TMI Blog2013 (11) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod cannot be sustained – Decided in favour of Petitioner. - Appeal No. E/852 & 853/2004 - Final Order No. 40496 & 40497/2013 - Dated:- 4-11-2013 - Shri P.K. Das and Shri Mathew John, JJ. For the Appellant : Shri M. Saravanan, Chartered Accountant For the Respondent: Shri P. Arul, Superintendent (AR) JUDGEMENT Per Mathew John In this proceeding, two appeals are being considered together because both the appeals arise from the same impugned order. The two appellants M/s. Indian Spring Company ( ISC , for short) and M/s. Bharathi Machine Tools ( BMT , for short) claimed to be separately manufacturing springs and textile machine spares and were availing exemption under Notification No. 1/93-CE dated 28.8.1993, meant for small scale units, separately. Revenue made out a case that these two appellants were not having independent manufacturing facilities to manufacture the said final products and they had just split the total turnover in the names of the two units and hence they were not eligible independently for exemption under notification 1/93-CE and exemption had to be reckoned as if M/s ISC had manufactured and cleared the goods. The period of demand is 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hand spring winding machine - 2 Nos. (10) No. 5 Ply press - 1 No. (11) No. 3 Ply press - 1 No. (12) Press brake - 1 No. (13) Zinc plating unit - 1 No. (14) Generator - 1 No. 5. A statement was recorded from Sri. S.Kumarasamy on 13.3.96. In his statement, Shri S. Kumarasamy has stated that he was the proprietor of M/s. ISC; that they manufacture springs and textile machinery spares; that M/s. BMT was functioning at M/s. BMT, 37, Sathy Road adjacent to M/s. ISC, 38, Sathy Street, Coimbatore; that there was a common passage between the two units; that Smt. Meenakshi, his wife was the Proprietrix of M/s. BMT; that he was the power of attorney holder for M/s. BMT that he looked after the day to day affairs of both companies; that they manufacture springs and textile machinery spares at M/s. BMT; that the springs manufactured by M/s. BMT were being cleared through the invoice of M/s. ISC; that apart from the two hand winding machines available at M/s. BMT no other hand winding machine was available in any of their units; that the work relating to the manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned registers indicated transfer of funds between M/s. ISC and M/s. BMT to meet day to day expenses without charging interest. Further, M/s. ISC incurred expenses towards maintenance of building as mentioned in book of accounts. 11. Since the Revenue noticed that neither of the units had independent set of machineries to manufacture the final products and they employed common labour, utilized common infrastructure, building and common machinery to manufacture completely finished and marketable goods under total management of Shri Kumarasamy, proprietor of ISC and power of attorney to M/s. BMT. It further appeared that Smt. Meenakshi did not have any control in day-to-day affairs of the company. Therefore, it appeared that both the units were engaged in the manufacture of springs and textile machinery machineries jointly and the production was distributed between two units on record to avail the benefit of Notification No. 1/93-CE dated 28.3.93. It appeared that M/s. ISC had not registered itself with the Central Excise Department and had not followed any procedure under Central Excise Act. Therefore, ISC and BMT were issued with show-cause notices asking them to show cause as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Excise Department as claimed in the grounds of appeal. He relied on the decision of the Tribunal in the case of Bentex Industries Vs. CCE- 2003 (151) ELT 695 wherein it was held that extended period cannot be invoked as both the units were registered with the Department after disclosing their existence and place of working. He contends that since all the material facts were disclosed to the Department by both the units and they were submitting periodical statements extended period of time cannot be invoked. He submits that BMT was duly registered with the Superintendent of Central Excise, Range IIA Coimbatore as evidenced by License in Form L4 No.4/Ch.84/91 dated 30.4.1991 and certificate of registration No. 8/1992 dated 3.7.1992. The licence as well as certificate of registration was issued to Smt. K. Meenakshi wife of S. Kumarasamy. They have given various evidences as under:- Declarations filed for the year Serial No. allotted by Department Date of acknowledgement 1986 87 3.2.1987 1987 -88 3/86-87 6.4.1987 1988 -89 2/88-89 Assistant Commissioners letter C. No. IV/16/149/8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om one or more factories will be taken together for deciding the value of clearances eligible for the exemption. Secondly the value of clearances from the same factory by different manufacturers will also be taken together to consider the exemption limits. That is to say a manufacturer could not have availed exemption by splitting his manufacturing activity under different factories and also a factory could not be given to use by different manufacturers for each manufacturer to claim exemption limit separately in a financial year. Such conditions were required to ensure that the exemption is limited only to genuine cases and not cases of artificial splitting of the factory or splitting of the period of use of a factory in the same financial year. He invites our attention to clauses 2 and 3 of Notification 1/93-CE reading as under:- 2. The aggregate value of clearances of the specified goods for home consumption in a financial year - (a) by a manufacturer from one or more factories; or (b) from a factory by one or more manufacturers, - (i) under sub-clause (a) of clause (1) and clause (2) of paragraph 1 taken together shall not exceed rupees thirty lakhs; (ii) under sub-cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces would not come to surface. Neither, mere filing of RT12 returns, obtaining of Central Excise Registration Certificate by M/s. BMT nor filing of declarations filed by M/s. ISC could come to their rescue as there had been deliberate planning on their part to conceal the total interrelated atmosphere as found out after thorough investigation made by the department. Taking relevance from the decision of the Hon ble Tribunal in the case of M/s. Alembic Glass Industries Vs. CCE 1994 (73) ELT 579, I hold that the visit of Central Excise Audit officers to one of the units does not mean that the entire activities of both the units having special interrelationships and the circumstances which establish the fagade nature of one of the units brought out in the investigation was within the knowledge of the department. Hence I have no hesitation to conclude that the contentions of the noticee on this score has no merit for consideration, since the noticee is guilty of suppression of material facts, giving false and separate declaration seeking exemption from licencing control/registration that there are no other factory wherein they have proprietary interest with deliberate intent to evade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssince those dates. However the returns filed with central excise department cannot be brushed aside. It is difficult to accept the contention of Revenue that when M/s BMI was audited for 1988-89 and 1989-90 the existence of the two units side by side could not have been noticed. Revenue had accepted subsequent returns by BMI and declarations by ISC without any questions being raised. The argument adopted by the lower authorities that only BMI had registration and ISC was only filing declaration as a small scale unit having turnover within the fully exempted limit cannot change the position because at least BMI was registered which implied visits by officers at least on an annual basis and being regularly audited as evidenced by papers produced by the appellant.The objection that is being raised now by Revenue is of a type which could be noticed during routine visits and audit of one unit itself. The adjudicating authority had relied on the observation of the Tribunal in Alembic Glass Industries Vs. CCE -1994 (73) ELT 579. But in that case the relevant information was about share holding pattern in two companies by different persons. Here the relevant fact is one of availability of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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