At, Customs Excise Service Tax Appellate Tribunal Chandigarh Bench
By, THE HONORABLE JUSTICE: ARCHANA WADHWA
By, MEMBER AND THE THE HONORABLE JUSTICE: DEVENDER SINGH
For Petitioner: Tarun Kumar, A.R.
1. Being aggrieved with the impugned order, the Revenue filed an appeal. The respondents are not present and the Revenue was given a number of opportunities to serve the notice upon the respondents. As per latest communication of the respondents' jurisdictional Central Excise Officer, they are not available at the address and as such the notice could not be served upon them.
2. In view of above, we proceed to hear learned AR and gone through the impugned order.
3. As per facts on records, the respondents are engaged in the manufacture of Lub. Oil pumps. The respondent is proprietary unit and there is another unit of his brother under the name and style of M/s. Sankla Industries near to the factory of present respondent. The distance between the two factories is around 30-35 industrial plot. The Revenue conducted searches in the respondents' factory and recorded various statements and entertained a view that the two units owned by the two brothers are one and the same and their clearances have to be clubbed. Accordingly, the proceedings were initiated against them resulting in confirmation of demand of duty and imposition of penalty. On appeal, the Commissioner (Appeals) set aside the order and hence the present appeal by the Revenue.
4. For better appreciation of the reasoning adopted by the Commissioner (Appeals) setting aside the order, we reproduce the relevant paras 9 and 10:
"9. The fact that the appellants had informed the department vide their letter dated 30-10-2000 acknowledged by the department on 2-11-2000 about shifting of unit M/s. Sankla Industries from 102, Vishwakarma Industrial Complex to new address 77 Vishwakarma Industrial Complex, Faridabad has not been discussed in the adjudication order. Plot No. 77, Vishwakarma Industrial Complex, Faridabad owned by Shri Sandeep Sankla whereas Plot No. 76, Vishwakarma Industrial Complex, Faridabad is owned by Shri Bharat Bhushan Sankla. The department has not denied correctness of the fact mentioned in the letter and in that situation change of manufacturing premises by M/s. Sankla Industries is in order. As regards flow back of funds between the two firms, there is no allegation for that in the show cause notice and the adjudicating authority has recorded the fact that in Order-in-Original. There are no hidden or otherwise flow of funds between them to make inferences that they constitute one unit and in that position clubbing of clearances will not be justified. Both the appellant units have been filing separate returns periodically and have submitted that their units were visited by Central Excise Officers and as well as by audit and they disclosed everything to the department. I agree that there are specific allegations of suppression of facts and case is based on statements of three persons who retracted at the time of cross examination.
10. From the above discussions, I find that M/s. Sankla Castings & M/s. Sankla Industries were separate and independent units. Both registered with Central Excise department and other department. There is no flow of funds between the two units and legally both have separate establishment and plant and machinery. The order of confirmation of demand of central excise duty of Rs. 18,45,187/- made in the O-in-O against M/s. Sankla Castings by clubbing value of clearances shown on records/papers of M/s. Sankla Industries under Section 14 of the Central Excise Act, 1944 is set aside and penalty of Rs. 20 lakhs levied on the firm on this account is dropped. Similarly there are not sufficient evidence to establish that Shri Bharat Bhushan Sankla & Shri Sandeep Sankla have violated the provisions of Rule 209A of the Central Excise Rules, 1944 and penalty of Rs. 5 lakh imposed on each of them is dropped."
5. As is seen from the above, the appellate authority extended the benefit to the respondents on the ground that both are independent units duly registered independently with the Central Excise department as well as also there is no allegation or evidence of any joint financial inter-tuning between the two. The Revenue in their memo of appeal have not rebutted the said finding of the Commissioner (Appeals) by production of
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any positive evidence. It is well-settled law that the two units belonging to two different relations, complete by themselves and independently registered with the tax authorities, cannot be termed to be one and the same units and clearances of the two cannot be clubbed. In the absence of any evidence contrary to the finding arrived by the Commissioner (Appeals), we find no infirmity in the impugned order of the appellate authority. Accordingly, the appeal is dismissed.