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TMI Blog2003 (4) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of Depot Sale prices, whether the demand is time-barred and whether demand of duty can be confirmed against the units held to be dummy units. 2.1 Shri A.K. Jain, learned Advocate, submitted that M/s. Dujodwala Industries (DI in short) is a partnership firm manufacturing rosin products, terpene chemicals, camphor and sodium acetate; that they came into existence in 1969 and have been duly licensed by the Central Excise department and are also duly registered as a SSI units with Director of Industries, Haryana; that M/s. Rosin & Terpene Industries (RTI in short) came into existence in 1979 as a partnership firm; that they are also registered as a SSI unit and have filed declaration with the Excise Department on 7-3-1980; that M/s. Dujodwala Udyog Pvt. Ltd. (DUL in short) was set up in 1983 and L4 Licence was obtained by them in February, 1983. 2.2 He, further, mentioned that after conducting search of all the three factories on 12-4-88, a show cause notice was issued on 14-12-88 on the main grounds that all the units were solely controlled by Shri S.V. Dujodwala; the ownership of all three units was vested among Shyam, his father V.M. Dujodwala and his wife ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Tribunal has already given a finding in their favour in their own matters vide Final Order Nos. 1076-1077/98-C, dated 30-10-1998. He also relied upon the following decisions: (1) Bharat Forge & Press Industries (P) Ltd. v. Commissioner of Central Excise - 1990 (45) E.L.T. 525 (S.C.). (2) Telangana Steel Industries v. State of Andhra Pradesh - 1994 (73) E.L.T. 513 (S.C.). (3) Union of India v. J.G. Glass Industries - 1998 (97) E.L.T. 5 (S.C.). (4) Light Metal Works v. Commissioner of Central Excise, Bombay - Final Order No. 612/86 Bl, dated 26-9-86. Affirmed by the Supreme Court in 1998 (95) E.L.T. A66 (S.C.) read with 2001 (47) RLT 78 (T). (5) Commissioner of Central Excise v. Popular Cotton Covering Works, 1994 (73) E.L.T. 264. (6) Master Strips Ltd. v. Deputy Commissioner of Commercial Taxes - 1995 (99) STC 216 (Kar.). (7) Swadeshi Mills Co. Ltd. v. Union of India - 1982 E.L.T. 237 (Bom.). (8) Commissioner of Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the two families had taken place; that after separation all the units came under the control of the family of V.M. Dujodwala; that Shri S.V. Dujodwala has been the partner in DI and director in DUL from the very beginning; that he came to participate in the working of RTI after V.M. Dujodwala suffered a paralytic attack in 1985; that he was eligible to participate in the activities of RTI as VMD -HUF was partner in that firm and he was a coparcener in the said HUF; that the other circumstances namely commonness of compound, water tank, canteen, administrative block, single entry and exit have pre-existed in all the three units; that all the three units enjoy independent status not only in the eyes of Income-tax, Sales Tax, Factory Act, Provident Fund Act, ESI Act, Industries Directorate, but in the eye of Central Excise Department itself as these units are registered separately and separate classification lists were filed and approved; that RT 12s were being assessed separately; that further even after registering the case against them, the Department had raised separate demands on RTI as well as DUL accepting them as separate and independents. The learned Advocate also men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the machinery and plant including raw materials; that the money transferred among the three units was not interest free; that at the time of search all the units were found working and the stocks of raw materials as well as of finished goods were found matching the statutory records; that the share holding in DUL by persons of Dujodwala family worked out to be 44.97% as against the share holding of 52.03% by other persons; that in any event all the buyers were eligible to take Modvat credit; that during the entire working of the three units, at no point of time the goods manufactured by each unit were found short or more and the Central Excise Officers had made endorsement on the respective RGIs in token of their having checked the stocks. 5.2 The learned Counsel, further, submitted that it is settled law that a Company is always independent of its share holders and is separately entitled to exemption. He relied upon the decision in Wood Craft Orissa Pvt. Ltd. v. Assistant Collector, Central Excise - 1979 (4) E.L.T. (J 139). He also contended that it is also settled law that when one person is a partner in two firms, those firms cannot be clubbed because partners and firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for holding them as dummy units when they are having independent transactions without any profit sharing, management control or money flow back to the main unit and each unit is having independent bank transactions, loans, sale, purchase and tax registration. He also referred to the decision in Jagjivan Dass & Co. - 1985 (19) E.L.T. 441 (T) wherein despite the fact of three factories being located in the same compound having common telephone/storage place/trade mark/office premises, having some common machinery/telegraphic address and mutual flow of finance without interest, the Tribunal did not club the three units keeping in view their separate Income-Tax/Sales Tax Registrations, SSI Registrations and separate electric meters. Reliance has also been placed on the decision in the case of Renu Tondon v. Union of India - 1993 (66) E.L.T. 