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2015 (11) TMI 1554 - CESTAT ALLAHABAD

2015 (11) TMI 1554 - CESTAT ALLAHABAD - 2016 (344) E.L.T. 965 (Tri. - All.) - Denial of small scale exemption to both units - clubbing of clearances - mutuality of interest in the business of each other - Held that:- there is no ban on the existence of more than one unit in a compound. Likewise, commonality of directors with stake in these several units is again not conclusive proof of mutuality of interest. Supply of goods from one to another, and even occasional financial accommodation, are no .....

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ue advantage of the benefits small scale exemption. This immunity has its origin in the accountability of a company to its shareholders and the status as an 'artificial person" which has neither greed nor the 'wherwithal to induige in a greedy conduct. - Crucial in any proceedings for clubbing is the existence of a principal and a dummy or dummies. The purpose of clubbing is to deny the independent existence of one or more entities on the ground that the subterfuge of physical segregation is .....

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y liability arises on the clubbed value of clearances to the extent that it exceeds the threshold prescribed for small scale exemption. The failure to identify the principal entity has, therefore, led to denial of this threshold exemption. Therefore, the entire proceedings from issue of notice till the impugned order to be tainted by lack of application of mind. - Decided in favour of appellant with consequential relief - E/3856 & 3857/06 - Final Order No. 70204-70205/2016 - Dated:- 18-11-2015 - .....

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nt to each other and M/S Alcochem Organics Pvt Ltd relies on M/s Ghaziabad Organics Ltd for a sizable quantity of its input viz. 'acetic acid'. The primary output of former is 'ethyl acetate' which requires alcohol as a second input - 'spirit' that is under regulatory control of the laws enacted by the state government. 3. Based on consumption patterns of 1999-2000 and 2000-2001, proceedings were initiated against M/S Alcochem Organics Pvt Ltd for unaccounted production o .....

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o had a common supervisory structure and that they have mutual financial interest in each other, that there is a free flow of acetic acid from M/s Ghaziabad Organics Ltd which is piped into M/S Alcochem Organics Pvt Ltd. Based on these allegations of mutuality of interest in the business of each other, the two were issued with notices for clubbing their clearance, for denying them the benefit of exemption under notification no. 9/98-CE and 9/99-CE and for demand duty ₹ 10,20,000/- from M/s .....

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y common order, upheld the findings relating to demand of small scale exemption but allowed the appeal of M/s Alcochem Organics Pvt Ltd in the matter of clandestine production. 6. Disputes relating to clubbing of clearance of units claiming the small scale exemption are galore and have travelled to this Tribunal, and beyond, on many occasions. Various decisions of the Tribunal were cited by Learned Counsel for appellants i.e. Poly Printers Vs. Commissioner of Central Excise, Delhi-I - [2002 (139 .....

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eriors Pvt. Ltd. Vs. Commissioner of Central Excise, Pune-l - [2001 (135) ELT 751 (Tri. - Mumbai)], Ruby Rubber Industries Ltd. Vs. Commissioner of Central Excise, Calcutta-Il- [2002 (149) ELT 970 (Tri.-Kolkata)], Northern India Rubber Mills vs. Collector of Central Excise, Chandigarh - [2000 (115) ELT 506 (Tribunal)] and that of the Hon'ble Supreme Court in Commissioner of Central Excise, New Delhi Vs. Modi Alkalies & Chemicals Ltd. - [2004 (171) ELT 155 (S.C.)]. 8. Having heard both si .....

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sive proof of mutuality of interest. Supply of goods from one to another, and even occasional financial accommodation, are not unusual features of business activities. Nor can common supervisory system be designated as out of the ordinary. 10. Both the lower authorities have, while concurring that each of these is not sufficient evidence to enable clubbing, held that the totality of circumstances would justify denial of small scale exemption to both units. 11. One of the fundamental aspects that .....

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