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TMI Blog1996 (4) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... entities are paper entries with a view to mis-lead authorities to believe that transactions were between independent parties." He confirmed the central excise duty demand of Rs. 1,28,220.25 demanded from M/s. Step. He also imposed a redemption fine of Rs. 10,000/- and a penalty of Rs. 10,000/- on M/s. Step. 2. The matter was posted for hearing on 2-11-1995 when Shri Gopal Prasad, Consultant appeared for the appellants. Shri J.M. Sharma, JDR duly represented the respondent/Revenue. 3. Shri Gopal Prasad, ld. Consultant stated that only issue for our consideration in this appeal is that of clubbing of Arkay with Step. He submitted that the two units - M/s. Step and M/s. Arkay were separate although both were in the same building and both were manufacturing cosmetics and toilet preparations. It was contended that both the units had separate licence and worked under an agreement in the same premises. He referred to the Tribunal's decision in the case of Jagjivan Das and Co., Thane v. CCE, Bombay-II - 1985 (19) E.L.T. 441 (Tribunal) where the Tribunal had held that innocuous circumstances such as use of common premises, telephone, telegraphic address, etc. do not conclusively ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cleared partly in the name of Step and partly in the name of Arkay. 6. Cosmetics valued Rs. 32,000/- said to belong to Arkay were lying in the premises declared for Step when the central excise officers visited the premises in January, 1987. Admittedly, electricity/water bill was paid by Step. 7. In his statement dated 27-1-1987 recorded under Section 14 of the Central Excises & Salt Act, 1944 (hereinafter referred to as the `Act'), Proprietor of Step had stated that Arkay were their loan licencee. In reply to the show cause notice, they termed it as an error and changed the relationship to be one of leave licencee. They had argued in reply to the show cause notice that "using machinery of one firm by another does not establish manufacture for or on behalf of one another." By no account, they established that Arkay was a working unit and had its own separate existence for the purposes of the small scale exemption under Excise Law. 8. If Arkay is taken as an independent unit then it will be in the nature of a rival unit in the same premises and that M/s. Step had to establish by cogent reasons as to why they allowed the rival unit to operate particularly when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee was not to take approval of the Department for granted merely on staking claim and that the basis of the claim was to be set out clearly. In the case of Balamurgan and Bala Murli v. CCE, Madras - 1988 (38) E.L.T. 54 (Tribunal), the Tribunal with regard to the applicability of small scale exemption had held that "the creation of Balamurli was nothing but a subterfuge and the firm itself is sham. It is a shadow which has no substance and intended only to create facade behind which the State was to be deprived of its legitimate tax." In the case of Unique Resin Industries v. CCE - 1993 (68) E.L.T. 230 (Tribunal) the four units were having common infrastructural facilities, they were financed and run by the same family. The Tribunal had held that the units were not independent and that the value of clearances of the four units was to be clubbed for the purposes of small scale exemption. In the case of Lotus Chemical Industries and Aurobindo Chemical Industries v. CCE - Tribunal's final Order No. 458-459/91-C, dated 21-5-1991 the Tribunal in similar facts and circumstances had observed that mere fact that units are separately registered as SSI Unit or that they were separate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he close family relationship among proprietors, partners, etc. of the units, their location in the same premises, the use of common facilities like water, steam and security arrangements besides the servicing facilities of Onkar Service Centre are factors which taken cumulatively leave no doubt in our mind that these units were separated for the specific purpose of showing their independent existence so as to take advantage of the exemption Notification. This is what has been termed as camouflage of identity of units by the Bombay High Court in the case of Swadeshi Dyeing case (supra) judgment." Para 4 from the Tribunal's decision in the case of Universal Precision Tools v. CCE, Belgaum - 1993 (68) E.L.T. 427 (Tribunal) = 1993 (49) ECR 608 (Tribunal) is also extracted below :- "4. We observe that the short point that falls for consideration is whether M/s. Universal Conveyors was only a firm registered on paper and the clearances alleged to have been of the goods which were manufactured by the appellants and cleared in the name of M/s. Universal Conveyors. We observe that the Department had made detailed investigation with the various authorities concerned with the starting of op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intention of the appellants. 14. The Revenue Acts on the basis of the declarations filed by the assessees. In the nature of things, the declarations had to be correct and all relevant facts had to be correctly stated therein. By filing incomplete/incorrect declaration, and by with-holding vital facts which are only within the special knowledge of the assessee it could never be a valid defence that the Revenue should have un-earthed the full and correct facts which the assessee had sought to suppress. No legal frame-work could be established on such an understanding. 15. The extended period of limitation had been put on the Statute Book for a purpose and with specific situations in view. Tax compliance is a serious matter for developed countries like ours and the purposes with which small scale exemption had been provided for meeting our socio economic objectives, cannot be allowed to be defeated on the plea that only the normal period of limitation should have been applied in a situation as in the present case. The adjudicating authority had held that "the declarations claiming exemption from licensing control etc. are mis-declarations." In the case of Priya Corporation ..... 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