TMI Blog2002 (1) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty on M/s. D.M. Gears Pvt. Ltd., under Section 11AC of the Act. 2. The duty demand on M/s. D.M. Gears Private Ltd. [in short, M/s. DMG] is based on clubbing of clearances for the purpose of determination of value of clearance in excess of exemption limit under Notification Nos. 175/86-C.E. and 1/93-C.E.) of motor vehicle parts cleared by M/s. DMG and M/s. Chandra Auto Engineers Private Ltd. [in short, M/s. CAE during 1-4-1993 to 31-12-1997. The clearances of the two companies have been clubbed on the basis of a finding that CAE had been carved out of DMG with the ulterior motive to split the latter's clearances for misutilising SSI exemption under the above Notifications and that there was mutuality of interest between the two companies. The basis of this finding has been summarized in Para (24) of the impugned order as follows :- "The overall control of Shri Rajiv Gambhir on M/s. DMG and CAE, common work force, common management, common stores, common testing laboratory, common electricity connections/Generator, photographs of the factory premises showing commonness between the said two units, regulation of entire sale of goods manufactured by both the units by M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the evidence on record clearly established mutuality of interest, for the purpose of clubbing of clearances of the two units. He also relied on the following decisions of the Tribunal :- (i) Double Bee Enterprises v. CCE - 1995 (78) E.L.T. 261 (ii) Supreme Engg. Works v. CCE - 1996 (82) E.L.T. 102 (iii) Step Cosmetics v. CCE - 1996 (87) E.L.T. 734 (iv) H.T. Bhavnani Chemicals (P) Ltd. v. CCE - 1997 (92) E.L.T. 502. 4. Having considered the rival submissions coupled with the evidence on record, we are of the view that this case can be decided by applying the test of mutuality of interest laid down by the High Court in Renu Tandon's case, which test has been consistently employed by this Tribunal in similar cases and appears to be holding the field. In that case, the two units were situated in the same premises, manufacturing similar product, having common office and electric connection, some common management and labour, etc. One unit was owned by father-in-law and the other by daughter-in-law and the work in both the units was looked after by her husband. Despite all these commonalities, the High Court held that the clearances of the two units ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purposes of computing SSI exemption. For this purpose, ld. Commissioner relied on the following three decisions of this Tribunal :- (i) Bathija Enterprises Others v. CCE - 2000 (115) E.L.T. 720 (T) = 2000 (36) RLT 181 (ii) Gopi Engineering Works v. CCE - 1997 (93) E.L.T. 527 (iii) Verma Frost v. CCE - 2000 (118) E.L.T. 504. 5.3. Renu Tandon (supra) has laid down that commonality in respect of factory premises, office, electric connection, management, labour, etc. or similarly of products is no evidence of mutuality of business interest. The view taken in that case by the High Court, according to our understanding, is that mutuality of business interest has to be inferred from common funding and financial flow-back. As we have already noted, there is no evidence or finding of common funding and financial flow-back in the present case. It has not been shown that M/s. DMG have entirely financed M/s. CAE's business and drawn all the profits of the business for themselves. Therefore, mutuality of interest between the two units is not a correct finding in this case. Renu Tandon was not considered by the Tribunal in two of the three cases cited above, nor wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 14 of the Central Excise Act under which the above statements were recorded. The only difference between the two provisions appears to be that, while under Section 108 of the Customs Act 'any gazetted officer of Customs' shall have power to take evidence from any person, 'any Central Excise officer duly empowered by the Central Government in this behalf' shall have similar power under Section 14 of the Central Excise Act. The Central Government has empowered all officers not below a specified rank for purposes of Section 14 of the Central Excise Act. It would follow from these provisions that any statement of any person recorded under Section 108 of the Customs Act should be signed by any gazetted officer of Customs and any statement of any person recorded under Section 14 of the Customs Act should be signed by an officer of Central Excise empowered by the Central Government. In other words a statement recorded under Section 108 of the Customs Act and signed by a non-gazetted officer of Customs will not be admissible as evidence for the relevant purpose under that Act. Similarly, a statement recorded under Section 14 of the Central Excise Act and signed by an officer of Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d-down by the High Court in Renu Tandon, we hold that the clearances of DMG and CAE were not clubbable for purposes of computing SSI exemption limits under Notification No. 175/86-C.E. and 1/93-C.E. We, therefore, set aside the demand of duty confirmed by the adjudicating authority against DMG. We also set aside the penalty imposed on them under Rule 173Q because we have already vacated the demand of duty and because a finding, against them, of contravention of C.E. Rules is unwarranted in view of the Commissioner's observation that they have fulfilled all C.E. requirements. Once the demand of duty is set aside, penalty equal in quantum to duty will also stand reduced to nil and consequently the Revenue's appeal complaining of non-imposition of such penalty under Section 11AC will get rejected. 6. There is no order of confiscation of any goods by the Commissioner. Hence no confiscation-related offence has been held out against any of the appellants in Appeals 2860-62. Therefore, the penalties imposed under Rule 209A on S/Shri C.M. Handa, D.K. Jain and R.K. Sharma are set aside. 7. In the result, Appeals No. 2859-62/2000 are allowed, while Appeal No. 1663/2001 is rej ..... X X X X Extracts X X X X X X X X Extracts X X X X
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