9911796707
TMI Blog1993 (5) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 4,77,757.85, 4,63,663.74 and ₹ 3,99,279.00 respectively has been made from appellants M/s. Supreme Engineering Works, M/s. Superflex Engineering Polymars Ltd. and Super Plating & Engineering Corporation. 2. The brief facts as in Department's case are as follows :- Proceedings were initiated against the appellants by Show Cause Notice when on the basis of the intelligence collected, to the effect that M/s. Superflex Engineering Polymers Ltd., M/s. Supreme Engineering Works and M/s. Super Plating & Engineering Corporation are evading Central Excise duty in respect of goods manufactured by them viz. Bare rubber hoses manufactured by M/s. Superflex and Rubber hose assemblies manufactured by M/s. Supreme and M/s. Super Plating, by fabricating their aggregate turnover and availing separately S.S.I. exemption benefits, the officers of Spl. Invest. Hqrs. Pune searched the office premises pertaining to all the three units at 139, Shaniwar Peth, Pune-30 on 26-8-1987 and recovered certain incriminating documents pertaining to all the three units. Further certain records/documents were also called under summons on 26-8-1987 and the statements of the Directors/partners of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mises at Bhosari (Plot No. 187 MIDC Bhosari). The vacated premises is now being used by M/s. Supreme. M/s. Superflex has been incorporated by the partners of M/s. Supreme and Supreme Plating as a Pvt. Ltd. firm in the year 1978 commenced their production of bare rubber hoses in the late 1980, at Talegaon works. It has been admitted by the Directors and partners of all the units in their respective statements dated 26-8-1987 and 4-9-1987, that since commencement of production of rubber hoses by Superflex. M/s. Super Plating, purchase 100% of their requirement of bare hoses from Superflex and M/s. Supreme purchase more than 80%. The records also confirm this aspect and in case of M/s. Supreme it is observed that rest 20% is mostly procured from imports. Thus, both the units for their requirement of bare rubber hoses exclusively depend upon M/s. Superflex. 3. Shri K.P. Joshi, learned Counsel alongwith Shri M.R. Mhaiskar, learned Consultant appeared for the appellants and contended that the Collector was in error in clubbing the clearances of the three appellants because the units had come into existence at various points of time. M/s. Superflex was established in 1978, Supreme E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t different firms are to be treated as different manufacturers and that if there are two firms with only some of the partners in common each firm is entitled to separate exemption limit. The learned Counsel contended that though the Collector in his order had held that the 3 units had to be considered as one entity, yet there is no finding therein as to which of the units is the real manufacturer on whom duty liability is to be fastened, but the duty has been demanded from all the appellants. It was, therefore, pleaded that the appeals be allowed. 4. Learned Departmental Representative Shri L.N. Murthy referred to the plethora of evidence on which the Collector's order is based clearly showing that there was common control of production, income, expenditure and sales among the units and definite inter flow of finances of non-commercial character justifying the clubbing of the value of their clearances to deny the exemption under Notification No. 175/86. The Collector's order the learned Departmental Representative pointed out is not based merely on the partners being common but has shown a cumulative circumstances of close financial link up and control of production in all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total debts of ₹ 7.16 lakhs showing the loss of ₹ 0.81 lakhs. Simultaneously profit and credit position as on 31-7-1985 were adjusted and worked out as follows. Profit was shown as ₹ 4,67,086.12 and credits as ₹ 6,58,302.81. However, in order to reduce the profit the creditors position was inflated from ₹ 6,58,302.81 to ₹ 3,25,000.00 by making adjustment in the original position. Hence the original profit of ₹ 4,67,086.12 was reduced by ₹ 3,25,000.00 to bring it to ₹ 1,42,086.12. This evidence has been brought on record and has not been refuted by the assessees which shows that accounts have been manipulated to keep the profits at pre-determined levels. It is significant to note that M/s. Superflex are virtually the exclusive creditors of M/s. Super Plating. Another instance is where M/s. Supreme has shown `profit to be shown' in one of their work-sheet dated 31-12-1986, which was brought on record as evidence, by adjusting the gross profit which was 56% i.e. ₹ 15.75 lakhs, and not profit was arrived at ₹ 9.38 lakhs (34.65%). But actual profit was proposed to be shown as ₹ 1.65 lakhs (i.e. 13% only) by adjusti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve in this case the Collector has brought out and relied upon ample evidence on this aspect to show that the three units are acting in tandem. He has, therefore, aptly relied upon the Tribunal decision in the case of Bhagwan Das Kanodia & Others, v. Collector of Central Excise, Bombay, reported in 1987 (32) E.L.T. 204 wherefrom he has quoted that, "to establish the case of fastening duty liability, something more would be required, for example, the existence of a person or a body of persons, who in reality, owned, directed and controlled the production in the four separate units which would show that the four units were only a facade to avail of the exemption". I find that the ratio of this judgment holds good in the present case as well since the group of persons consisting of two brothers and their wives are the controlling factors in all the three units." This conclusion, based on ample evidence regarding common control of production and sales among the units, having special financial relationship shown to be not on a principal to principal basis, is well founded and is upheld. The Collector has also very fairly held that the Department cannot allege suppression of facts by ..... 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