ORDER
P.G. Chacko, Member (J)
1. The original authority had confirmed a demand of duty of Rs. 3,56,476/- against the respondents for the period 1995-96 and 1996-97 by invoking the extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act, in adjudication of show-cause notice dated 21.7.97 issued by the Department. That authority clubbed the clearances of goods by M/s. Ranveer & Co. with the clearances of goods by the respondents, on the ground that the former unit had been created as a dummy for the latter, and the above demand was raised on the goods cleared in excess of the aggregate clearance limit prescribed under the relevant SSI notification. The authority also imposed penalties on the assessee under Section 11AC and Rule 173Q, besides a penalty of Rs. 20,000/- on M/s. Ranveer & Co. under Rule 209A. Aggrieved by the Deputy Commissioner’s order, both the parties preferred appeals to the Commissioner (Appeals). The appeal filed by M/s. National Adhesive & Chemicals (respondents herein) was allowed by the Commissioner (Appeals), Trichy. Hence the present appeal of the Department. It appears, the appeal of M/s. Ranveer & Co., happened to be considered by the Commissioner (Appeals), Madurai on a later date, by which time, on account of reorganization of Commissionerates, the appellate Commissioner at Madurai had assumed jurisdiction.
2. Learned Counsel for the respondents has brought on record copies of Order-in-Appeal No. 41/2003 passed by the Commissioner (Appeals) Madurai in the appeal filed by M/s. Ranveer & Co. against the penalty imposed on them by the Deputy Commissioner. The operative part of this order reads as under:
I have gone through the facts and records of the case. A penalty of Rs. 20,000/- has been imposed on the appellants under Rule 209A of Central Excise Act. The appellant is held to be a dummy unit of M/s. National Adhesive & Chemicals and penalty has been imposed after clubbing the clearances of both the units. It is brought to my notice that Commissioner (Appeals), Trichy has dropped the proceedings against M/s. National Adhesive & Chemicals vide Order-in-Appeal No. 54/99. In view of the above, the allegations against the appellant that it is a dummy unit of National Adhesive & Chemicals does not survive and the imposition of penalty also does not survive.
(emphasis added)
3. Learned SDR reiterates the grounds of the present appeal. He has particularly relied on the findings recorded by the original authority in paragraphs 20 to 23 of the Order-in-Original. Learned Counsel for the respondents submits that, in the absence of finding of common funding and financial flowback, all those findings of the original authority would not call for clubbing of clearances between the respondents and M/s. Ranveer & Co. Reliance is placed on the Rajasthan High Court’s judgment in the case of Renu Tandon v. Union of India , wherein it had been held that clearances of goods manufactured by two units in the same premises, having commonalities in respect of management, labour, electric connection, etc. could not be clubbed in the absence of evidence of common funding and financial flowback. It is submitted that, in the instant case, there was not even an allegation in the show-cause notice that there was common funding of the activities of the two units or that there was financial flowback from one unit to the other. In the circumstances, it is argued, the impugned order, which ruled out clubbing of clearances, cannot be interfered with.
4. After giving careful consideration to the submissions, we find that the appellant has relied on various statements and private records maintained by the two units, to contend that M/s. Ranveer & Co. were set up by the respondents only to show that a part of the clearances of the goods manufactured by the respondents stood in the name of M/s. Ranveer & Co. so that the clearances in the name of the respondents remained within SSI limits. It appears from the records that, as rightly pointed out by learned Counsel, no common funding or financial flowback was alleged in the show-cause notice. According to the ruling of the High Court, in the absence of evidence of common funding and financial flowback, it was not permissible to club the clearances of two units, notwithstanding the fact that the units operated in the same premises with commonalities in respect of management, labour, electric connection, etc. One of the two units considered by the High Court was owned by father-in-law and the other by daughter-in-law and both the units were looked after by the son. Nevertheless, there was no finding of common funding of the units. In the present appeal, the appellant has made an attempt to distinguish the case of M/s. Ranveer & Co. by submitting that both the units considered by the High Court were registered with the Department, whereas, in the present case, only one of the two units was registered with the Department. Since the substantive issue involves the question whether the benefit of SSI notification was available to the goods in question, we do not find relevance in whether any of the units was registered or not with the Department inasmuch as a SSI unit at the material time was not required to be registered with the Department. The distinction sought to be drawn between the instant case and the case considered by the High Court is apparently irrational.
5. It is now on record that Order-in-Appeal No. 41/2003 passed by the Commissioner (Appeals) Madurai in the appeal filed by M/s. Ranveer & Co. contains a clear finding that the allegation against M/s. Ranveer & Co. that it was a dummy unit of M/s. National Adhesive & Chemicals (respondents herein) does not survive. There is no material on record to show that this finding, which has strong bearing on the present case, has been challenged by the Department.
6. In the result, we do not see any reason to interfere with the impugned order and the same is sustained. The appeal is dismissed.
(Dictated and pronounced in open Court)