ORDER
T.P. Nambiar, Member (J)
1. These appeals are filed against a common order passed by the Addl. CCE, Madras. In terms of that order he held that appellant M/s. Gopi Engg. Works are the manufacturers and all the goods said to have been manufactured by M/s. Prakash Engg. Works (PEW) and M/s. Ganesh Engg. Works are to be clubbed together with the manufacture of M/s. Gopi Engg. Works. Since they have manufactured excisable goods beyond the exemption limit, the duty has to be charged on the excess quantity cleared against M/s. Gopi Engg. Works and their deliberate intention to evade payment of duty is proved. Therefore, he demanded a duty of Rs. 92,480.65 from the appellant and imposed a penalty of Rs. 10,000/- on M/s. Gopi Engg. Works.
2. The brief facts of the case are that during the course of the visit to the appellants unit on 5-9-1990, it was noticed that two other units M/s. Ganesh Engg. Works & M/s. Prakash Engg. Works were functioning in the same premises. As per the agreement, the excisable goods are manufactured at M/s. Gopi Engg. Works using their labours and machines and are sold in the name of other units. The raw materials purchased in the name of the three units are kept together in the store room of M/s. Gopi Engg. Works and accounts of raw materials are not maintained separately by the three units and apart from the lease amount payable, no other amounts are paid by the other two units for availing the services of M/s. Gopi Engg. Works such as office expenses, telephone charges, etc. In this view of the matter, the deptt. is of the view that the units were floated only for availment of the exemption and to avoid payment of duty. Accordingly, a show cause notice was issued to the appellants requiring them to show cause as to why the duty of excise amounting to Rs. 92,480/- should not be demanded and why penalty should not be imposed.
3. The appellant M/s. Gopi Engg. Works as well as other appellants sent a common reply wherein they stated that Addl. Collector has no competence to invoke the provisions of Section 11A (1) of CESA. They also stated that the other two units are independent units and therefore production cannot be clubbed with provision of M/s. Gopi Engg. Works and finally, a personal hearing was granted and the impugned order was passed.
4. The learned Consultant in the first instance contested before us that during the relevant period it is the Collector alone who can issue the show cause notice and not the Addl. Collector Therefore, the SCN itself is void and no duty in this regard can be confirmed in terms of an invalid SCN. He further stated that other two units are independent units and therefore the production cannot be clubbed.
5. The learned DR reiterated the reasonings in the impugned order.
6. We have considered the submissions. The point that arises for our determination is whether the show cause notice issued by the Addl. Collector is in accordance with law. In this connection, the learned Consultant drew our attention to the following decisions :-
(i) Lakshmi Inds. v. C.C.E. reported in 1994 (72) E.L.T. 893 (Tribunal)
(ii) Nikhildeep Cables Pvt. Ltd. v. C.C.E. reported in 1994 (70) E.L.T. 273 (Tribunal)
(iii) Alpha Toyo Ltd. v. C.C.E. reported in 1994 (71) E.L.T. 689 (Tribunal)
(iv) Additional Collector v. J.C. Shah reported in 1978 (2) E.L.T. (J 317) (S.C.)
Relying on the above said decisions, he state that the Addl. Collector is not the Collector and therefore for invoking the longer period it is the Collector alone who should have issued the notice.
7. We have considered the submissions. It is now seen that Hon’ble Karnataka High Court in the decision reported in 1992 (57) E.L.T. 12 (Kar.) in the case of Engineering Systems Pvt. Ltd. v. UOI has defined Collector to include ‘Addl. Collector’ in terms of Rule 2 (ii) of CER. This decision was taken note of by the Addl. Collector in the impugned order at para 4. ‘
8. It is also seen that in similar circumstances, the Hon’ble Bombay High Court in the case of Tivincity Glass Pvt. Ltd. v. UOI reported in 1992 (61) E.L.T. 441 (Bom.) has taken the same view and the relevant portion is reproduced below :-
“Counsel had a submission, that under the Rule there was only a limited role and play for the ‘Additional Collector’ as attempted by the definition of ‘Collector’. He stressed the opening words “for the purpose of these Rules”. It is submitted that if the definition was only for the purpose of the Rules, such an Additional Collector would not be treated as a ‘Collector’ for the purposes of the Act. The Additional Collector who could have the cap of Collector while in the field of Rules, would be bare-headed once he enters the enclosure of the Act – contended Counsel.
