TMI Blog2004 (6) TMI 475X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) Hindon Electricals Pvt. Ltd., (3) Domestic Aids, (4) Summerking Enterprises, (5) Servottam Appliances, (6) Weather Makers. 2.2. He, further, mentioned that a show cause notice dated 20-3-97 was issued to them along with others for demanding Central Excise duty for the period from 1-4-1992 to 30-11-96 and imposition of penalties; that eight more show cause notices were issued for the period from 1-2-1996 to March, 2000 containing the following main allegations: (i) Shri D.R. Goel is the key person in functioning of these units. He is in absolute control of the working of the units and under his supervision day to day affairs of these units are carried out. (ii) The testimony of suppliers of raw materials and purchasers of finished goods leave no room for doubt as to who was the person who had actual control over business of all these units. These units were constituted on paper in a way so as to create an impression that they were separate and independent legal entities whereas their actual ownership always remained in the hands of Shri D.R. Goel. (iii) Shri D.R. Goel has been instrumental in creating various firms and companies in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Hindon Electricals Pvt. Ltd. which started on 13-10-89 cannot be clubbed with the clearances of M/s. Summerking Electricals Pvt. Ltd. which was started subsequent to these units on 14-12-1989; that further these units were having separate factories at different places; that as these unit came into existence prior to coming into existence of M/s. Summerking Electricals Pvt. Ltd. their clearances are to be excluded as per the finding of the Adjudicating Authority itself; that this fact is even apparent from the show cause notice dated 20-3-97 itself (Internal Page Nos. 5 to 8 of the notice). He mentioned that the clearance of only remaining two units namely M/s. Sarvottam Appliances and M/s. Weather Makers, which came into existence on 22-10-92 and 11-9-95 at the most can be clubbed with the clearances of M/s. Summerking Electricals P. Ltd.; that the value of these clearances does not exceed the exemption limit provided in the small-scale exemption Notification. He also emphasized that the Revenue has not challenged the said finding contained in the impugned Order. 3.2. The learned Advocate mentioned that the finding in the impugned Order is that all the units were the creation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Portions A B ; that Portion A was trading shop where the following units were working as under : (1) Sales India From 22-10-92 to 31-3-95 (2) Sarvottam Appliances From 7-4-95 to 8-9-95 (3) Summer Sales From 9-9-95 to He mentioned that Portion B was the manufacturing portion wherein the following units worked: (i) Summerking Enterprises upto 21-10-92 (ii) Sarvottam Appliances 22-10-92 to 31-3-95 (iii) Weather Maker 11-9-95 to 18-3-98 He contended that it is evident that the units did not work simultaneously; that first floor was also manufacturing premises where the following units worked one after the other and not simultaneously: (1) Summerking Enterprises upto 21-10-92 (2) Sarvottam Appliances 22-10-92 to 31-3-95 (3) Weather Maker 11-9-95 to 18-3-98 He also mentioned that even though the address was same, there were different distinct portions with no commonness; that proper rent was paid to the owner of the premises which were reflected in income tax returns. 5.1. The learned Advocate contended that these units ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctors, by itself, is no ground for holding them as dummy units and for ordering clubbing of all their clearances.....There is no dispute in all these cases that all the four units are independent in existence, with independent transactions, without any profit sharing, management control or money flow back to the main unit. Each unit is having independent bank transaction, loans, sales, purchase tax registrations. 5.3. Regarding the list of the firms and persons (at Pages 130 to 132 of the Appeal Paper Book) who had given loans, the learned Advocate mentioned that it is not merely the family of D.R. Goel but even various financial agencies who had given the loans to the respective units; that all such loans had been paid back by the respective units along with the interest; that it is not the case of the Department that the loan advanced had not been paid back; that thus it cannot be alleged that there has been any financial flow back or financial control of D.R. Goel on the units. He relied upon the decision in D.M. Gears Pvt. Ltd. v. C.C.E., Delhi-1, 2002 (141) E.L.T. 514 wherein the Tribunal, relying upon the judgment of the High Court of Rajasthan in Renu Tandon v. UOI, 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ached the market; that figures mentioned against B-9 in the show cause notice is from sale account and cannot be treated as clandestine removal. He, further, mentioned that in show cause notice for the purpose of imposing penalties under Rule 209A it was alleged that the specified persons were engaged in acquiring, possessing, removing etc. the goods and they knew that the goods were liable for confiscation; that, however, in the impugned Order penalties have been imposed on entirely different reason that is these persons have wilfully cooperated with, D.R. Goel in lending their identities for the various units and providing active assistance in misusing the SSI benefits; that the said finding is thus beyond the scope of show cause notice as such was not an allegation in the show cause notice; that Rule 209A is also not applicable in these situations. Reliance has been placed on the decision in International Talkie Equipment Co. P. Ltd. v. CCE, 2000 (121) E.L.T. 345 (T) = 2000 (39) RLT 767 (T). He also mentioned that no statement/enquiry whatsoever was made from Smt. Savitri Goel, Ms. Gunjan Goel and Shri Ashok Kumar Gupta and as such no penalty can be imposed on them. He mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Gold as one and the same; that this clearly goes to prove that D.R. Goel was having the actual