TMI Blog2005 (4) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... out of the tapes and fabrics of HDPE/LDPE and PP granules. On conducting physical stock verification of the finished goods in Unit No. 1, the officers found excess stock of HDPE Laminated fabrics of 5.87 MTs and in Unit No. 2, shortage of 4.00 MTs of HDPE Laminated fabrics than the balance recorded in the statutory records. The officers seized the excess stock of HDPE Laminated fabrics. The officers also seized certain records of other units viz. M/s. Adi Properties (P) Ltd., M/s. Alpine Properties (P) Ltd., M/s. Anshuman Properties (P) Ltd., M/s. Dham Properties (P) Ltd. and M/s. Jacquart Properties (P) Ltd. lying in office premises of M/s. Gilt Pack Ltd. The officers thereafter visited the 22 units said to be used by respondent No. 1 for evasion of duty. On physical verification of these units, the officers noticed that these were only small rooms/sheds of dimension ranging from 10' x 20' ft. to 20' x 40' ft. and were separated from each other by cement walls but none of the units were having manufacturing activity nor there was any machinery. All the sheds were found with full of dust and cobwebs with no sign of any manufacturing activity. From visual examination of the sheds, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent No. 1 was taking advantage of non-payment of duty for the quantity of sacks, shown as manufactured by the respondent No. 3 to 24. Six show cause notices issued to the appellants demanding duty, interest and imposing penalty were dropped by Commissioner under the impugned order. 4.Shri Vikas Kumar, ld. SDR appearing for the Revenue challenged the findings of the Commissioner on following grounds: - (1) on 16-5-96, no machines were found in 20 units (respondents No. 3 to 22). The machines were cleared to have been sent for repairs to places like Mumbai and Ahmedabad. Repairing invoices which were produced during adjudication were for very small repairs and it was claimed that labour personally came and took away the machines in their own vehicle. The machines claimed to have been sent for repairs were in fact shown sent in June-July, 1996 whereas the visit of the officers was in May, 1996 and minor payment has been shown for repair through demand/drafts, all dated 8-8-96. (2) None of the units having their individual power service connection for use of electricity from MPEB. The respondents No. 3 to 22 have claimed that power charges are included in the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nits, the man power used by respondent No. 1 for day to day management of these units were factor, which were supported by sufficient evidences. The commissioner committed error in not holding that noticee No. 1 was promoted by the Kalani group and holding more than 30% shares and also the management control. The production of sacks by 22 units was meant to supplement the needs of respondent No. 1 by clearing the goods without payment of duty in the garb of SSI exemption. He, therefore, pleaded that in view of the above, the impugned order may be set aside and the appeals may be allowed. He also relied on the following decisions :- (1) CCE, New Delhi v. Modi Alkalies Chemicals Ltd. Ors. [2004 (171) E.L.T. 155 (S.C.) = 2004 (95) ECC 617 (SC)] "Where it was held where there is interdependence and whether another unit is, in fact, a dummy has to be adjudicated on the facts of each case. There cannot be any generalisation or rule of universal application Two basic features which prima facie show interdependence are pervasive financial control and management control. (2) Sanjay Steel Co. v. CCE, Ahmedabad [1996 (84) E.L.T. 307 (Tribunal)] Where it was held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pack Ltd., only P.S. Kalani and Saurabh Kalani are the Directors of Kalani Family and the rest are professional directors. The other 22 respondents No. 3 to 24 are Private Limited Companies and many of these companies came into existence even prior to coming of existence of Guilt Pack Ltd. He submitted a chart as Exhibit-D giving the data of incorporation of the various companies and pleaded that they were having L-4 licence as well as L-6 liecence which were issued to them during 1987 to 1991. He pleaded that these companies were working since the date of their taking L-4 licence. All these units were maintaining their RG-1 registers. 20 units working in the sheds provided by Kalani Industries on rent and these units were working there and regularly maintaining RG-1 registers and submitting RT-12 Returns. The panchnama shows that records of the these units were recovered from the respective units and not as shown in the statement of Shri Rajinish Sharma taken on 16-5-96 where it is mentioned that these were recovered from the office of respondent No. 1. He stated that the sheds where the 20 units were working required repair, therefore, all the machines and records were shifted f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facturing activities were ever carried out in their SSI units. They explained that they do not have separate electric power connection from MPEB because this facility is provided by their lessor and power charges are included in the lease rent of the shed. This power consumption is for stitching which is very low equivalent to bulb of 40 watts. M/s. Kalani Industries have given similar sheds to other transport company on similar rent including power charges. The department has also made some queries from repairers. The departmental officers in connection with their official duties had been visiting their units. This includes preventive checks, annual stock taking, budget day stock verification, audit purposes, export of consignment from factory premises. These had been carried out by the department over a period of time. During these visits, the officers verified stocks vis-à-vis records maintained by these SSI units and it was not an observations that no manufacturing activity was carried out. These small scale units were procuring HDPE fabrics from various manufacturers without payment of duty by following Chapter X procedure up to June, 1992. The D-3 intimation about receipt of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.)] (2) Supreme Washers (P) Ltd. v. CCE, Pune [2003 (151) E.L.T. 14 (S.C.)] (3) Alembic Glass Industries Ltd. v. CCE [2002 (143) E.L.T. 244 (S.C.)] (4) L.D. Industries v. CCE, Pune [2003 (157) E.L.T. 459] (5) Super Star v. CCE, Calicut [2002 (148) E.L.T. 854] (6) Padma Packages (P) Ltd. v. CCE, Coimbator [1997 (90) E.L.T. 175] (7) Metrosyl v. CCE, Patna [1995 (77) E.L.T. 130] (8) CCE, New Delhi v. Modi Alkalies Chemicals Ltd. [2004 (171) E.L.T. 155] 7.We have care fully considered the submissions made by both the sides. We find that the case of the department is that M/s. Guilt Pack Ltd. is manufacturing HDPE/LDPE/PP Bags. In order to avail concessional rate of duty on bags manufactured by them, they created dummy units - respondents no. 3 to 24 for showing that part of bags cleared by them were manufactured by the respondents no. 3 to 24 and were cleared by respondents no. 3 to 24 under SSI exemption. We find that the claim of the department is that units no. 3 to 24 are taking financial loans from each other or from Kalani family or Kalani Family Trust or from Kalani Industry and thus, there is financial contro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the show cause notices have been issued, these factories were not working. The respondents have produced the evidence in the form of visit of the central excise officers and audit officers to their factories on various dates and also verification of the export consignments and goods received under Chapter X Procedure. Therefore, it cannot be said that these factories were not in existence. We also find that the Revenue has failed to establish that there has been managerial control over the activities of these 22 respondents (Sl. No. 3 to 24) by the respondent no. 1. Only the workers of respondent no. 1 were working as authorised signatory in some of the units but the managerial control was not being exercised by the respondent no. 1 on these units. 9.In order to establish a common link between respondent no. 1 and respondents no. 3 to 22, there must be clear evidence that respondent no. 1 was having a financial and managerial control over the activity of respondents no. 3 to 24. We find that no such evidence was produced before us. Whatever evidence was collected by the Revenue was inter-dependent of respondents no. 3 to 24 with respondent no. 2 and not with the respondent no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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