9911796707
TMI Blog2002 (8) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... nd released on payment of redemption fine of Rs. 4.4 lakhs, bank guarantee of Rs. 3.62 lakhs have been encashed and appropriated towards the redemption fine of confiscated goods. Plant and machinery have also been directed to be confiscated in respect of Meera Industries and Rama Industries under Rule 173Q and 209 of CE Rules. However, granting the appellant to redeem the same on payment of fine of Rs. 1 lakh. The allegation against the appellant is that they are manufacturers of the products of pressure pans, pressure cookers registered with the Central Excise department and were availing the benefit of SSI exemption under the said notification. They were fixing brand name "SEETHA". The firm comprised of partners of Mr. K.R. Balachandran and Mrs. B. Kousika w/o of Mr. K.R. Balachandran. 2.M/s. Rama Industries, another firm, which according to the appellant is an independent firm with separate constituents of partners comprising of Mr. K.R. Babu and Mrs. B. Nithya, w/o. Mr. K.R. Babu registered with the Central Excise department and manufacturing pans, pressure cookers with brand name of "RAMA" and availing benefit under SSI notification. 3.Two show cause notices were issued on 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucts falling under Section 4A for determination of value in terms of Notifications 18/98 C.E. (N.T.) dated 2-6-98 and 20/99 C.E. (N.T.) dated 28-2-99 an addendum dated 17-2-2001 to the Show Cause Notice dated 12-6-2000 was served on the Noticees on 7-3-2001 demanding a differential duty of Rs. 2,86,156/- arisen due to the valuation to be made under Section 4A. 7.The facts of the case are set out in detail in the two show cause notices and it will be superfluous to repeat them all over again. However, the facts and allegations of the two show cause notices, in brief are as follows :- (i) On a thorough search conducted at the premises of Meera Industries on 1-7-1999 and 3-7-1999, it was found that no Central Excise records were available in the factory for verification; (ii) It was informed that another company name, Rama Industries was also manufacturing excisable goods within the said premises; (iii) the stock of excisable goods valued at Rs. 5,09,670/- available could not be correlated as no Central Excise records were available in the factory and hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) In his statement dated 18-8-99 Shri S.A. Hussain, Accounts Manager, M/s. Associated Marketing, has stated that M/s. Rama Home Needs (P) Ltd., Chennai have supplied them Aluminium Pressure cookers, LPG Stoves with Rama brand; that M/s. Rama Home Needs P. Ltd. have supplied Aluminium Pressure pan but have billed them as Aluminium Frying Pan and lid for frying pan, that M/s. Associated Marketing Agencies sold the same as 'Pressure Pan'; that at no point of time they sold the frying pan and lid separately and that they were the distributors of M/s. Rama Home Needs P. Ltd.; and has stated further in his letter dated 19-8-99 that the Frying pan and lid had come in a single carton; (xii) Dealers from various places have also stated that they have received 'Seetha' brand LPG stoves from Rama Industries; that, 'Rama' range of products from both Meera Industries and Rama Industries; (xiii) The registers/documents requested from Seetha Industries were submitted by them in piecemeal and that too mostly in photocopies. The final set of documents were handed over by them on 10-12-99 only, after p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essure Cooker and Frying Pan under the brand name of "Rama" and "Sheetha"; (ii) that the brand name of "Seetha" is registered in the name of Meera Industries while the brand name 'Rama' is not registered, use of brand name 'Rama' was started only from 1998; (iii) that Rama Industries is another registered partnership firm and LPG Stoves are manufactured by them with the brand name 'Rama'; (iv) that Rama Industries is functioning at the same portion of No. 146, East Coast Road, Injambakkam, Chennai - 600 041 which property belonged to Meera Industries who have given it on rent to Rama Industries; (v) that the allegation that Meera Industries is engaged in the manufacture of all items is factually wrong and established by the following. Sl. No. M/s. Meera Industries M/s. Rama Industries 1. Exist in their own premises Exist in leased premises for which rent has been paid 2. Separate Electricity meter Separate Electricity meter 3. Separate entrance Separate entrance 4. Separate set of machineries Separate set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; Vir Industries v. Collector of Central Excise, Bombay I - 1999 (109) E.L.T. 322 (Tri.); (j) Vasavi Industries v. Collector of Central Excise, Hyderabad - 1999 (109) E.L.T. 908 (Tri.). (vii) that as product range, partner, premises, electricity, excise registration, ST, IT, Factories Act, PF, ESI are different clubbing the value of clearances of both the units is legally not sustainable and therefore the proposal contemplated to confiscate the goods of both the companies are ultra vires the provisions of law. (viii) that LPG Stoves are manufactured by Rama Industries under the name of 'Rama' whereas Pressure Cookers and Frying Pans are manufactured by Meera Industries under the brand names 'Rama' and 'Seetha'. On the brand name issue they cited the following further case laws. (a) Collector of C. Ex., Bombay v. Srinagar Cosmetics Private Limited - 1988 (35) E.L.T. 581 (Tri.); (b) Rukmani Pakkwell Traders v. Commissioner of Central Excise, Trichy - 1999 (109) E.L.T. 204 (Tri.); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the two Companies by the Department during earlier years and from