TMI Blog2002 (12) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Heemanshu Auto Ltd. Scrutiny of records of Heemanshu Traders revealed that duty determined under Gate Passes for the period from 4th April, 1988 to 7th April, 1988 had not been debited. Some goods such as Electric horns received by different customers, from M/s. Heemanshu Traders, were also seized. Detailed examination of records of Heemanshu Traders, Heemanshu Auto Pvt. Ltd., Shri Krishna Industries, M.K. Industries, Shri Hari Industries revealed that all the partners and/or Directors are members of the Shah family and they had mutual interest in the business of each other and that Heemanshu Traders was controlling the overall activities of manufacture and sales of these units. The Department was of the view that Heemanshu Traders had by recourse to fraud, wilful mis-statement and suppression of facts evaded payment of duty in respect of 12285 Kgs. of M.S. Scrap seized from the Truck, did not account for the day to day production of M.S. Scrap in R.G. 1 register, cleared 12323 Electric Horns during the period from 4-4-88 to 7-4-88 without debiting the duty in PLA/RG 23A and that all the units above mentioned along with Shri Vishnu Industries, M.C. Industries and D.G. Auto Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Tariff; that during the said period C.B. Points and parts thereof manufactured by M/s. M.K. Industries fell under Tariff Item 68; that, therefore, it is not permissible to confirm duty liability in respect of goods falling under Item 68; that the impugned order, thus, travels beyond the scope of the show cause notice; that the value of clearance of M.K. Industries for the financial year 1985-86 was Rs. 18,13,161/- which is less than Rs. 20 lakh as specified in Notification No. 77/85; that there is, therefore, calculation error while calculating duty liability of the appellants; that further show cause notice does not bring out or mention any evidence of flow back of financial interest etc. 3.2 The learned Advocate mentioned that during the year 1986-87, the clearance of 5 units have been clubbed sleaving 2 units namely M.C. Industries and D.Q. Auto Industries); that the total clearance did not exceed Rs. 1.5 crores and as such they are eligible for the SSI benefit; that the total value of clearance for 1986-87 is Rs. 1,29,83,667/- which is less than Rs. 150 lakh; that Annexure C-2 to the show cause notice does not allow the benefit of first clearance of either Rs. 7.5 lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces, etc.; that they have their SSI registration; that, therefore, the extended period of limitation cannot be invoked for demanding the duty. 3.8 In respect of seizure of M.S. Scrap on 7-4-1988, the learned Advocate mentioned that the same is totally exempted from duty under Notification No. 91/88-C.E.; that Shri S.S. Mehta has stated that the goods were purchased from Heemanshu Auto (P) Ltd. and produced the challan also which should be accepted. Regarding seizure of contact break and horns, he submitted that it was a technical lapse as there was sufficient balance in RG 23 A part II and the goods accompanied gate passes; that only debit entry was not carried out purely on account of inadvertence; that duty was paid in April, 1988 only; that CB/horns were sent to M/s. Fluxbol for packing only and goods were duty paid wherever required. 3.9 He also submitted that the units have different factories at different premises having independent existence; that Hari Industries was closed in 1987 and Krishna Industries in December 1986; that Bombay Office owned by Heemanshu Traders was used by all the appellants for the purpose of dispatching sales documents; that Heemanshu Traders an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to all other units, payment of the salary of the employees of M.K. Industries was controlled through Heemanshu Traders. Ld. SDR referred specifically to Para 10.6, 11 and 12 of the impugned order, which contained the charge of financial flow back and Heemanshu Traders controlling the overall activities of manufacture, sale/trading of all the units. 4.2 The learned SDR relied upon the decision in H.T. Bhavnani Chemicals (P) Ltd. v. C.C.E., Baroda - 1997 (92) E.L.T. 502 (T) wherein the Tribunal, in view of the facts that four units were having two common Directors, one of them being the Chairman of all the four units and who controlled the production, procurement of raw materials of all the units, three units were located in one common plot at Bulsar and fourth at Mumbai, three units were producing the same goods, having common employees controlling the various activities of the four units and there was flow back of finances, has held that the clubbing of the value of clearances of these units is justified as the units are not independent. He also placed reliance on the decision in the case of Bathija Enterprises v. CCE, Bombay-II, 2000 (115) E.L.T. 720 (T) = 2000 (36) RLT 181 (CE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and in exercise of such he does the same but with reference to a wrong provision of law that would be a mere irregularity and would not vitiate such act or action. 6. We have considered the submissions of both the sides. As far as clubbing of value of clearances of various units are concerned, we find that the Collector has dealt with this aspect in detail and has given many reasons for clubbing the value of clearances. The specific findings given by the Adjudicating Authority are in respect of getting the bills issued in the name of Heemanshu Traders changed in the name of Heemanshu Auto Pvt. Ltd.; scrutiny of case book and general ledger revealed that the money was being transferred among the appellants which are being described by the appellants as normal business transaction; supply of raw material by Heemanshu Traders to all the units at Umbergaon. The Adjudicating Authority has referred number of correspondence in support of the findings reached by him. For instance, he has referred to a letter dated 25-2-87 from M/s. Harish Metal Industries in which they had mentioned that they had not received any instruction in whose name the bill is to be charged for the supply. In re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement, finance and other incidents of the respective business". The Tribunal, thereafter, upheld the clubbing of the value of clearances as the four units were having two common directors, one being Chairman of all the units controlling the production, procurement of raw materials of all the units; units producing same goods, common employee and flow back of finance. The Tribunal also observed that "It is not so much the flow back of finance only which is to be considered, but also the identity of interest amongst the firms and the intention of the partners". We find that in the present matter the intention is apparent to create a legal facade by having different units with an intent to avail of small scale exemption. 7. We, however, find substantial force in the submissions of the learned Advocate that the benefit of small scale exemption has to be extended to them during the relevant period if the total value of clearances are within the limits specified in the relevant notifications. The learned Advocate for the appellants has submitted that for the financial year 1985-86, the products manufactured by M/s. M.K. Industries were falling under Tariff Item 68 and benefit of Notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how cause notice, no penalty can be imposed on the appellants under the sale rule. The appellants are required to be put to notice for imposition of penalty under Rule 209A. We, therefore set aside the penalty imposed on appellants No. 2 to 7. In the facts and circumstances of the case the confiscation of the plant, building and machinery belonging to appellants is not warranted and the same is set aside. The penalty on M/s. Heemanshu Traders is to be considered by the Adjudicating Authority after examining the question of invocability of extended period of limitation, re-computation of duty liability in view of findings contained in Para 7.0 7.1 of this order. 7.5. The learned Advocate has also challenged the confiscation of goods contending that there was sufficient balance in RG 23A Part-II and CB/Horns were sent to Fluxbol only for packing only. The fact, however, remains that these goods were removed from the factory without payment of duty which is a must. Accordingly, the said goods are liable for confiscation. However, we reduce the redemption fine from Rs. 2,500/-, Rs. 35,000/- Rs. 2,000/- and Rs. 60,000/- to Rs. 1,000/- Rs. 10,000/-, Rs. 500/- and Rs. 20,000/-respecti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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