TMI Blog1994 (1) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Collector also imposed a penalty of Rs. 1,00,000/- on the appellants. Appeal No. 475/88-C is directed against Order No. 5/88(B)(D) dated 29-1-1988 passed by the Collector of Central Excise (Appeals), Madras setting aside the order passed by the Assistant Collector that M/s. Gammon Fer Chems were entitled to avail exemption under Notification No. 175/86 dated 1-3-1986 and discharging the Show Cause Notice dated 31-10-1986 which sought to deny that exemption claimed under the said Notification vide Classification List No. 1/86-87 dated 2-4-1986. The Collector (Appeals) has held that for purposes of ascertaining the applicability of Notification 175/86-C.E., dated 1-3-1986 goods cleared from all the factories of M/s. Gammon India Ltd. and its subsidiary were required to be clubbed. Appeal No. E/355/89-C is directed against Order-in-Appeal No. 210/88(B) dated 20-7-1988 passed by the Collector of Central Excise (Appeals), Madras upholding the order No. C/V/28/3/112/87 M.P. I dated 25-1-1987 passed by the Assistant Collector wherein based on the Collector of Central Excise Order No. 103/87, dated 9-11-1987 (subject matter of present appeal No. E/899/88-C) he has held that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, bearing pad, anchorage cone, hand grout pump, hydraulic jack and sliding bearing falling under T.I. 68. The value of clearances of these goods during the year 1984-85 was Rs. 76,73,645. The appellants availed exemption in respect of Sulphuric Acid under Notification No. 85/85 for the year 1985-86 on the grounds that the total value of clearances of goods falling under T.I. 14G and T.I. 68 had not exceeded Rs. 75 lakhs during the year 1984-85. However, the appellants were served with a show cause notice requiring them to show cause alleging that the exemption availed by them during the year 1985-86 under Notification No. 85/85 was not admissible since the total value of clearances by them and the subsidiary company of M/s. Gammon India Ltd. had exceeded Rs. 75 lakhs during 1984-85. The appellants were therefore asked to show cause as to why duty should not be recovered from them under Rule 9(2) read with proviso to Section 11A of the Central Excises and Salt Act, 1944 on the excisable goods cleared by them without payment of duty. In the reply to the show cause notice and also during the personal hearing the appellants denied that they had suppressed the fact that they are a Divi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of M/s. Gammon India Ltd. He submitted that the order passed by the Collector was illegal since the amount of duty demanded had not been quantified either in the show cause notice or in the impugned order. He contended that the Collector s order invoking the extended period under the proviso to Section 11A was also illegal since in all their correspondence with the Department they had mentioned that they were `an enterprise of M/s. Gammon India Ltd. and in the classification list there was no column seeking such information. He stated that the appellants had cleared the goods in accordance with the approved classification list and complied with all the procedural requirements. On these grounds he prayed that the impugned order may be set aside. In support of his submissions he cited the following case law :- (1) Deputy Commissioner of Sales Tax (Law) Board of Revenue (Taxes) v. M/s. K. Kelukutty - AIR 1985 SC 1143; (2) Government Ceramic Service Centre, Cannanore v. Collector of Central Excise, Cochin - 1983 (13) E.L.T. 1215; (3) Jaswant Sugar Mills Ltd., Meerut v. Union of India Others - 1981 (8) E.L.T. 177. 5. On behalf of the respondents Shri Sharad Bhansal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the conduct of its affairs it has to be deemed as a separate legal entity and for this reason it cannot be deemed to be manufacturing goods on behalf of M/s. Gammon India Ltd. In this regard it has been stated that M/s. Gammon India Ltd. do not undertake marketing of goods manufactured by M/s. Freyssinet Prestressed Concrete Co. Ltd. which are entirely different from the goods manufactured by the appellants. It has been claimed that M/s. Gammon India Ltd. are only entitled to the Profit/Loss of the latter company in accordance with the shareholding in that company. The Learned Counsel for the appellants has also relied upon the Delhi High Court judgment in the case of Jaswant Sugar Mills Ltd. v. Union of India, reported in 1981 (8) E.L.T. 177 in which it was observed that the partnership firm concerned would be a person distinct from the petitioner which was a Public Limited Company. In support of his contention the Learned Counsel on behalf of the appellants has also placed reliance on the judgment of the Hon ble Supreme Court in the case of Deputy Commissioner of Sales Tax (Law) v. M/s. K. Kelukutty - AIR 1985 SC 1143 in which it was held that each partnership is a distinct r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sum of Rs.1,25,000 was also advanced by the Holding Company. It is evident that on account of their holding of 97.83% shares of M/s. Freyssinet Prestressed Concrete Co. Ltd., M/s. Gammon India Ltd. were in a position to exercise complete control over the policy and business operations of their subsidiary. On this account and also on account of the flow of funds from the Holding Company to the subsidiary, we are inclined to hold that the latter was only a facade and the goods produced by the subsidiary company were in fact produced for and on behalf of M/s. Gammon India Ltd. 11. The appellants have contended that the impugned orders are not sustainable also on the ground that the duty demanded had not been quantified. On a plain reading of the operative part of the impugned order No.103/87 dated 9-11-1987, we find that the Collector after holding that the appellants were not eligible for the exemption under Notification No. 85/85 during 1985-86 had confirmed the demand of duty on amount by which the clearances during 1984-85 of the appellants and M/s. Freyssinet Prestressed Concrete Co. Ltd. Bombay taken together had exceeded Rs. 75 lakhs. Hence the determination of the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsidiary companies of M/s. Gammon India Ltd. In the case of Apex Electricals Pvt. Ltd. v. Union of India, reported in 1992 (61) E.L.T. 413 (Guj.), the Hon ble Gujarat High Court has held that the Department will not be justified in proceeding on the basis that there was suppression of true facts and, therefore, the show cause notice could be issued within the larger period of five years when the only facts not disclosed by the assessee were such which he was not required to disclose and about which he was also not questioned before recording of his statements by the Excise authorities. Para 18 of the judgment being relevant is reproduced below :- ****** On the ratio of the judgment quoted above, we hold that the invocation of the extended period in terms of proviso to Section 11A for the confirmation of the demand by the Collector is not legal and sustainable. 13. In view of the above discussion, we confirm the findings in the impugned orders in Appeal Nos. E/899/88-C, E/475/88-C and E/355/89-C that for the purposes of the exemption under Notification Nos. 85/85 or 175/86 the value of the clearances of excisable goods from the appellants factory and those from the factory ..... X X X X Extracts X X X X X X X X Extracts X X X X
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