The argument according to us is fallacious. If for the purpose of the Rules, an Addl. Collector is to be equated as a Collector that equation would endure even for the purpose of the Act; for, as noted earlier, the Rules are framed only to carry out the provisions of the Act. In other words, when the Rules are having a distinct direction and objective, viz., for the purpose of carrying out the provisions of the Act, that facet of the exercise should also be treated as for the purposes of the Act. The Addl. Collector occupying the seat of the Collector by virtue of the help and push of the statutory rule created for carrying out the mission of the Act, is a person equipped with the authority, might and right of the full-fledged Collector seated there in his own right. There is no room for a half way horse in such a situation. In that view of the matter, we hold that the Addl. Collector has the same powers as the Collector and that his responsibility and his duties are co-existent with those of the Collector of Central Excise is visualised under the Act. The general concept of an additional functionary not being a subordinate functionary has an enduring recognition in general and regular legal proceedings. That accounts for an artificial definition and deeming provision when in the limited contingencies a differential treatment is desired. (See the special provision by which the Court or the Addl. District Judge is deemed to be a subordinate Court only for the purpose of section 24 (dealing with transfer) of the Code of Civil Procedure.)
Now, in similar situations the question has arisen earlier under the Income-tax Act. The Courts have resolved the controversy holding that the Additional Commissioner wields the same authority and shoulders the same responsibility as the Commissioner. The decision of the Gauhati High Court (to which one of us, Saraf. J. is a party) came to the same conclusion. [See Anath Bandhu Saha v. Utpal Deb Banna, (1989) 1 Gauhati Law Reports, 332.] The decisions in Hemraj Gordhandas v. H.H. Davel, Assistant Collector of Central Excise & Customs, Surat and Ors., 1978 (2) E.L.T. J. Dave, Assistant Collector of Central Excise & Customs, Surat and Ors., 1978 (2) E.L.T. (J 350); Hindustan Steel Ltd. v. State of Orissa, 1978 (2) E.L.T. (J 159)] have taken a view which accords with the conclusion which we have reached. A reference to other provisions would covey confirming messages of the interpretation we have given. Thus, for example, the provision indicating the appellate forum, would easily fit in with a situation when an affected party is enabled to appeal against all erroneous orders, whether they be passed by the Collector or the Addl. Collector. It is not easy to reconcile with a situation that the Additional Collector is a show piece or mere ornament or just another person to receive a regular salary and serving no purpose at all.”
9. In view of the above cited decisions of these two High Courts and when there are no contrary decisions of any other High Court, the Tribunal is bound to follow these two High Court decisions. In this view of the matter, we are of the view that when there are two High Court decisions in this regard and when there is no other decision of any other High Court or the Supreme Court decision on this point, the Tribunal has to follow these decisions. In the premises, we hold that this argument of the learned Consultant that the SCN is not valid cannot be accepted by us.
10. The next point for determination is whether the units Prakash Engg. Works and Ganesh Engg. Works are the dummy units of M/s. Gopi Engg. Works. In this connection, the learned Consultant stated that M/s. Gopi Engg. Works is a partnership firm under Hindu undivided family having four partners and Sri J. Gopikrishnan is the proprietor of M/s. Ganesh Engg. Works and Sh. J. Prakash is the proprietor of M/s. Prakash Engg. Works. In this connection, he drew our attention to the decision of the Supreme Court in the case of Addl. C.C.E. v. Shri J.C. Shah reported in ECRC 224 wherein it was held that production by the two firms in which the respondent Sri J.C. Shah was a partner cannot be said to be a production on behalf of the same person. But the facts of that case are not similar to the facts of this case. The facts in this case will be discussed by us to find out whether these two firms are dummy firms of M/s. Gopi Engg. Works.