375 (Raj.) wherein the Rajasthan High Court has held that value of clearance of the two units cannot be clubbed together and the two units cannot be treated as one unit merely because there are some common employees unless there is a clear and specific evidence that there is mutuality of business interest between the two units and that both have in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein Gujarat High Court has held that there is no suppression where the assessee is neither required to disclose the information nor is he questioned about it. Reliance has also been placed on the following decisions: (i) Tata Iron and Steel Co. Ltd. v. Union of India - 1988 (35) E.L.T. 605 (S.C.) (ii) Prabhu Steel Industries Ltd. v. Commissioner of Central Excise, Nagpur - 1997 (95) E.L.T. 164 (S.C.) (iii) ESPI Industries & Chemicals Pvt. Ltd. v. CCE - 1996 (82) E.L.T. 444 (S.C.) (iv) CCE, Baroda v. Cotspun Ltd. - 1999 (113) E.L.T. 353 (S.C.) (v) Nikhildeep Cables Pvt. Ltd. v. Commissioner of Central Excise, Coimbatore - 1990 (70) E.L.T. 273 (T) He also relied upon the Board's Circular No. 312/28/97-CX., dated 22-4-1997 wherein it has been observed by the Board that quite a lot of unnecessary litigation and avoidable work is created by indiscriminate issue of show cause notices invoking the proviso to Section 11A of the Central Excise Act even when there is no fraud or m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (20) E.L.T. 179 (S.C.) that even though there was no jump from one tariff entry to another, or even from one sub-heading to another in the same entry, yet duty liability would arise so long as (i) the process engaged in amounted to manufacture and (ii) the resultant product was a commercially a distinct marketable commodity; that similar views have been expressed by the Tribunal in the case of Srinivasa Metal Industries v. Commissioner of Central Excise, Guntur - 1987 (30) E.L.T. 578 (Tribunal) wherein it has been held that "If the process of manufacture led to the emergence of a new and distinct commercial product, marketable as such, the conclusion is inevitable that their new product would invite imposition of duty, though there may not be any move away from the tariff item or from one sub-heading to another." The learned Senior Departmental Representative also referred to the decision of the Supreme Court in the case of TVL. K.A.K. Anwar and Co. v. State of Tamil Nadu, AIR 1998 S.C. 518. He also mentioned that it has been held by the Supreme Court in Union of India v. Ahmedabad Manufacturing and Calico Printing Co. Ltd. - 1985 (21) E.L.T. 633 (S.C.) that the classification of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the letter that they had deposited with the Bank the title deeds of office premises at Bombay apart from the first charge on various factories, land and building, plant and machineries located at Faridabad and Himachal Pradesh. The learned Senior Departmental Representative contended that it is thus evident that common land, machine, etc., had been mortgaged for loan facilities from the bank; that prices were controlled by S.V. Dujodwala; that Shri Kedia deposed, in his statement dated 12-4-88 that prices of the manufactured items were communicated by Bombay office; that under letter dated 21-7-87 from Shyam to Calcutta office price of goods ex-factory and ex-godown were intimated; that selling strategy was also decided by Shyam which is evident from Inter Office Memo dated 6-4-87 in which Shyam instructed Calcutta to sell resin on account of RTI to give benefit of 10% excise duty to customers; that Shri M.D. Kedia has clearly stated, in his statement dated 4-5-88 that S.V. Dujodwala used to decide about when, how much, and to whom and from which factory i.e. RTI. DUL and DI how much sale was to be done and accordingly instructions were to be sent to Faridabad factory; that K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a single family of four i.e. Parents, sons and son's wife and that it would be convenient to operate from one account after getting all the funds accumulated in different account to one account and then telegraphically transfer to procurement places i.e. Head Office at Bombay and factories at Faridabad; that it is apparent from the said letter that all their business activities were interlinked being the business of one family and working capital was utilized commonly and profits made by individual industry were ploughed back into the business funds as a whole. The learned Senior Departmental Representative contended that these facts have not been controverted by the Appellants as Commissioner has given a specific finding in the impugned order that "nothing has been brought on records before me to disprove the allegations levelled in the show cause notice." The learned Senior Departmental Representative relied upon the decision in the case of U.K. Machine Tools Pvt. Ltd. v. Commissioner of Central Excise - 1999 (114) E.L.T. 1009 (T) wherein it has been held that common procurement of raw materials, centralized payments to employees, common storage facilities, common operation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the head of the family. Reliance has also been placed on the following decisions : (i) Supreme Engineering Works v. CCE, Pune - 1996 (82) E.L.T. 102 (T) (ii) L.R. Industries v. CCE Pune - 1999 (114) E.L.T. 550 (T) (iii) Double Bee Enterprises v. CCE, New Delhi - 1995 (78) E.L.T. 261 (T) 12. Regarding Valuation, the learned Senior Departmental Representative submitted that the Appellants have not made any factory gate sales to any independent buyers; that they had