ORDER
P.S. Bajaj
1. This order will dispose of six appeals preferred by the appellants against two impugned orders in appeal dated 28.1.2000/7/2/2000 and 22.2.20001 28.2.2000. Appeals Nos.E/1617/2000-B, E/1431/2000-B and E/1423/2000-B had been filed by the appellant against the impugned orders dated 28.2.2000/7.2.2000 vide which the Commissioner(Appeals) had firmed the order in original dated 31.8.98/9.9.98 of the Deputy Commissioner who confirmed the duty demand of Rs.2,26,053/- for the period February-March 1997, Rs.1,18,876/- for the period 4/97 to 9/97 and Rs.2,00,125/- for the period 10/97 t 3/98 against M/s.Simplex Expeller Works (appellant No.1) and also ordered cancellation of the registration certificates of the appellants and further imposed personal penalty of Rs.1,00,000/- each on them under Rule 173-Q of the Rules while appels Nos.E/1750/2000-B, E/1894/2000-B and E/1893/2000-B had been filed by the appellants against the impugned orders in appeal dtd.17.2/21,2.2000 22.2.2000/28.2.2000 vide which Commissioner(Appeals) had upheld the order in original dated 31.8.98/ 24.9.98 of the Deputy Commissioner who ordered the confiscation of the seized goods under Rule 173-Q of the Rules with option to get the same redeemed on payment of Rs.1,60,000/- and imposed penalty of Rs.50,000/- on each of them. Since all these six appeals arise out of the common facts and as such are being disposed of by one common order.
2. The facts giving rise to all the above captioned appeals may briefly be stated as under:
3. All the above named appellants were engaged in the manufacture of oil expellers and parts and other machinery parts falling under sub-heading 8479.19,8421.10,8428.10, 8483.90, 8470.90 and 8302.00 of the schedule to the CETA, without any Central Excise registration. They had been referred as party No. (1) to (3) respectively in both the impugned orders as well as in the orders in original referred to above. Their units were visited by the Preventive Party on 16.1.97 and during the course of visit, it revealed that the manufacturing of oil expellers and parts was being carried out in one premises belonging to M/s.Super Engineering Works(appellant No.(2). On the left side adjoining that premises was a shed where two welding sets and gas cutting machine were lying and on the right side of the premises was a small room where tampering hearth and lathe machine were installed. The shed and the small room reportedly belonged to M/s. Shakti Engineering Works (appellant No.3). There was, however, no power connection in the premises of appellant No.(3) and the power connection of 100 HP installed in the premies of appellant No.(2) was being used by him for running the machines. The premies of M/s.Simplex Expeller Works, appellant No. (1) was found adjacent to the common office of all the appellants, wherein four lathe machines were installed with power connection of 20 HP. The investigation further revealed that the partners in all the these units (appellants) were interse blood relations and all the units virtually belonged to one family. It was also discovered that they all were availing benefit of SSI exemption Notification No.1/93-CE dated 28.2.93 on their individual clearances illegally. On physical verification of the stock of the finished goods lying in the premises, unaccountedd goods valued at Rs.6,37,268.00 involving Central Excise duty amounting to Rs.95,590.00 were found and the same were seized. However, on the request of Sat Parkash Goyal, partner of appellant No.(1) the goods were provisionally released to him on 27.1.97 on furnishing bank guarantee of Rs.1,60,000/-. All the appellants were thereafter served with a show cause notice dated 11,6.97 to show cause as to why the seized goods should not be confiscated and the duty amounting to Rs.95,590.00 be not recovered and penal action under rule 173-Q be not taken against them.
4. It was also found by the Prevenive staff during the checking, that the appellants connived in order to evade the payment of Central Excise duty and got themselves wilfully registered in different names and filed separate declarations under rule 173-B of the Rules and that they were not entitled to the benefit of the exemption Notification No.1/93-CE but illegally availed its benefit during the period February – March 1997 to March 1998. They were accordingly served with there show cause notices dated 2.9.97, 12.12.97 and 14.5.98 to show cause as to why their clearances should not be clubbed and the differential duty evaded by them for the periods February – March 1997, (Rs.226058/-) 4/97 to 9/97(Rs.118876), 10/97 to March 1998(Rs.200125/-) be not recovered and penal action also be not taken against them.
5. The appellants contested all the above referred show cause notices,i.e.one issued in a seizure case, dated 11.6.97 and the other three issued in clubbing in clubbing case, dated 2.9.97, 12.12.97, and 14.5.98. They in their reply took the defence that their all the three units were separately located had sufficient machinery to produce the goods, the partners in all the units were different and the units were separately registered with the Registrar of Firms and that there was no flow back of money from one unit to another and there was also no common control of the business and the profits of the units by any single person.. They also avered that the seizure of the goods was illegal and there was no justification for denying them independently the benefit of exmption Notification No.1/93-CE dated 28.2.93 in their individual clearances, during the period in question.
