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M/s. Genesis Instrument Company, M/s. Genesis Power Equipment Pvt. Ltd. (Now known as Genesis Power Equipment Ltd.) Shri V.U. Thambi, Director Versus Commissioner of Central Excise

SSI Exemption - Clubbing of clearances - dummy units - benefit of exemption under N/N. 8/2003 - Held that: - evidence found that there is a financial flow back between the two units and both the units are controlled by the same person. There is a specific evidence of financial flow from one entity to another entity and both the entities are being controlled by two Directors viz., S/Shri V.S. Manohar and V.U. Thambi. If the corporate veil is lifted then it can be revealed that both the entities a .....

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nterests of justice. - Invocation of extended period of limitation - Held that: - extended period has been rightly invoked by the Department as the Director has concealed the true facts from the Department with intent to evade payment of duty and the said Director whose statement was recorded and he has admitted the factum of flow of funds between the two units is personally responsible and the penalty has rightly been imposed on him. - Demand of duty, interest and penalty confirmed - ap .....

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and therefore all the three appeals are disposed of by this common order. Briefly the case of the appellant is that the appellant is a partnership firm with Shri V.S. Manohar and V.U Thambi as partners and are engaged in the manufacture of Uninterrupted Power Supply (UPS) of different capacities falling under chapter 8543.90. M/s. Genesis Power Equipment Ltd. was incorporated on 12.01.1996 with Shri V.S. Manohar and V.U Thambi as Directors and both are registered under the Central Excise. Intel .....

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ve Hundred and Seven only) was proposed to be demanded. Thereafter the Additional Commissioner passed the Order-in-Original dated 11.10.2002 and confirmed the demand and ordered clubbing of clearances and duty demand of ₹ 2,54,375/- (Rupees Two Lakhs Fifty Four Thousand Three Hundred and Seventy Five only) was confirmed and penalty of equal sum was imposed under Section 11AC along with demand of interest under Section 11AB. In addition penalty of ₹ 20,000/- (Rupees Twenty Thousand on .....

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gned order is not sustainable in law as the learned Commissioner has decided the case on the basis of investigation report and the show-cause notice and no independent investigation was conducted and there was no sufficient evidence to establish the charge of clubbing. He further submitted that the Additional Commissioner has relied upon the statement of V.U. Thambi with regard to transfer of funds between the two accounts and confirmed the demand on that basis which is unjust and illegal. He fu .....

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ment Commission to hold that the appellant had approached the Settlement Commission and hence they have accepted the liability and therefore they have to pay the duty. 4. On the other hand the learned AR defended the impugned order by submitting that there was sufficient evidence to establish both the entities are controlled by two persons who are its Directors. He further submitted that the partnership firm and the private company have only two Directors who were in-charge of the affairs of the .....

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rguments raised by the appellant in support of their submissions. 5. We have considered the submissions of both the parties and we find that in this case a show-cause notice was issued by the Director General of Central Excise Intelligence on the basis of evidence that there is a financial flow back between the two units and both the units are controlled by the same person. We also find that in the impugned order the learned Commissioner has considered all the submissions raised by the appellant .....

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d by the same persons. The partners of M/s. Genesis Instrument Company S/Shri V.S. Manohar and V.U. Thambi are also Directors of the Private Limited Company. The business activities of both these units were looked after by the same persons. Both the units are in the same premises. Both the units manufacture the same product namely UPS. There is evidence to show that the Indian Overseas Bank, with whom they had account had transferred the amount from one unit to another and vice versa. The adjust .....

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pendent is not correct. After the show-cause notice was issued, the appellants approached the Settlement Commission and accepted the duty liability in full as indicated in the show-cause notice. They could not find fault with the adjudicating authority for using these facts in the adjudication order. From the facts of the case, it is very clear that the units have been floated with the intention of availing undue Small Scale Industry benefits. The Hon ble Supreme Court s decision in 1998 (9) E.L .....

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rder in TOTO. 5.1. Further we also find that there is a specific evidence of financial flow from one entity to another entity and both the entities are being controlled by two Directors viz., S/Shri V.S. Manohar and V.U. Thambi. We also find that keeping in view the facts and circumstances, if we lift the corporate veil then we find that both the entities are one and the same and therefore there is nothing wrong in clubbing the clearances of both the units for the purpose of computation of aggre .....

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