11. The learned Consultant invited our attention to the decision of the Tribunal reported in Aroma Apparels v. C.C.E. – 1986 (25) E.L.T. 90 (Tribunal) holding that on a mere suspicion it cannot be said that two firms are the same. This principle is also well accepted. There cannot be a dispute of this proposition. But it was contended before us that the learned Addl. Collector has not applied the ratio of the decision in the case of Jagjivandas & Co. v. Collector reported in 1985 (19) E.L.T. 441 (Tribunal). He stated that in that particular case all the three factories were situated in one compound and they have a common telephone and some of the partners are common and the goods were stored in a common storage place. The office premises are common and some of the machinery belonging to Jagjivan Das & Co. are used by the other two concerns and a letter was written to the Government of Maharashtra by M/s. Jagjivan Das & Co. to combine the units of energy consumed by the five units together and the telegraphic address was common for all the concerns. Even in those circumstances, he pointed out that it was held that those units were held separate. In this connection, he also invited our attention to the following decisions :-
(i) Shree Packaging Corpn. v. C.C.E. reported in 1987 (32) E.L.T. 94 (Tribunal)
(ii) C.C.E. v. Emkay Glass Works reported in 1989 (44) E.L.T. 586 (Tribunal)
He further contended that a tax payer may resort to a device to divert the income before it accrues or arises to him. Effectiveness of the device depends not on consideration or morality but on the operation of the Income-tax Act. Therefore, he stated that in this case, it cannot be held that there is an identity of these firms.
12. We have considered the submissions of the learned Consultant. The facts available in the decisions cited by the learned Consultant are not the same as the facts which are found in this case. The reason are that the main company M/s. Gopi Engg. Works was split up into two units, namely, M/s. Ganesh Engg. Works and M/s. Prakash Engg. Works. The premises of all the factories is the same. The address of the premises of the company are one and the same. There is a common manager and common telephone to all the three firms. There is only one common machinery in the premises of M/s. Gopi Engg. Works and the electricity for all these premises is common. It was contended that these by themselves are not sufficient to hold that these are dummy firms of M/s. Gopi Engg. Works.
13. We observe that besides having a common manager, common premises, common telephone and common electricity, there are certain other materials also to justify the conclusion of the adjudicating authority. The manufacturing activity of all the three firms are common. But the proforma invoices are issued in the name of three different units by M/s. Gopi Engg. Works. M/s. Gopi Engg. Works have informed one of the customers that they have two units which are created to avoid the burden of excise duty to the customers. But there will not be any difference in quality or appearance of the machines. It is thus seen that when the invoices are also issued by M/s. Gopi Engg. Works and when there is a common manufacturing activity involved with respect to these concerns, the only conclusion is that these three firms are one and the same. It is further seen that Shri Janarthanam, Managing Director of M/s. Gopi Engg. Works in his statement before the officers had stated that the unit M/s. Ganesh Engg. Works was floated during Sept. 1988 with his son Shri J. Gopalkrishnan as sole proprietor and M/s. Prakash Engg. Works was floated during 1988 with his another son Shri J. Prakash as sole proprietor. He has also stated that there are no separate offices, staff, labour, manufacturing premises and partners for these two units. He further stated that under the agreement made between him as Managing Partner and the other two partners of the above two companies, the goods were manufactured by M/s. Gopi Engg. Works for and on behalf of other two units and were sold in the name of these two units by raising invoices and other documents in their names. He also stated that as his sons are inexperienced, the administration and other functions and responsibilities are carried out by himself and on his instructions Sri Krishnamurthy, Manager, of M/s. Gopi Engg. Works does the whole transactions. He has further admitted that all letters and orders are addressed to M/s. Gopi Engg. Works. All the correspondences were replied by either himself or the Manager. He further admitted that all accounts, records and documents of M/s. Ganesh Engg. Works and M/s. Prakash Engg. Works were maintained at the office of M/s. Gopi Engg. Works. He has further admitted that the other two units have no machinery for manufacture and the goods sold in their name are manufactured by M/s. Gopi Engg. Works. All the averments along with the other circumstances clearly establishes that these three firms are one and the same. The decisions cited by the learned Consultant which we have referred to above do not deal with the situations as is in the present case. In this case, in the light of these admissions and the other facts which we have already discussed there is no other conclusion except to say that these three firms are one and the same. In this view, we find no infirmity in the order of the learned lower authority and the demand of duty is in accordance with law. In the facts and circumstance of the case, the penalty imposed on M/s. Gopi Engg. Works is reduced to Rs. 10,000/- (Rupees ten thousand). The appeals are thus disposed of in above terms.