6. The Deputy Commissioner(Tech.) who adjudicated all these show cause notices, did not accept the version of the appellants. He in the seizure case ordered the confiscation of the goods with option to get the same redeemed on payment of Rs.1,60,000/- and appropriated that amount from the bank guarantee furnished by appellant No.(1) while getting provisional release of the goods. He also imposed penalty of Rs.50,000/- on each of the appellants under rule 173-Q of the Rules, through order in original dated /31.8.98/24.9.98. This order of his was affirmed in appeal, through the impugned order in appeal dated 17,2/21,2,2000 2 2.2.2000/28.2.2000 by the Commissioner(Appeals).
7. Similarly, in the clubbing case, the Deputy Commissioner as adjudicating authority did not accept the plea of the appellants and confirmed the demand in all of Rs.5,45,045/- for the period February 1997 to March 1998, on appellant No.(1) and imposed penalty of Rs.1,00,000/- on each of the appellants through the order in original dated 31.8.98/9.9.98. The Commissioner(Appels) upheld his order, when appealed against before him by the appellants through the impugned order in appeal dated 28.1.2000/7.2.2000.
8. Against both the aforesaid orders of the Commissioner(Appeals) the above referred six appeals have been filed by the appellants.
9. The learned counsel for the appellants had assailed the validity of the bot above said orders of the Commissioner(Appeals) by contending that there was no material on the record to prove that all the three units(appellants) were one and that there was flow back of money from one unit to another or that all the units were being controlled and managed by one person. Therefore, neither the clubbing of the clearances of all the units during the period in question nor the seizure of the goods lying in their premises at the time of checking, could be made under the law. He has also submitted that since the duty in a seizure case initiated on the basis of show cause notice dated 11.6.97 as well the penalty, had been imposed on all three units under rule 173-Q of the Rules, it must be presume that the Excise department accepted them as independent units especially when they all were having independent SSI registration and also registered with the Registrar of Firms and had separate Sales Tax numbers. Therefore, the impugned orders of the Commissioner(Appeals) in all the appeals deserve to be sest aside. In support of his contention he has placed reliance on –
“(1)1999(32) RLT 651(CEGAT)
Process Plant (India) Ltd. & Ors.
Vs. CCE Bombay.
(2)1999(113) ELT 946
Rupani Textile Industries
Vs. CCE Mumbai.
(3)1996(86) ELT 229
CCE Ahmedabad
Vs.Ambica Scale Mfg.Works
(4)1997(92) ELT 451(SC)
Gajanan Fabrics Distributors
Vs. CCE Pune and
(5)M/s.Shriram Central Processing System & O
Ors. Vs. CCE Indore decided vide Final
Order No.A/79-84/2000-NB(DB) dated
1.2.2000 by the Tribunal
10. On the hand, the learned SDR has argued that there was overwhelming evidence to prove that all the three units (appellants) were virtually one, being located in the same premises had common manufacturing activities being carried by one family and had common office where record/documents of all the units were being maintained and stored. Therefore, the clubbing of their clearances and seizure of the goods had been rightly made by the authorities below.
11. We have gone through the record and heard both the sides.
12. Admittedly, the partners in all three units(appellants) for manufacture of oil expellers and parts were inter blood relations and members of one family. In Simplex Expeller Works, unit No.(1) (appellant) partners were Desh Raj, his sons, Sat Parkash, and smt. Kiran Goyal, wife of Surender Pal his another son, while second unit [appellant No.(2)] the partners were Surender Pal, son of Desh Raj, Raj Rani, wife of Rakesh Kumar and Raksha Rani, wife of Anil KUmar, both sons of Desh Raj. Similarly, in the third unit[([appellant No.(3)] Rakesh Kumar and Anil Kumar both sons of Desh Raj and Kanta Rani, wife of Sat Prakash, another son of Desh Raj, were the partners, All the three units were apparently constituted by Desh Raj, his sons wife and daughters in law.
