TMI Blog2015 (11) TMI 1162X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority as and when Show Cause Notice is issued in terms of the orders of the Tribunal. The authority concerned is directed to issue show cause notice to allthe parties, afford them an opportunity of hearing and pass appropriate orders afresh, on merits and in accordance with law. - Matter remanded back. - C.M.A. No: 1865 of 2010 - - - Dated:- 23-7-2015 - Mr. R. Sudhakar And Ms. K.B.K. Vasuki, JJ For the Petitioner : M/s. S. Xavier Felix For the Respondent : Mr. J. Shankarraman ORDER R. Sudhakar, J. Aggrieved by the order of the Tribunal in partly allowing the appeal filed by the assessee, the Revenue/appellant is before this Court by filing the present appeal. This appeal was admitted on 23.07.2010 on the following substantial questions of law :- 1. Whether issuance of separate show cause notice is essential to the dummy units of the 1st respondent / assessee while clubbing the value of the clearances of the said dummy units with that of the assessee / 1st respondent against whom admittedly proceedings commenced with issuance of show cause notice only ? and 2. Whether or not the order of the Tribunal in remitting the matter is a non-sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 9,00,000/- (Rupees Nine lakhs only) already paid by M/s. Urbane Industries and adjust the same towards the duty determined under Sl. No. 1 above. 4. I appropriate an amount of ₹ 1,54,296/- (Rupees One lakh, fifty four thousand, three hundred and ninety six only) already paid by M/s.Urbane Industries, vide TR 6 Challan dt.17.2.2001 and adjust the same towards the duty determined under Sl. No. 2 above. 5. I impose a penalty of ₹ 51,29,017/- (Rupees Fifty one lakhs, twenty nine thousand and seventeen only) on M/s. Urbane Industries under the provisions of Section 11 AC of the Central Excise Act, 1944. 6. I impose a penalty of ₹ 1,54,396/- (Rupees One lakh, fifty four thousand, three hundred and ninety six only) on M/s.Urbane Industries under the provisions of the Rule 57 U of the erstwhile Central Excise Rules, 1944. 7. I impose a penalty of ₹ 10,00,000/- (Rupees Ten Lakhs only) on Shri. R. Krishna Mohan, Managing Partner of M/s. Urbane Industries, under the provisions of Rule 209A of erstwhile Central Excise Rules, 1944. 3. On appeal, the Tribunal, by a two page order, remanded the matter for issuance of fresh show cause notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CC had no infrastructure whatsoever, to engage themselves in manufacture of the said goods. 17.1 Now coming to the status of CTGC, as seen from records, this unit is situated at No. 9, SIDCO Industrial Estate, Chennai 98. M/s. UI have in their submissions, claimed that CTGC is a private limited company with Smt.R.Sasikala [wife of Shri Krishna Mohan] and her brother Shri Vijaya Kumar as Directors and they are a separate entity legally eligible to avial separate exemptions. However the facts available on records, as listed below, provides an altogether different scenario: As per lease agreement dt.1.11.98 entered into between one Mrs.Polammal Naidu [Proprietrix] of M/s. Kuptha Industrial Corporation, No: 9, Sidco Industrial Estate, Chennai 98 and M/s.Urbane Industries, No.48, SIDCO Industrial Estate, Chennai 98, the premises used by CTGC has been leased to M/s. UI against specific considerations. [Annexure A to the SCN - Sl. No.18]. Shri.C. Vijaya Kumar, of CTGC had confirmed that no advance deposits or monthly rental payments have been made by them to M/s.UI [Mahazar dt.26.9.2000 - Annexure A to the SCN - Sl. No. 19] Shri. R. Krishna Mohan, in his statement reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the ld. Collector. We are not satisfied with the said findings as Managerial control is different from money flow back, management control and profit sharing. A dummy unit is a unit, which is not in existence in reality, but it is merely created on paper only. In other words, the physical existence of such a unit is not to be found in terms of investment of capital, machinery and labour. The unit which creates such a dummy unit, utilise the dummy unit for the purpose of tax evasion. Therefore, the courts have clearly distinguished on facts each of the cases and have now settled the issue by holding that mere evidence of Directors being common or utilisation of telephone, labour or machinery by itself is not a ground to consider an unit as a dummy unit of the other. It has been held that even if a unit is in existence, but if it is totally controlled in terms of money flow back, profit sharing, management control, and it had been created with a view to evade taxes by a series of acts of omission and commission, by manipulation of accounts and records then in such an eventuality, the clearances of a dummy unit can be clubbed. As rightly pointed out by the ld. senior advocate there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals. The impugned order is set aside and appeals allowed. 