TMI Blog2015 (5) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... only if those units are owned by the same person. In this case, the evidence relied upon by the Department, at the most indicates the mutuality of interest, but it does not prove that the appellant company and MBPL. are owned by the same person. Moreover, since there is no shareholding of the appellant company in MBPL, on the basis of individual shareholding of the Directors of the appellant company in MBPL, the latter cannot be treated as subsidiary company of appellant company. Similarly, the registered offices of both the companies being at the same address or that plant and machinery of one company having been pledged to the Bank as a security for the loan sanctioned by the bank to the another, by themselves cannot be treated as the ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at of in the holding company of MBPL and hence their clearances are to be clubbed and if the clearances of the two units are clubbed, the appellant would not be eligible for SSI exemption. It is on this basis that the duty demand of ₹ 18,63,830/- has been made against the appellant for the period from 2002-2003 to 2004-05 vide show cause notice dated 15.07.2005. The S.C.N. besides the duty demand, also sought recovery of interest on this duty under section 11 AB and also sought imposition of penalty on the appellant under section 11AC on them. Basis of the Department's allegation against the appellant company that they fully own and control the other unit MBPL is that the Directors of the appellant company have 53.85% share holdin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this ground the clearances of the two units are sought to be clubbed, that the appellant for being treated as holding company of MBPL must be, as per the Provisions of section 4 (1) (b) (ii) of the Companies Act, 1956, must hold more than half in nominal value of the equity share capital of MBPL, that in this case, this condition is not satisfied, as there is no share holding of the appellant company in MBPL and the shares held by the Directors of M/s.BSBK in their individual capacity in MBPL cannot be treated as the share holding of appellant company in MBPL, that besides this, the other conditions of treating the two company, as holding companies and subsidiary company, as prescribed in section 4 of the Companies Act are not satisfie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded the impugned order by reiterating the findings of the Commissioner (Appeals) in it. He also cited the judgment of the Apex Court in the case of CCE, New Delhi vs. Modi Alkalies Chemicals Ltd. reported in 2004 (171) ELT 155 (S.C.) wherein, it was held that when a company has pervasive financial and management control over the other and their manufacturing and marketing operations are interdependent, the clearances of the two units have to be clubbed for the purpose of SSI exemption. Besides this, he also relied upon the Tribunal's judgment in the case of Heemanshu Traders vs. CCE, Surat reported in 2003 (153) ELT 119 (Tri.-Del.) and also in the case of Harish Mehra vs. Collector of Central Excise, Chandigarh reported in 2002 (147) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Shri Rohit Kumar; (4) 11 equity shareholders of the appellant company have shareholding in MBPL and (5) As per the annual reports of MBPL for the year 2001-02 and subsequent financial years, its plant and machinery had been mortgaged to a Bank as security for working capital loan for appellant company and also as per annual report of the appellant company M/s.BSBK for the same years, their plant and machinery has been mortgaged to a bank as security for the working capital limits sanctioned by the Bank to MBPL. On the basis of above, it has been alleged that two Company's have mutual interest in each other's business and are owned by the same person. 7. In our view, when the department seeks to club the clearances of appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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