TMI Blog2017 (3) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... Authorities, Income Tax, State Sales Tax Department and even under Factories Act. Further it is not a case where the allegation of the revenue was that M/s. A.s. Processors is a dummy unit - it emerges that the department has not brought on record sufficient evidence to sustain the charge of financial flow back from one unit to other and whatever the facts the department has brought on record are normal commercial transactions and cannot be termed as a case of financial flow back in any case - clubbing of clearances of two private limited companies i.e. M/s S.K. Sacks Pvt. Ltd., and M/s. A.S. Processors (P) Ltd., Amritsar is not sustainable. Whether the extended period of limitation is invokable or not? - Held that: - it is clear that the said is private limited company does not own any other factory in their own name, therefore, there is nothing wrong in the said declaration and the said declaration cannot be the basis for invoking the extended period of limitation. As all the facts were in the knowledge of the department, therefore, the show cause notice cannot be issued by invoking the extended period of limitation - the extended period of limitation is not invokable. App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y commercial transactions. However, closer look at them proves the point of investigation beyond was beyond doubt in fact they have devised an ingenious financial arrangement together. Therefore, they have financial interdependence and common funding/ procurement of raw materials. M/s.A.S. Processors purchased the finished goods from the respondents No.1 and thereafter made the payments of raw material purchased by the respondents to the raw material suppliers of respondent No.1 against purchases of finished goods by them from the respondent No.1. He further submits that the Commissioner (Appeals) has failed to appreciate that the premises occupied by both the companies belonged to one Shri Arvinder Pal Singh who was one of the directors in both the companies and managed both the companies. He submits that the Commissioner (Appeals) has failed in placing reliance on the correspondence pertaining to the price declaration and job declaration and holding that the matter was in the knowledge of the department, hence the extended period of limitation was not invokable. He also submits that the Commissioner (Appeals) has failed to appreciate that on 1.4.1994 wherein they have made declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment and the same has been dealt by the Commissioner (Appeals) in detail in the impugned order. 7. Apart from the findings of the Commissioner (Appeals), he submits that: (i) both companies were registered under Central Excise during 1994 and 1995, (ii) classification list under Rule 173B was filed in which the job worker name was mentioned along with the manufacturing process, (iii) declaration under Rule 173C was duly filed, (iv) on different occasions audits were conducted and Central Excise staff was also visited the premises, (v) show cause notices were issued and orders were passed in which name of both companies were appearing, (vi) site plan of both companies were given to the department but no objection was raised (vii) only Shri Arvinder Pal Singh was dealing with the department for both companies. 8. As all the facts were in the knowledge of the department, the extended period limitation is not invokakble. 9. Heard the parties and considered the submissions. 10. On careful consideration of the submissions made by both sides, we find that the issues emerged before us is: (I) Whether the clearances made by the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f one lot and the manufacturer being only one entity, there will be no question of distributing the exemption. (iv) Whether or not in the expression 'by or on behalf of a manufacturer' the expression 'from one or more factories' is added, the effect would be the same if the manufacturer is also the same. The expression, 'one or more factories' only further clarifies that whether the factory is one or more, it is the clearances by or on behalf of the same manufacturer which is to be taken into consideration for purpose of interpreting the exemption notification. 14. We hold that both companies are separate units and clearances of both the units cannot be clubbed together. 15. The allegation against the respondents is that both units have been managed by Shri Arvinder Pal Singh, the same cannot be a ground for clubbing clearance of both the units in view of the decision of the Tribunal in the case of Superior Products which has been affirmed by the Hon ble Apex Court. 