9. In the case of Ogesh Industries vs. Collector of Central Excise, Kanpur, the Tribunal went on to hold that, 3. The first argument advanced by Shri Gujral, ld. Advocate, was that M/s. Gore Industries were a separate corporate entity from M/s. Ogesh Industries. He has shown that in his order, the Dy. Collector has observed that he had no reason to disbelieve that these two corporate entities were separate and distinct. It is his claim that no Panchnama was conducted in the premises of M/s. Gore Industries. In the absence of Panchnama, there was no basis to the observation of the Dy. Collector that the officers on a visit, found no machines, no raw materials or other evidence to establish that no manufacture could be undertaken therein. He submitted that the attendance records would show that there were workers working in the factory of M/s. Gore Industries. He stated that the work of pressing the sheets in the form of locks was done by hand. Other operations were got done on job work basis from M/s. Ogesh as well as from other concerns, referred in the statement of Shri Raizada, partner of M/s. Gore Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeded on the basis that the aggregate value of clearances of excisable goods effected by the appellants and all the units of M/s.Shree Baidyanath Ayurved Bhawan taken together exceeds the ceiling limit on value of clearances prescribed in the SSI exemption Notifications. Therefore, the ratio of the above cited decisions is applicable on all fours to the present case and following the same, we set aside the impugned order as bad in law on this preliminary point alone without going into the merits of the case. 11. In the decision reported in K.R. Balachandran vs. Commissioner of Central Excise, Coimbatore, - reported in 2003 (151) E.L.T. 68, it was held by the Tribunal that, 14. We have carefully considered the submissions made by both the sides and have perused the enormous paper book and the defence filed by the appellant. The main case against the appellant is that they were manufacturing pressure pans, pressure cookers with the brand name of Seetha. That they were using the brand name of Rama Industries and thus they were ineligible for SSI exemption and as a consequence the demands have been raised to club the clearances of both Meera Industries and Rama Industri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... III has also been produced. RG 1 register showing register of parts of daily stock account of both the units have also been produced. The Superintendent of Central Excise had issued summons to both the units separately on 7-3-97 calling upon them to produce the various registers which had been done. The Deputy Commercial Tax Officer has also certified the premises of both the units and has given inspection of Form D 1 of the Commercial Tax Office Act which has also been produced to show the existence of functioning of two separate units. Various notices received from the Deputy Commercial Tax Officer has also been produced. Rama Industries has also compounded the offences and compounding order passed by Deputy Commercial Tax Officer have also been produced. Correspondences between Rama Industries and Bureau of Indian Standards and a certificate from the Department of Commercial Tax has also been produced to show the existence of individual units. The financial balance sheet of both the units have been audited and have been accepted by the Income-tax Department. Both the units have huge turn over and from the records produced it is very clear that Rama Industries was in existence a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istration have been checked by the Inspectors, Superintendents and Assistant Commissioners of Central Excise. Therefore it follows that the department had full knowledge of the existence of Rama Industries and in that view of the matter, suppression of facts for invoking larger period is not sustainable and the demands are time-barred and requires to be set aside on this ground also. In view of the fact that the department has not issued show cause notice to Rama Industries and has proceeded to hold that Meera and Rama Industries to be one and the same and also that Meera Industries has used the brand name of Rama Industries making them ineligible for SSI exemption is bad in law. Therefore, on this ground alone the impugned order is set aside and appeal allowed besides the other ground of time-bar and also for insufficiency of evidence to uphold the charges of evasion of duty in the matter. Appeals allowed. ( emphasis supplied ) 12. In view of such findings and in the light of the decision of the Tribunal in the aforesaid matters, especially in Ogesh Industries and Ramsay Pharmaceuticals, it is clear that the consistent view of the Tribunals is that if there is an element o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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