TMI Blog1995 (1) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... leged that during this period the excisable goods valued at Rs. 1,30,63,279.42 were cleared without payment of duty amounting to Rs. 10,45,062.35 in violation of provisions of Rules 9, 173B, 173C, 173F, 173G(4) of the Central Excise Rules, 1944. Therefore, the department has also invoked larger period by invoking Rule 9(2) which deals with clandestine removals and has also invoked the penalty provision of Rule 173Q. The Collector has also imposed a fine of Rs. 50.000/- under Rule 173Q of the Central Excise Rules, 1944. The defence of the appellants had been that the appellant is a proprietary concern, whereas M/s. Metroark is an independently incorporated Private Ltd. Company under the Companies Act, that there are two independent legal entities and as such there is no justification to ignore this position and consider them as one entity. They had also challenged the statement dated 24-3-1983 given by the Manager (Finance Accounts) namely Shri R.S. Jha on the ground that the statement had been recorded under duress. The department had alleged that the local office of M/s. Metroark Pvt. Ltd. was being utilised for keeping all the records of Metrosyl without payment of any rent. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the appellant commenced production of Silicones out of the material supplies by the Private Ltd. Company w.e.f. 24-9-1979 and that during the period from 24-9-1979 to 14-1-1981, the total number of workers employed by the appellant was less than 10 and therefore, for this period they were fully covered by Notification No. 85/79, dated 1-3-1979 which exempted in premises which was not a factory within the meaning of Section 2(m) of the Factories Act, 1948 that is the factory employed less than 10 workers, although it might have been belonging to the same manufacturer. It has been submitted that even by the department argument if they are to be clubbed even then the benefit of this notification cannot be denied as during this period as per the evidence produced the number of workers were less than 10 and hence the clearances made during this period and the duty thereon was less than the exemption limit. It has been further stated that w.e.f. 15-1-1981 to 31-3-1981 the total value of clearances were Rs. 12,11,777/-. There was no clearance from the private limited company during the said period since the factory of the company was under `Lock-out . It has been submitted that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and more particularly the above grounds, the ld. Advocate submitted that now it is a settled law that the clearances of two independent legal entities cannot be clubbed unless the other company is a dummy one which has been set up with a sole view of defrauding the Revenue and to evade payment of taxes. He submitted that both the units were geographically apart as the appellant being a Patna and the Private Limited Company being situated at Calcutta. The Calcutta concern had only a office and with a telephone facility at Patna which was being shared. The fact that advise was given by an elderly person i.e. father of the appellant to manage the concern would not by itself sufficient to club the clearances. There is merely a managerial control and that there is a difference between managerial control and financial control. The appellants had only carried out job work and did the work on the basis of the job work charges and that there was nothing to show on record that both the companies had been operating together and at the instance of the Calcutta Company. He submitted that both the units have been independent by operating for a long period of time registering themselves under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate veil and holding that both the units were one and the same. Pointing out to the Inspector s letter to the appellant seeking details of clearances, ld. SDR submitted that this letter by itself is not sufficient to hold that the department had the entire knowledge of the appellant s activities. It is only by the raid and further investigation of records, it came to light the clandestine manner by which both the concerns were carrying out the activity. Therefore, merely visits of the Inspector or correspondence cannot be set to be a ground to invoke a larger period. In this regard, he has relied on the ruling rendered by the Tribunal in the case of Shree Ganjanam Fabrics Distributors GFD Sanghi Others v. Collector of Central Excise, Pune - 1992 (43) E.C.R. 172 (Tri.). He has also relied on the judgment of the Tribunal as per final Order No. 166-168/93-C, dt. 18-5-1993 as rendered in the case of Supreme Engineering Works Others v. Collector of Central Excise, Pune. 5. We have carefully considered the submissions made by both the sides and perused the records. The evidence of the records and the citations relied upon before us. The department has proceeded on the basis that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e show-cause notice proceedings certain administrative directions and to the appellants for the Private Limited Companies in connection with the bank transactions. The question before us is as to whether these instances are sufficient to hold that the Private Limited Company at Calcutta is the controlling authority of the proprietor concern at Patna and Patna Unit has been set up on their instance. The Tribunal had gone in great detail in the similar circumstances cited by the department in the show-cause notice and has nagatived each of them as a factor for clubbing both the units, as can be seen from several citations brought to our notice by the appellants. Both the units are geographically apart and are independently constituted having separate management and separate financial control and financial funding. The instances cited by the department are mostly in the nature of managerial control, commonality of use of premises, telephone staff and mutual business interest. These are not the grounds on which the two units can be considered as one or the same. The department has to show that the appellant concern is a dummy unit inasmuch as the appellant had no role to play and they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... destine