TMI Blog2001 (11) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... led in the factory premises of M/s. Jindal Packaging which were supplying power not only to that factory, but also to M/s. Plas Packaging. The records of all the units were found kept in a common office in the premises of M/s. Jindal Packaging. The plant and machineries required for the manufacture of plastic laminates were found installed in the factory premises of appellant No. 1. The partners of appellant No. 1 and of M/s. Jindal Packaging and M/s. Plas Packaging were also found to be inter-se related. On scrutiny of the records, it also revealed that there has been financial transactions between these firms without charging any interest during the years 94-95 and 95-96 which were not on principal to principal basis. It was also noticed by the Officers of the Central Excise that in fact the appellants had deliberately floated the manufacturing units in the name of M/s. Jindal Packaging and M/s. Plas Packaging, in order to avail SSI benefit. The resumed documents also showed that the appellants had indulged in clandestine removal of the goods and also failed to pay duty on the job work carried out by them for others. Accordingly, show cause notice dated 30-8-99 was served on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n imposed on the other appellants by the Commissioner on three grounds, (i) the clearances by appellant No. 1 were liable to be clubbed with those of M/s. Jindal Packaging and M/s. Plas Packaging; (ii) they had indulged in clandestine manufacture and clearances of goods during the period in question (Oct., 94 to July, 99) without payment of duty; (iii) they had failed to pay duty on job work charges collected by them, from other parties. 9.We proceed to discuss these grounds one by one. For clubbing, the circumstances referred to in the show cause notice and relied upon by the Commissioner broadly were these; (i) the partners of the appellant No. 1 and of M/s. Jindal Packaging and M/s. Plas Packaging were inter-se co-related; (ii) they had inter-se money transactions between them; (iii) the two generator sets installed in the unit of M/s. Jindal Packaging were found supplying electricity to the unit M/s. Plas Packaging at the time of checking by the Central Excise Officers on 6-8-97 and records of all the units were also found lying in the office of the unit of M/s. Jindal Packaging. 10.The inter-se relationship of all the partners of above referred three units i.e. M/s. Poly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tedly, all the three units were not started at one time or in the same year. Rather, they were started in different years. The unit M/s. Poly Printers (appellant No. 1) was set up in the year 1980, while M/s. Jindal Packaging unit started business in 1990 and M/s. Plas Packaging came into existence in the year 1991. There is not an iota of evidence on record to suggest if M/s. Poly Printers (appellant No. 1) invested entire capital in the establishment of other two units. There is also no evidence to infer that there was sharing of profits and losses between all the units or that there was flow back of money from one unit to another. Rather it is quite evident that all the units maintained independent books of accounts such as ledger and cash books and whatever money transactions took place between them, they reflected in their respect books of account. No hidden or under the table money transactions between them so as to warrant infererence that they constituted only one unit, had been brought on record. 13.Similarly there is no evidence on record to suggest if all the three units had common supplier of raw material and buyer of their final products. No evidence has also been br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of the Department was that interest free loans were being given without time schedule for re-payment, and that the other units were totally dependent on the main unit and even some of the directors were common and there was a common managerial control. But in paragraph-4 of the judgment, the Tribunal observed as follows : - "The department had proceeded on the basis of the annual report of M/s. Alpha Toyo Ltd. It is noted therefrom about the interest free loans given by them to other four units and have come to the conclusion that they are related persons and that the four units are dummy ones, and as there is a common managerial control, hence the benefit of exemption under Notification No. 175/86-C.E., dated 1-3-1986 is denied to them. Therefore, the clearances at all the five units have been clubbed. We have considered the grounds and the finding given by the learned 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrol was being exercised by only one unit over the others and all the units had common employees, common telephone and joint electricity connection for running their factories, had been made in the notice. In the impugned order, the learned Commissioner had also not recorded definite findings that units M/s. Jindal Packaging and M/s. Plas Packaging, were dummy units. Therefore, the law laid down in all the above referred cases, relied upon by the counsel, very aptly applies to the case of the appellants. 17.In the face of the facts, circumstances and discussion made above, the clearances of all the units i.e. appellant No. 1 M/s. Poly Printers and of M/s. Jindal Packaging and M/s. Plas Packaging could not be legally clubbed. Therefore, the impugned order of the Commissioner in this regard, for confirming the duty on M/s. Poly Printers (appellant No. 1) cannot be legally sustained and deserves to be set aside. 18.This takes us to the second ground. The allegations of clandestine receipt of the raw material and manufacture of final products had been based on certain invoices, addressed to the firm M/s. Gupta Traders and S.N. Traders and allegedly found from the residence of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und. This ground has not been seriously contested before us by the learned counsel. The duty liability of the firm appellant No. 1 and of M/s. Jindal Packaging and M/s. Plas Packaging on account of work charges billed by them to the persons for whom they did the job work, during the period in dispute, had not been contested. The learned counsel has only disputed the correctness of the amount allegedly collected by them as job charges, as detailed in para 4.1 of the show cause notice and the quantum of duty payable thereon by the appellants. From the record, it is difficult for us also to ascertain the exact duty amount on that score payable by them. Therefore, the matter deserves to be sent back to the adjudicating authority, for quantifying the exact duty amount, after hearing the appellants. 20.In view of the discussions made above, the impugned order of the Commissioner under appeal, to the extent to which he had confirmed duty demand along with penalty on the firm appellant No. 1 on the grounds of clubbing and alleged clandestine clearances of the goods without payment of duty (grounds first and second set out in preceding para No. 8) and also imposed penalties on the partn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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