13. No doubt all the unit got themselves registered as SSI units separately at different times but not apparently for the purposes of having independent business, income etc. but only with a common intention to evade the payment of Central Excise duty by wrongfully availing the benefit of exemption Notification No.1/93 dated 28.2.93. There is no material on the record to suggest if all the partners before starting these units had any independent source of income or nucleus with them for starting the business. They all engaged themselves in the manufacture of common goods i.e. oil expeller and parts and kept different names of the units just with a view to camouflage their motive of evading Central Excise duty. They carried manufacturing activity in a common hall without any partition therein. The machinery for manufacturing expeller and parts was found only in the premises of unit No.(1)[appellant No.1] while the other units( appellants) did not possess any sufficient machinery and the power connection for carrying out the manufacturing activities. Even Sat Parkash Goyal, partner of unit No.1 in his statement dated 16.1.97 did not deny all these facts. He in his statement rather conceded that their manufacturing activities/facilities were common that is. they had common, manufacturing premies and one common office for all the three units. His statement was endorsed by Surender Pal, his son who was partner with him in one unit.Similarly his another son Anil Kumar who on papers was shown as partner in unit No.3[ appellant No.(3)] also accepted the correctness of his statement. On the basis of their statements and investigation carried out by the Preventive Staff at the spot, in our view, the clubbing of clearances of the goods made by all the units (appellants) during the period in question and the seizure of the goods lying in their premies had been rightly made by the authorities below. The alleged subsequent retraction of the statement by Sat Parkash Goyal had been rightly ignored being an afterthought. Moreover, there is no material on record to suggest if any pressure or coercion was exercised on him for making the statement. His statement, as observed above that all the units were having common manufacturing activities/facilities was endorsed by his own sons Surender Pal and Anil Kumar whom he showed them partners in the units.
14. On the basis of separate registration as SSI units or by getting separate sales tax numbers and registration from the Registrar of Firms, the appellants could not be termed as independent units, when the manufacturing activities were being carried out by them collectively as members of one family at one place with one office.
15. The flow back of money from one unit to another could not be possibly detected by the Preventibe Staff as this was within the special knowledge of the partners of these units. The money transaction in such cases would never be transparent, rather it would be under the table, by the parties. Therefore, it was not for the Revenue but for the appellants to prove that they had independent money transactions and were not sharing the losses and profits inter-se. Rather, being members of the one family, it could be safely inferred that they were packing the profiles of all the units. They have not brought in material on the record even to suggest that they were all having separate residence, mess and bank accounts and that they started the manufacturing activities with the capital contributed in equal share by all the partners from their own savings or income. It was for them to prove all these facts to establish their separate identities in order to claim benefit of exemption Notification No.1/93 dated 28.2.93. When units No. (2) and(3)[appellants Nos.(2) and(3)] did not possess even sufficient machinery and the power connection for carrying out manufacturing activities, the question of their being independent units, did not at all arise. In fact, the clearance of the goods by Unit No.(1)[appellant NO.1] were being made in the names of other two units with a view to avail illegally the benefit of the exemption notification to evade the payment of duty.
16. The ratio of the law laid down in none of the cases referred to above and relied upon the counsel for the appellants is attracted to the facts of the present case. In the first case Process Plant(India)Ltd. & Ors. the clearance were not clubbed as the transactions were found on principal to principal basis. But such was not the position in the case in hand. Similarly in the second case Rupani Textile Industries the demand was raised by the Collector against all units by considering as independent assessees and for that reason it was observed that the clubbing could not be made, but that was not the position in the present case. Similarly, in the third case CCE Ahmedabad Vs. Ambica scale Mfg. Works the sales of the goods were found to had been made be each unit independently under their respective brand name and one unit had no control over the affairs of the other and for that reason the clubbing was not allowed, Similarly, in the fourth case Gajanan Fabrics Distributors,the demand was confirmed on all the seven units and for that reason it was observed that the Collector treated them as assessees and recognised their independent existence. But in the case in hand, the seize goods were got released on furnishing a bank guarantee only by appellant No.(1) and not by other units. Only penalty had been imposed on all the appellants and that too under Rule 173-Q of the Rules for the simple reason that they all connived and evaded the payment of Central Excise duty. They had not been recognised directly or indirectly as independent units. Rather both the authorities below had recorded concurrent findings that these were one unit constituted by members of one family with a view to evade the appropriate payment of Excise duty. Similarly, in the last case Shriram Central Processing decided by the Tribunal vide Final Order No,A/79-84/2000-NB(DB) the ratio of the law laid down in Gajanan Fabrics Distributors was followed but that ratio in the instant case, keeping in view facts, circumstances and the discussion made, cannot be made applicable.
17 In view of the discussion made above, both the impugned orders of the Commissioner(Appeals) referred to above are prefectly valid and not suffer from any legal infirmity and as such the same are upheld.
18. Consequently,all the six appeals of the appellants being without merit are accordingly ordered to be dismissed.