TMI Blog1990 (5) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... ip firm, was known as M/s. Shivaji Oxygen, but as the name referred to historical personality, the name had to be changed and the change was carried out in L4 licence also. Partners in the Firm were Mrs. Pushpa R. Sanghi and Mr. Nitin R. Sanghi, whose names were shown as partners in the L4 licence w.e.f. 1-9-1983. L4 licence was issued on 3-11-1980. The appellants followed Chapter VIIA Procedure (SRP) for clearance of the goods. They had filed classification lists w.e.f. 1-4-1983,1-4-1984 and 1-4-1985 which had been approved from time to time. Appellants were granted exemption under Notification No. 80/80-C.E., dated 19-6-1980, as amended by Notification No. 83/83-C.E., dated 1-3-1983 and 85/85-C.E., dated 17-3-1985 for their product falling under T.I. 14H. Records of the appellants were audited from time to time by Central Excise Audit Parties and CERA parties. Acting on information, the officers of the Central Excise (Preventive), Anti Evasion, visited the factory premises of the appellants and also of Pimpri Gases, appellants of Appeal No. E/660/87 (hereinafter referred to as Pimpri Gases). The officers made some enquiry, resumed some records and recorded statements of some pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir goods. They had filed classification lists from time to time and were approved. The unit was granted exemption under Notification No. 80/80-CE as amended by Notification Nos. 83/83-CE and 85/85-CE. Their records were also audited from time to time by Central Excise and CERA Audit parties. These appellants also received show cause notice dated 2-6-1986 to show cause as per above. Both the appellants submitted their reply to show cause notices. Collector of Central Excise Customs, Pune adjudicated the matter by the impugned order and :- (i) confirmed the demand of Rs. 10,63,922.75 under Rule 9(2) read with Section 11A of the Act to be paid by M/s. Sanghi Gases. (ii) Confirmed the demand of Rs. 3,15,859.87 to be paid by M/s. Sanghi Gases under the provisions of same Rule and Section of the Act; and (iii) Imposed a penalty of Rs. 3 lakhs each on M/s. Sanghi Gases and Pimpri Gases, Pimpri under Rule 173Q of Central Excise Rules, 1944 (hereinafter referred to as Rules). Aggrieved by the said order, both these appellants have preferred these appeals. 2A. We have heard Sh. A.V. Phadnis ld. Advocate for M/s. Sanghi Gases and L.A., Sh. V. Lakshmikumaran for M/s. Pimpri Gases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that the telephone belonged to M/s. Sanghi Gases and extension was provided to M/s. Pimpri Gases which was not in the same premises. It was also admitted by Sh. R.K. Sanghi that the telephone was in his personal name, but was installed in Sanghi Gases and installation charges were paid by M/s. Sanghi Gases and bills are also paid by M/s. Sanghi Gases. So, as held by the Collector, this would show that both the units had interest in the business of each other. (iv) The Collector has also stated as under : Though the other circumstances such as sale-purchase of each other s products, purchase of Calcium Carbide by Sanghi Gases for Pimpri Gases and payment adjustment of payment against the sales of Acetylene Gases to Sanghi Gases, supply of material to Pimpri Gases and use of trucks belonging to Sanghi Gases by Pimpri Gases are claimed to be innocuous in nature and as per the trade practice, the said circumstances support the above findings that both the units have got mutual interest in the business of each other. Hence it would be justified if both the units are clubbed together for the purpose of exemption. (v) Supply of Machinery - M/s. Sanghi Gases, Pimpri had pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transaction was accepted by the jurisdictional Central Excise Authorities in whose jurisdiction, M/s. Sanghi Oxygen are located and no inquiry had been held as far as M/s. Sanghi Oxygen are concerned. Moreover, the evidence, relied upon by the Collector, is not at all reliable and nothing turns upon that evidence. 9. Sh. Chandersekharan, ld. S.D.R. for the Revenue reiterated what is stated in the adjudication order. He, further submitted that Sh. Ram Avtar, who was an employee of M/s. Sanghi Gases, had produced some vouchers, he was not cross-examined by the appellants and so the Collector relied upon those vouchers and conclusion arrived at by the Collector is proper. So, the value of investment under machinery and plant exceeded the prescribed limit. 