills and other EB line materials. However, the officers noticed that M/s. SGE obtained power connection only on 13-9-95 though the unit was started in 1994. As no documents were availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an, Manager of SGE was looking after the entire affairs of SGE since its inception; that she did not know as to how manufacturing activities were carried out prior to 13-9-95 and Shri L. Venkatasubramanian, Manager would only know such details; that she had given power of Attorney to Shri L. Venkatasubramanian already for looking after the entire activities; that any statement given by him would be binding on her. 6. Shri L. Venkatasubramanian, Manager of M/s. SGE in his statement dated 14-3-96 inter alia stated that he was looking after all affairs of the company; that goods were manufactured by engaging contract labourers; that Shri Palanichamy Konar was the owner of the factory; premises; that power connection was obtained to the company on 13-9-95 under S. No. 515 from L.B and prior to that no power supply was made to SGE; that welding plant and power press were the machineries used in production; that power press was purchased from M/s. N.S. Mechanical Works, Ludhiana vide Invoice No. 24 dated 26-10-95; Welding Plant was purchased form M/s. Asian Engineering Company, Madurai vide Bill No. 4516 dated 22-5-95; that prior to power connection obtained by SGE on 13-9-95, RTS Gril ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SGE from 8-2-95 without payment of duty. (x) Shri M. Gunasekaran, the proprietor of M/s. SLI in his statement dated 8-3-96 admitted the fact that the RTS Grills cleared vide Bills No. 5/8-2-95, 6/12/2/95, 4/5-5-95, 5/5-5-95, 6/28-5-95, 7/3-6-95, 9/12-6-95, 10/15-6-95, 11/1-7-95, 13/6-7-95 and 14/11-7-95 of SGE were manufactured by ARC welding process with welding plant and labourers of SLI in the factory premises of SLI Further he agreed to discharge the Central Excise duty liability on the above value of RTS Grills cleared in the name of SGE. (xi) Smt. G. Ganga, Proprietrix of SGE in her statements dated 11-3-96 and 16-7-97 stated that she did not know any thing about the manufacturing activities of SGE and his authorized manager Shri L. Venkatasubramanian was only looking after entire manufacturing and other affairs of the company. (xii) Shri L. Venkatasubramanian, the Authorised Manager of SGE in his statement dated 14-3-96 admitted the fact that RTS Grills cleared in the name of SGE prior to 13-9-95, were are welded and manufactured in the premises of SLI. 10. From the above it is revealed that SGE did not have power connection and welding facility for manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offence by knowingly concerning themselves in the receipt of unaccounted ad not duty paid RTS Grills, rendered themselves liable for penal action under Rule 209A of Central Excise Rules, 1944. 15. Based on the facts and findings discussed above, a notice was issued to SLI demanding duty of Rs. 2,36,898/- towards the duty liability on the RTS Grills manufactured in SLI and cleared in the name of SGE during 8-2-95 to 11-7-95 for imposing penalty on them under Section 11AC, for contravention of the provisions of Central Excise Rules, 44." 3. After taking into account the detailed submissions and the oral arguments, the original authority confirmed a demand of Rs. 2,36,898/-and has imposed a penalty of Rs. one lakh on M/s. SLI. As regards Shri Ganga Engineering, the other notice, the original authority did not impose any penalty. 4. On appeal by Shri SLI, the lower appellate authority has upheld the order of the original authority and has rejected the appeal filed by the appellants before him with the following observation :- "I have given my careful consideration to the facts and circumstances of the case and the submissions made during the course of personal hearing. The alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur - 1997 (94) E.L.T. 88 (Tri.), under which it was held that when show cause notice has been issued to only one unit, non-issuance of show cause notice to the other unit amounts to violation of principles of natural justice. He states that a similar decision was taken by the Tribunal in the case of Ramsay Pharma (P) Ltd. v. CCE, Allahabad - 2001 (127) E.L.T. 789 (Tri.-Del.). He further states that for clubbing of clearances of two units, the department is required to show evidence of common funding and financial flow-back. In this regard, he cites a decision of the Hon'ble Rajasthan High Court in the case of Renu Tandon v. UOl - 1993 (66) E.L.T. 375 (Raj.) and CCE, Jaipur v. Electro Mechanical Engg. Corporation - 2008 (229) E.L.T. 321 (S.C.). The ld. Advocate has also made further written submissions on 16-11-09, subsequent to hearing of the case. In the written submissions, several other case laws have been cited to the same effect that when clubbing of clearances of two units are proposed to be clubbed, show cause notices are required to be issued to both the units. Several other decisions have been cited to the effect that small scale exemption can be claimed at any time and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proceedings before the original authority pursuant to the joint show cause notice to both the units. The original authority came to the conclusion that SGE was the dummy unit and he took a decision not to penalize the said unit taking into account of the tact that the proprietrix of the said unit was in no way concerned with the manufacture and clearance of the impugned goods done by SLI in which her husband was the proprietor. Since no penalty was imposed on SGE, the unit had no necessity to file any appeal before the lower appellate authority or before the Tribunal. In other words, SGE has no grievance in regard to the joint show cause notice issued to both the units. It is SLI which is agitating before us that no separate show cause notice was issued to SGE and on that basis they are seeking to quash the demand confirmed against SLI. 10. In this regard, we find that in a similar case vide Modern Engineering Plastics Pvt. Ltd. v. CCE, Trichy - 2009 (243) E.L.T. 289 (Tri.-Chen.), this Bench has upheld the clubbing of clearances and application of extended period of limitation. We also find that in the case of Bakelite Hylam Ltd., Bombay and another v. CC, Bombay and another ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause notice, it was the department's view that SGE was a fictitious dummy unit, the proposal to club the clearances of both the units was contained in the joint notice and both the units were put on notice and both the units subsequently represented their cases before the adjudicating authority. As held by the Hon'ble Supreme Court in the case cited above, it was more appropriate to examine the matter together in this case which has been done by the department. There was a proposal to penalize SGE which has been dropped by the adjudicating authority and the said unit has no grievance. The objection raised by the appellants herein i.e., SLI that SGE was not separately asked in the show cause notice why the clearances shown in SGE's name should not be clubbed with that of SLI is at the most a mere technical objection and in any case there is no prejudice caused to SLI since they were specifically put on notice regarding clubbing of the clearances. 12. Moreover, the statements recorded and the investigation carried out including the non-availability of electricity connection at the material time leaves one with no doubt that SGE had no manufacturing facility, its proprietrix k ..... X X X X Extracts X X X X X X X X Extracts X X X X
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