removal would not be sustainable. The department has proceeded on the premise that there is a suppression, on the basis of collection of details from records and on the basis of allegations made in the show cause notice. We are of the considered opinion that the nature of transaction is more of business and commercial transaction and the Tribunal has held that commonality of Directors, Telephone, premises and use of business premises is no ground to club the clearance of both the units, as is being one or the same. In that view of the matter, we have upheld that there is no suppression in the present case and the larger period cannot be invoked in the facts and circumstances of the present case. The appellant has also raised a very important issue that the show-cause notice to the private limited company has not been issued nor proceedings raised against them and as such in the light of the allegation that the appellant being part and parcel as Private Limited Company, the proceedings should have been against the Private Limited Company and demands be confined on them. In this context, the ld. Advocate has relied on the ruling referred in the case of Cheryl Laboratories (su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has negatived the department s contention. The earlier citation referred to by the appellants in the case of Swastika Metal Works and Kinjol Electricals (P) Ltd. are also directly applicable in the facts of the present case. The Tribunal has also examined in the case of Prabhat Dyes Chemicals about the close and proprietor of another firm, combined purchase of raw materials, interest free loan by one to the other or common inspection note recorded by ofiicer and has held that there are not material for the purpose of clubbing clearances but both units are separately registered as small scale units and also with Income Tax and Sales Tax authorities. Therefore, the Tribunal has held that the value of both the units cannot be clubbed. 6. Ld. S.D.R. relied on the ruling rendered in the case of Shree Ganjanam Fabrics Distributors GFD Sanghi Others (supra). This ruling is totally different and this is not applicable to the facts of the present case. The Tribunal has gone in great detail in to the facts of the cases held that both the units were situated in the same premises and there was several factors which were in existence by which it could be gathered that both the units wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was of course entitled to lift the veil and show the reality but that puts the burden on the Department to establish that they are one and the same in their essential features relating to managerial control, manufacture or sale or financial relationship etc. which would go to show commonality of interest. 11.For these purposes it was necessary as mentioned above to implede the Calcutta Unit of Metroark as well. 12. The question of time bar is inter-twined with that of the merits and the correctness of computation of duty liability if any, could also be examined only in the light of such findings as may be arrived at with reference to the main issues. 13. The impugned order is therefore set aside and the matter is remanded for being re-adjudicated by the proper authority in the light of the above observations and the law with the directions that both the concerned units may be given necessary opportunity to make their submissions and present their case in all respects. 14. In view of the difference of opinion between Hon ble Member (J) and the Vice President, the matter is submitted to the Hon ble President for reference to a third member on the following point :- Wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stage to M/s. Metroark Pvt. Ltd. as ordered by the Hon ble Vice President. He contended that the matter having been argued at length and relevant material for decision being available on record, the case would not be remandable in view of the Supreme Court judgment in the case of M.G. Shahani Co. (Delhi) Ltd. v. Collector of Central Excise, New Delhi, reported in 1994 (73) E.L.T. 3. He stated that he was also relying on the Tribunal s decision in the case of Talbros Automotive Components Ltd. v. Collector of Central Excise, reported in 1988 (38) E.L.T. 39 in which it was held that when in the show cause notice and in the order passed on adjudication of the matter, no evidence is forthcoming to support the allegations made, the matter would not be remandable. He added that the relevant period in the present case being September, 1979 to January, 1982 it was not remandable in view of the decision in the case of Icycold Commercial v. Collector of Central Excise, Calcutta-I, reported in 1994 (69) E.L.T. 337 in which it was held that remand is not necessary when the matter is old. He stated that any fresh proceedings if initiated on remand by serving notice on M/s. Metroark Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence disclosed by the department in support of their case is available on record. In this regard it is seen that in the case of M.C. Shahani Co. (Delhi) Ltd. v. Collector of Central Excise, New Delhi (supra) the Hon ble Supreme Court had observed that since all the available material was on record and the concerned parties had argued at length the appellate authority should have analysed the evidence and given a factual conclusion instead of remanding the matter to the lower authority. It is seen that in the case of Talbros Automotive Components Ltd. v. Collector of Central Excise, (supra) in which it was held that there could be no case for remanding the matter when both in the show cause notice and final order passed on adjudication of the matter no evidence was forthcoming to support the allegation. On the ratio of this decision since no show cause notice was issued to M/s. Metroark Pvt. Ltd. to disclose the charges and the supporting evidence, the matter would not be remandable at this late stage to enable the department to investigate and make out a fresh case against them. In any case, as pointed out by the learned Counsel, the show cause notice in respect of clearances d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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