TMI Blog2000 (3) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... cturer of the goods which were excisable, manufactured by Classic Cartons Pvt. Ltd. (Classic for short) and M/s. Trinova Graphics (Trinova for short). He has found that the other two companies were dummies or shells created by H.G. Shetty and S.M. Shetty; he has therefore directed clubbing together the clearances of each of the three firms, the total of which he finds exceeds the limit provided under notification 175/86, demanded duty payable, without the benefit of notification with interest on the delayed payment and imposed penalty on SGPL, H.G. Shetty and S.M. Shetty. 2. The contentions of the advocate for the appellants are these: The constitution of each of the firms in question is different. SGP and Classic are private limited comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s family holds 1/3 share in each of these companies. 5. This position as indicated above thus suggests that a majority of the stock holding was in the hands of three families, two of Shetty's and one Hegde. The material also does not show that the actual control and running of the firms was in the hands of H.G. Shetty and S.M. Shetty, as the Commissioner has concluded. The Commissioner has relied upon the statement of Jyoti Shetty, director in Classic and Sridevi Hegde, partner of Trinova, that the control of affairs of these firms are in the hands of S.M. Shetty. Sridevi Hegde has said that she was not looking after the day-to-day affairs of the two units for the reason that she is not technically qualified. She however, indicated her pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ock holding, in the course of limited companies and extent of partnership in the case of partnership firm itself constitute control by two individuals or of one particular family group. The judgment of the Rajasthan High Court in Renu Tandon v. Union of India, 1993 (66) E.L.T. 375 that such a factor alone cannot justify clubbing, is relevant. 8. Another factor, which the Commissioner has found, is that all the firms shared a common office at 180 Raja Industrial Estate, Mulund, and Mumbai. The appellant does not deny this fact, but says that this was purely a commercial arrangement, rent having been paid by other users for their office. If rent was in fact paid it is difficult to see how the sharing of the office itself would lead to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n expansion of Surface Graphics. This fact is not disputed by the appellants. It is further stated that this was a commercial tactics to mislead the bank into believing that Trinova had secured foundation; so as to make easier for the loan from the bank to be obtained. In support of the contention that this claim made by a person could not conclusive of the fact, and hence cannot lead to clubbing, decisions of the Tribunal in Prima Controls Pvt. Ltd. v. CCE - 1994 (72) E.L.T. 62 and Vivomed Labs. v. CCE, 1991 (53) E.L.T. 152 was cited. We find that these decisions support this contention. 11. The next feature relied upon by the Commissioner is that there was an interest free loan of Rs. 2 lakhs given by Surface Graphics to Classic and thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted. S.M. Shetty had also agreed that Surface Graphics stood as guarantor for the loan given to Classic by Shamrao Vithal Co-operative Bank. However, we are unable to see how this would lead to the conclusion that Classic was a dummy or even that the two are related. It is no means a strange or uncommon practice for one company to act as a guarantor for loans to be used for another, even though they may not be the one and the same or even related, financially or otherwise. 13. The Commissioner also relies upon the fact that Classic diverted an order of cartons received by it from M/s. Wonder Ox Laboratories for execution to Surface Graphics. We are unable to see how this fact establishes that Classic Cartons was a dummy. On the contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he primary considerations which was required to be taken into account in such matters that financial inter-relationship of a nature of other than normal commercial transaction was established. 16. It would be necessary, at this point, to refer to the decision of the Tribunal in J.N. Marshall v. CCE - 1997 (96) E.L.T. 149. After analyzing various decisions of the Courts and the Tribunal with regard to clubbing, the Tribunal said. "what we understand from the above decisions is that regard must be had to all the circumstances established in a given case but emphasis must be on common control of production and sales or on management control and special financial relationship existing between the units or profit sharing or financial flow ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