been making direct sales from the factory gate only to their sister concerns, their commission agents or transferring stock to their branch offices and to the independent buyers on contract basis; that no evidence has been produced by the Appellants for having sales at factory gate; that the goods were transferred at lower prices in the names of fictitious firms created in the names of partners/directors by withdrawing the money from their personal accounts; that this has been disclosed by Shri P. K. Jhunjhunwala in his statement; that accordingly the assessable value for charging excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of TVL. K.A.K. Anwar & Co., supra, is not applicable as the same dealt with the levy of sales tax under the Tamil Nadu General Sales Tax Act, 1987 whereas the duty under consideration in the present matter is Central Excise duty leviable under the Central Excise Act; that RTI and DUL were not created to evade payment of duty as DI was paying excise duty all the time; that DUL paid the duty up to 1985; that further it was Shyam who was organizing all the activities and not DI and, therefore, the confirmation of demand of duty against DI is not correct; that the decision of Tribunal in Unique Resin Industries - 1993 (68) E.L.T. 230 was passed before the decision of the Rajasthan High Court in Renu Tandon's case; that the decision in Heemanshu Traders, supra, is not applicable to the facts of the present matter as in the said matter two units were not paying any duty at all; that the judgment in Calcutta Chromotype case was in relation to related person and as such is not relevant; that in fact all the decisions relied upon by the learned Senior Departmental Representative are not applicable as facts are different. He also referred to the list of buyers (at pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture takes place, it is dutiable." 14.2 In the present matters the Appellants are bringing duty paid turpentine and rosin and are manufacturing derivatives of Rosin and Turpentine which are different products and applying the ratio of the Supreme Court's judgment, the duty is payable by them even if there is no change in the Tariff Heading. Recently the Supreme Court has again held in Commissioner of Central Excise, Meerut v. Kapri International (P) Ltd. - 2002 (142) E.L.T. 10 (S.C.) that "the mere fact that the material from which the new goods are manufactured, has suffered a duty under a particular tariff item that does not exclude the finished product from being exigible to fresh duty if the Tariff Act provides for it. In the instant case, though the cotton fabric had suffered duty under Tariff Item 19(1), the Tariff Act has made bed sheets, pillow covers, etc., also dutiable under the very same tariff item, therefore, the Respondent is liable to pay duty on bed sheets, pillow coves, napkins, etc., manufactured by it". The decision in the case of J.G. Glass Industries, supra, is not applicable as in the said matter glass remains glass even after printing and no ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he veil of the Corporation can be lifted and its face examined in substance. The Collector has given a specific finding in the impugned Order No. 25/90 that S.V. Dujodwala was controlling the production and other business activities of all the units. In fact we observe that the Appellants have themselves mentioned that S.V. Dujodwala is eligible to participate in the activities of R.T.I. being a coparcener of the VMD-HUF which is a partner in RTI. Further he is controlling DI as partner and DUL as a director. Thus it is apparent that these three units were controlled by one person Shri S.V. Dujodwala. The material brought on record by the Revenue clearly show common use of plant and machinery, common production, mixing of final products, common despatches and sales, utilization of employees commonly. The learned Senior Departmental Representative has referred to the letter dated 5-11-86 in which it is mentioned that Central Bank of India, Faridabad was insisting upon to transfer the account to it as it was found difficult to segregate the stock of raw materials as well as of finished products of DI and DUL. The financial involvement of these three units is also evident from the evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable to the facts of the present matter as therein the Rajasthan Court found that there was no mutuality of interest or common funding and financial flow back. In the present matter, the Revenue has succeeded in establishing the common funding and financial flow back. The decision in the case of D.M. Gears Pvt. Ltd. - 2002 (48) RLT 768 is also not applicable as the Tribunal did not find any cogent evidence in support of the finding of the Commissioner in that case that both the units were under the overall control of one Rajev Gambhir and that the units belonged to the Gambhir family. The fact of all the units registered separately under different Acts is of no relevance for the purpose of clubbing the clearance if the different units are held to be one. It has been held by the Tribunal in Double Bee Enterprises v. Commissioner of Central Excise, New Delhi - 1995 (78) E.L.T. 261 (T), relying on the decision in Lotus Chemical Industries and Aurbindo Chemical Industries v. Commissioner of Central Excise, Indore, Final Order Nos. 458-459/91-C, dated 21-5-1991, that "the mere fact that units are separately registered as SSI unit or that they were separately assessed for income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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