that it could be seen that the Units were individually existing and had been frequently visited, inspected and controlled by various statutory authorities; (v) that following further case laws support their contention against clubbing of value of clearances. (a) Accurate Engg. Co. Private Ltd. v. CCE, Pune - 1999 (112) E.L.T. 679 (Tri.); (b) CCE, Rajkot v. Amar Plast Industries - 2000 (115) E.L.T. 482 (Tri.); (c) Chemguard Coatings Private Ltd. v. CCE, Chennai - 2000 (116) E.L.T. 43 (Tri.); (d) Deep Jyote Paints Industries v. CCE, Bombay - 2000 (117) E.L.T. 223 (Tri.); (e) Jalla Industries v. CCE, Mumbai II - 2000 (117) E.L.T. 429 (Tri.); (f) Primlaks Waffles Pvt. Ltd. v. CCE, Pune - 2000 (118) E.L.T. 221 (Tri.); (g) CCE, New Delhi v. Standard Watch Co. (P) Ltd. - 2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on this ground he has distinguished large number of judgments cited before him. He has held that financial flow back between Meera Industries and Rama Industries is proved and the SSI exemption notification specifically bars use of other brand name while availing duty exemption. (f) In para 17 of the order the Commissioner has also noted that it is an admitted fact that the brand name of 'Seetha' belong to Meera Industries and the brand name of "Rama" belong to Rama Industries. He has held that the activity of manufacture of all goods in effect was done by Meera Industries and all the goods whether it bore the brand name 'Seetha' or 'Rama' were in fact manufactured by Meera Industries only. Therefore the effect of this fact is that Meera Industries manufactured excisable goods bearing the brand name of another firm and as such the benefit of the SSI exemption notification is not available to the appellant. (g) The Commissioner has distinguished large number of judgments cited by the appellant to support their plea that each firm was different from the other and there was no use in the bran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that both the units had registered with the department including separate registration, declaration and RT 12 returns from time to time. He also pointed out that Rama Industries was in existence from 1990 onwards and were paying duty and also filing income-tax and sales tax returns. They were having separate balance sheets and there was no flow back of funds. The statement given by the buyers could not lead to a conclusion that there was flow back or mis-utilization of brand names either of them. He contended very strongly that the department has failed to issue show cause notice to Rama Industries and without notices to Rama Industries their clearances cannot be clubbed with the clearances of Meera Industries. It is his contention that it is a well settled law that when the department wants to hold the other unit as a dummy unit or to hold that the said unit is on paper or that there is flow back of funds then it was mandatory to issue show cause notice to the other unit namely Rama Industries. Violation of issue of show cause notice and proceeding to club clearances of the other unit is bad in law and on that account the proceedings are required to be quashed. He relied on the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries and 3 other separate units called upon them to report to him and explain the reasons for not filing the declaration for the financial year 1991. In response to the said letter Rama Industries filed the declaration on 4-7-91 which has been acknowledged by the Assistant Collector on 9-7-91. Certificate of registration dated 7-11-94 issued by Superintendent of Central Excise, Range III 'C' Madras - III Division to Rama Industries have also been produced showing the details of items manufactured by them. A separate certificate issued by the Department of Industries and Commerce registering both the units as SSI Units have also been produced. Form A.R. 4 for export under QBAL and application for removal of excisable goods for export by Meera Industries and Rama Industries which has been attested by the Superintendent of Central Excise, Range III has also been produced. RG 1 register showing register of parts of daily stock account of both the units have also been produced. The Superintendent of Central Excise had issued summons to both the units separately on 7-3-97 calling upon them to produce the various registers which had been done. The Deputy Commercial Tax Officer has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was incumbent for the department to have issued show cause notice to Rama Industries which had an independent existence with separate partners. None issue of show cause notice to Rama Industries and also for the reasons that department has taken different stand on the status of Rama Industries therefore the proceedings have become bad in law we are constrained to set aside the impugned order on this ground above in the light of the judgments relied by the ld. Counsel in the case of CCE v. Madan Lal; CCE v. Supreme Electrical Appliances and Dawn Fire Works v. CCE (supra). 15.We are also agreeable with the ld. Counsel's argument that the department was fully aware of the existence of the Rama Industries and that it had been receiving RT 12 returns and Rama Industries was maintaining separate registration under various legislation and their registration have been checked by the Inspectors, Superintendents and Assistant Commissioners of Central Excise. Therefore it follows that the department had full knowledge of the existence of Rama Industries and in that view of the matter, suppression of facts for invoking larger period is not sustainable and the demands are time-barred and req ..... X X X X Extracts X X X X X X X X Extracts X X X X
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