10. We have carefully perused the records and considered the arguments by both the sides. 11. As far as constitution of both the firms is concerned it is not in dispute that M/s. Sanghi Gases is a partnership firm which has two partners and they are admittedly the wife and son of Sh. R.K. Sanghi and Sh. R.K. Sanghi is the proprietor of M/s. Pimpri Gases. But, then, only because they are very close relatives, it cannot be said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of work force of one firm and another in certain circumstances and the Tribunal has held that these are not such circumstances which would prove that the firms were not independent. 12. In view of the above decisions, in the present appeals also, we are satisfied that use of common telephone, staff, etc. would not go to prove that both the production units are one in the eyes of law. The other circumstances, referred to by the Collector, such as sale-purchase of each other s products, purchase of calcium carbide by Sanghi Gases for Pimpri Gases and adjustment of payment against the sales of Acetylene Gases to Sanghi Gases, supply of material to Pimpri Gases and use of products belonging to Sanghi Gases by Pimpri Gases, are not discussed in details by the Collector, but while summarising the evidence, in the earlier part of the order, it has been stated as under (internal page 4 of the copy): i) Sale-purchase of each other s products - Sanghi Gases is buying dissolved acetylene gases manufactured by Pimpri Gases and Pimpri Gases is buying oxygen and nitrogen gases manufactured by Sanghi Gases as per statement of Sh. Ashok Mangal, Manager of Sanghi Gases. Accounts of these produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses to M/s. Dalal Mckenna. In this, there is a debit entry of Rs. 3.00 lakhs dated 30-9-1985 stated to have been sent by Demand Draft to Maharashtra State Finance Corporation. At page 101 is a copy of a letter dated 25-6-1985 from Pimpri Gases to Dalal Mckenna whereby Pimpri Gases placed order for oxygen plant to Dalal Mckenna. At page 99, is a letter from Dalal Mckenna to Pimpri Gases wherein M/s. Pimpri Gases had been called upon to pay a sum of Rs. 3.00 lakhs to M.S.F.C. as against advance for the purchase of oxygen plant (it may be noted that this payment has been reflected in the statement of accounts at page 84). At page 98, is a copy of a letter dated 15-10-1985 whereby M/s. Pimpri Gases cancelled the order placed with Dalal Mckenna for the purchase of oxygen plant. At page 97 is a copy of a letter dated 20-10-1985 addressed by Dalal Mckenna to Pimpri Gases whereby they accepted the cancellation and it has been, further, stated therein as under: We are arranging the refund of your advance money through M/s. Sanghi Gases, Pimpri, Pune-18, who is one of our clients, M/s. Sanghi will make the payment directly to you. 16. Admittedly, M/s. Sanghi Gases paid this amount to M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further stated that the Excise Officer from Bombay had raided the premises of Sanghi Oxygen and seized some goods, but he did not verify whether any show cause notice was issued to M/s. Sanghi Oxygen pertaining to this deal and he also did not verify whether any differential duty was charged on the basis of value arrived at by the Officer. He was specifically put the following question and he answered as under : Q. Did you verify whether the air separator column installed in the Sanghi Gases, Pimpri and the air separator column mentioned in the invoices produced by Sh. Ram Avatar had same components and specifications? A. This was not found necessary by me. 19. It is contended by the appellants, M/s. Sanghi Gases that relations between Sh. R.K. Sanghi and said Ram Avatar were strained and that is why the said Ram Avatar gave such a statement. Whatever, it might be, but apart from that also, the Investigating Officer, has specifically, admitted that he had neither verified the original voucher nor the gate pass under which the column, in question, was cleared. Moreover, he specifically admitted that he did not find it necessary to verify whether the components and specificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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