control over the business of all the units and these units were constituted in a way so as to create an impression that they were separate and independent legal entities whereas their actual ownership always remained in the hands of D.R. Goel; that this was done with a view to evade payment of Central Excise duty by fragmentation of the value of clearances in the name of different concerns. He also mentioned that there is no force in the submissions of the learned Advocate that the premises at 61 Maliwara was given on rent; that the rent receipts produced by Shri S.K. Gupta did not reflect electricity charges; that no written agreement in respect of the said charges had been produced; that these receipts are not bona fide receipts; these are fabricated ones with an attempt to establish that these units were separate units; that two units were shown to have functioned from the same premises at one point of time. 8. Regarding financial management and inter-flow of funds, the learned SDR submitted that the funds in all units were provided by the members of the family of Shri D.R. Goel an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned that the various dealers have stated that they treated the brand name Summerking and Summerking Gold as one and the same and belonging to Summerking group; that for example, Shri Chandra Prakash, Proprietor of Chandra Cooler Industries, Ahmedabad, in his statement mentioned that he purchased electrical appliances from M/s. Domestic Aids and M/s. Summerking Enterprises; that the payment in respect of purchase made from Domestic Aids was made in cash to Shri D.R. Goel and payment in respect of purchase from Summerking Enterprises was also made to Shri Goel through demand draft; that similarly Shri Arun Kumar Kakkar, Manager of M/s. Talwar Appliances, Lucknow, has deposed in his statement that the goods were purchased from M/s. Hindon Electricals (P) Ltd., M/s. Summerking Electricals (P) Ltd., Sarvottam Appliances, Domestic Aids and M/s. Sales India; that order for these firms was placed on D.R. Goel on phone at Maliwara; that payments were sent through bank drafts to D.R. Goel. He contended that this leaves no doubt regarding the ownership of all the units and the use of common brand name by all the units; that this also proves that in trade and business circle there was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... days only from 1-4-95 to 12-6-95). Regarding contention of the learned Advocate that entries in RGI for the relevant period are more than what figured in the testing record, the learned SDR contended that figures in RGI cannot be more than the figures shown in testing report; that the sale proceeds of goods cleared in clandestine manner was being deposited in the undisclosed Bank Account No. 1447 with Oriental Bank of Commerce. He also mentioned that a parallel Bill No. 49, dated 19-2-93 had been issued by Domestic Aids to M/s. Jaggi Electricals for sale of coolers; that on checking it was found that Bill No. 49, dated 12-2-93 had been issued to M/s. Arihant Steel for sale of Iron Sheet; that thus it is apparent that Domestic Aids had indulged in issuing parallel bills not disclosed to the Department. Finally the learned SDR mentioned that Shri D.R. Goel had hired goonda elements who attacked and beat the officers, snatched away most of the incriminating documents/records collected during the search; that two of the officers had to be rushed to the hospital and were admitted in ICU; that F.I.Rs had been lodged with Police and the matter is being examined by CID Meerut. 11. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court in the case of Renu Tandon v. UOI, 1993 (66) E.L.T. 375 (Raj) that the value of clearances of two units cannot be clubbed together and the two units cannot be treated as one unit merely because of proximity or relationship or the situation of the two factories or because there are some common employees unless there is a clear and specific evidence that there is a mutuality of business interest between the two units and that both have interest in the business of each other or they have common funding and financial flow back. The Appellate Tribunal has followed the said judgment in the case of D.M. Gears Pvt. Ltd. v. C.C.E., Delhi-1, 2002 (141) E.L.T. 514 (T) wherein the Tribunal did not uphold the clubbing of clearances as It has not been shown that M/s. DMG have entirely financed M/s. CAE s business and drawn all the profits of the business for themselves. 12. In the present matters, the main submissions of Revenue about the common funding and financial flow back is that funds in all units were provided by family members and friends and the unsecured loans were arranged by D.R. Goel. From the Summary of Financial arrangement given by the learned SDR, we observe that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the judgments cited by him is that a dummy unit is a unit, created by the main unit with a view to evade taxes and that the first main unit totally controls its activity in terms of profit sharing, management control, decision making, and acts of such nature. The dummy unit would be a mere facade one and in reality it is one and the same with the main unit. In this particular case, there is no such evidence at all, to show that such an arrangement is in existence. The mere fact of management control and a few directors being common and also by the fact that interest free loans are being given to the other units by the first unit, these factors, by itself, is no ground for holding them as dummy units and for ordering clubbing of all their clearances, and to deny the benefit of the exemption Notification. 13. The Tribunal has thus held that the mere fact of management control or of grant of interest free loans is not sufficient to come to the conclusion that the units are dummy. The Bank Account No. 1447 with Oriental Bank of Commerce, Ghaziabad which was not disclosed to the Department by Shri D.R. Goel, pertains to M/s. Sales India, a trading concern only. This bank account ..... X X X X Extracts X X X X X X X X Extracts X X X X
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