16. We further find that next allegation is that in some cases M/s. A.S.Processors Pvt.Ltd. made payment directly to the suppliers of M/s.S.K.Sacks Pvt.Ltd. We find that as M/s.S.k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Both the companies have common office. (vi) That sh. Arvinder Pal Singh and his proprietor concern i.e. M/s A.P. Singh and Brothers have been advancing interest free loans to the appellants No. 1. This suggest that the appellants No. 1 and M/s. A.S. processors, Amritsar in fact belonged to same manufacturer. Sh. Arvinder Pal Singh is exercising administrative and financial control in both the units for their mutual and common benefit resulting in unity of interest. On the basis of above allegations, the clearances of M/s S.K. Sacks Pvt. Ltd., (appellants No. 1) and M/s. A.S. Processors, Amritsar have been clubbed and as after clubbing their clearances exceeding the prescribed limit the benefit of SSI exemption has been denied to the appellants No. 1. Besides, another allegation is that the appellants No. 1 has sold his goods at a lower rate to M/s A.S. Processors, Amritsar as both the units are under the same management and one manufacturer, the sale price of M/s. A.S. Processors, Amritsar should be the assessable value on which the appellants No. 1 was required to discharge the duty. Accordingly the duty has been sought to be recovered on the additional value charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal that when the units have separate registration with the Central Excise Department/Income-Tax Authorites, permission to do job work on behalf of other undertaking, factors like one supervisor working for both the units and one unit have certain financial dealings for the other unit cannot be a basis for clubbing of clearances of two units. The Hon ble Tribunal in a majority of decisions has held that :- Value of clearances Clubbing of Separate registration of units with Central Excise Department, Sales Tax and Income-Tax Authorities Regular returns filed by both units and assessed Permission to job work on behalf of other undertaking for certain processes granted under Rule 57F(3) of erstwhile Central Excise Rules, 1944 Factors of one supervisor working for both units and one unit doing certain finishing processes for another unit, not a basis for clubbing the clearances of the two units Notifications No. 1/93-C.E. Further in case of M/s. L.D. Industries Vs. CCE Pune, reported as 2003 (157)ELT459 (Tri. Del.), the Hon ble Tribunal has held that the limited companies whether public or private are to be considered as separate distinct from share holders and each such lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustries and LR Industries for the purpose of assessment. Similar view was taken by the Hon ble Tribunal in case of M/s. Tapsya Steels (Pvt.) Ltd., Vs. CCE Meerut reported as 2004(174)ELT108(Tri. Del.) and reliance was placed in case of M/s. L.D. Industries Vs. CCE-2003(157)ELT459(Tri.) also referred to above. It was held by the Hon ble tribunal that in light of Board s Circular dated 29.51992 wherein it has been clarified that limited companies whether Public or Private are separate entities and each company is a manufacturer by itself and will be entitled separate exemption, separate exemption shall be available as the department cannot argue against Board s Circular. On the issue of clubbing of clearance of two factories, I find that in case of M/s Rollataners Ltd., Vs. CCE Del. 2004 (170) ELT 257 (SC), THE Hon ble Supreme Court has held that simply because of the fact that both the factories are in the same premises that does not lead to inference that both the factories are same. The relevant para 7 of the judgment is reproduced below:- 7. There is no two opinion that both the factories are near to each other and it is owned by the same owner and the common balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... occasions receipt of raw material, using one brand name by both units with little variation, etc., not sufficient to club the clearances of both units Demand of duty from both the companies itself enough to prove that department accepted the existence of two independent units otherwise duty was to be demanded from one main unit Both the companies having their separate registration numbers for the purpose of labour, industrial law, provident fund, income-tax, State and Central Excise and Sales Tax, Department cannot plea that only one company is main while the other is a dummy unit Section 2(f) of Central Excise Act, 1944. The ratio of this case law squarely covers the instant case as M/s. S.K. Sacks Pvt. Ltd. (the appellants No. 1) and M/s A.S. Processors are two Private Limited companies separately registered with Excise Authorities, Income Tax, State Sales Tax Department and even under Factories Act. Further it is not a case where the allegation of the revenue was that M/s. A.s. Processors is a dummy unit. In view of above discussions and ratio of the referred case laws, it emerges that the department has not brought on record sufficient evidence to sustain the charge of fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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