ORDER
S.S. Kang, Member (J)
1. The revenue filed these appeals against the order-in-original dated 11-6-1991 passed by the Additional Collector of Central Excise. In the impugned order the Additional Collector of Central Excise held that M/s. Standard Times Pvt. Ltd. & M/s. Standard Watch Co. P. Ltd. are two separate legal identities and their clearances cannot be clubbed.
2. Brief facts of the case are that M/s. Standard Times Pvt. Ltd. were engaged in the manufacture of wall clocks and table clocks and were availing the benefit of small scale exemption. During the course of visit of the factory premises of M/s. Standard Times Pvt. Ltd., it was found that in the same premises another unit namely M/s. Standard Watch Co. Pvt. Ltd. were also manufacturing wall clocks and table clocks. During investigation, it was found that the Director/partners of both the units are related persons. A show cause notice was issued to the respondents for clubbing their clearances on the ground that both the units are one.
3. After adjudication, the impugned order was passed.
4. Ld. DR, appearing on behalf of the revenue, submits that Ms. Seema Gulati, a company supervisor of both the respondents in her statements, admitted that she was company supervisor working for both the units; she was not aware that the two units were manufacturing the wall clocks and table clocks. She also admitted in her statement that there was no segregation in respect of final product and all the production was done at one place and all the workers were being paid by one Shri S.K. Gupta, who is owner of both the units. He submits that both the units are maintaining a combined register for stock production and clearance. He submits that as both the units belonged to one manufacturer they are not entitled for the benefit of small scale exemption notification. He, therefore, prays that the appeal be allowed.
5. Ld. Counsel appearing on behalf of the respondents, submits that it is not the case of the revenue that both the units are run by the same persons. He submits that, no doubt, the Director/partners of both the units were related to each other and they were not the same. He submits that the adjudicating authority gave a specific finding of fact that both the units were having independent separate portions of a building and these are owned by separate owners and the rent is being paid separately, which was duly reflected in the cash books maintained by them. He, further, submits that M/s. Standard Times Pvt. Ltd., the respondents, imported and purchased some of the components for the manufacture of wall clocks and table clocks. He submits that the customs duty and local purchases were paid of their own funds and through cheques. Similarly. M/s. Standard Watch Co. Pvt. Ltd. also imported certain components and customs duty was paid by them from their own account. He submits that in the manufacture of clocks, only screw drive technology is required. There is no requirement of plant and machinery as they were only assembling parts of the clocks and only testing machine is required. He submits that in the present case both the respondents have independent testing instruments, which were installed in their respective units. He, further, submits that in the impugned order there is specific finding that there is no financial flow back from one unit to the another. He relies upon the decision of the Hon’ble Rajasthan High Court in the case of Renu Tandon v. Union of India reported in 1993 (66) E.L.T. 375 (Raj.) and submits that the Hon’ble High Court held that in absence of evidence of common funding and financial flow back, two units cannot be treated as one and their clearances cannot be dubbed even if the units are situated at same premises, manufacture the same product, having same management, office and labour and even common electric connection. He, therefore, prays that the appeals be dismissed.
6. Heard both sides.
7. In this case, the revenue wants to club the clearances of both the respondents on the ground that they are situated in the same premises and they are maintaining the common register in respect of stock, production and clearance and the Director/partners of both the units are closely related persons.
8. The adjudicating authority, in the impugned order, has given specific finding of fact that both the units were situated in independent separate premises which were owned by separate owners and the rent was paid by the respondents separately. Both the units were registered with the State Industries Department as small scale units separately. Both the respondents were importing certain components separately and paying duty from their own accounts.
9. In respect of financial flow back, a specific finding is given by the adjudicating authority that there is no evidence of financial flow back from one unit to another. Therefore both the units are independent and their clearances cannot be clubbed. To contradict this finding of fact, the revenue has not produced any evidence in support of their case. Further, we find that the Hon’ble Rajasthan High Court in the case of Renu Tandon v. Union of India (supra) held that in absence of evidence of common funding and financial flow back, the clearance of two units cannot be clubbed and units cannot be treated as one even in the case where the units are situated in the same premises having common, office, management and labour and common electric connection. In the present case, there is no evidence produced by the revenue to show the common funding or financial flow back from one unit to another. Therefore, in view of the decision of the Hon’ble Rajasthan High Court, we find no infirmity in the impugned order. The appeals filed by the Revenue are rejected.
