TMI Blog2002 (5) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... r and is in respect of a manufacturer's production from one or more factories or from a factory by one or more manufacturers. The impugned order has held that the production from both the factories of the appellants should be held as the production of one manufacturer. The demand for duty and interest and penalty etc. proceeds from this finding. 3.Facts relevant to the dispute in this case are that M/s. Super Products, is a Partnership between M/s. Rita Dutta and Dr. Mrs. Tripta Dutta. The investment being Rs. 10,21,650/- by the former and Rs. 5,07,750/- by latter. This Partnership firm started producing pet bottles from 1997. The other appellant M/s. Superior Pet Pvt. Ltd. started production of the same goods from the next year i.e. 1998. In this company Mrs. Rita Dutta has an investment of Rs. 7,77,000/- and Dr. Mrs. Tripta Dutta has a investment of Rs. 29,17,000/-. There are four other share holders with lesser amounts of investment. Both the units were being managed by Mrs. Rita Dutta. It is in this background that the impugned order has been passed holding both the units to be of the same manufacturer (Mrs. Rita Dutta). The finding as to who is the manufacturer in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as by the text of the exemption notification, the values of the two companies should be clubbed for arriving at the clearance figures". 4.The submission of the appellants is that the learned Commissioner's findings are not sustainable in law or on facts of the case. With regard to the Commissioner's finding that Directors in a company or Partners in a Partnership firm should actively involve themselves in managing the manufacture and in the present case "Dr. Tripta Dutta being not at all concerned with any manufacturing or managerial activities in both the units", makes Mrs. Rita Dutta the manufacturer in both the units," is a clear mis-understanding of the legal position. It is submitted that management and supervision of two units by the same person, would not make that person the owner or the manufacturer in both the units. Learned Counsel for the appellants has submitted that the finding of the Commissioner completely goes against the concept of juridical personalities. Companies are juridical persons, separate from their share holders and managers. Partnerships are also legal entities. Similarly, share holding by one person in a partnership as well as in a limited c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port. Learned Counsel for the appellant pointed out that this position has been specifically noted by the Commissioner in para 92 of the impugned order. The learned Counsel also submitted that the findings in this case are also not in accordance with the scheme of lifting of corporate veil, even though the Commissioner has not put forth such a case. Learned Counsel for the appellant emphasized that lifting of the corporate veil is resorted to in order to ascertain who is the real beneficiary from the corporate character of the business and whether the real beneficiary is getting out of tax liabilities by assuming a mythical corporate personality. Learned Counsel emphasized that in the present case there was no allegation or finding that Ms. Rita Dutta was the source of funding for both the units or that she is the beneficiary from the manufacturing activities carried out by both the units. There is nothing on record to show that she got any extra benefit by way of tax or otherwise. 7.As against the aforesaid submissions on behalf of the appellants, learned SDR pointed out that in the present case it is clear that both the units are manufacturing the same product. Both the units a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and consideration of the submissions made on behalf of both the sides, we are of the opinion that the finding in the impugned order that Mrs. Rita Dutta is the manufacturer in both the units is not sustainable. The two assessees in this case are legally understood juridical persons. One is a registered Partnership firm and other is a limited company. The Commissioner's finding goes beyond stating that one entity belongs to the other. His finding that directors of a company or Partners in a Partnership should actively involve themselves in managing the manufacture and since Dr. Tripta Dutta is not at all concerned in manufacturing or managerial activities in both the units, the other person, namely Mrs. Rita Dutta who manages both the units is the manufacturer in both units is clearly erroneous. Not all directors or partners have to be engaged in managing companies or partnerships. It all depends upon the management structure and responsibilities agreed upon. In fact, management remains entirely separated from ownership in professionally managed business. Therefore, this finding of the Commissioner is not sustainable at all. Even otherwise, a finding that Mrs. Rita Dutta is the manu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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