SRI VIVEKANANDA INDUSTRIES Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) All the four appeals arise out of a common Order -in -Appeal Nos. 118 to 121/2002 (MDU) (GVN), dated 28 -6 -2002 passed by the Commissioner of Customs and Central Excise (Appeals), Trichy by which the Commissioner (Appeals) has rejected the appeals filed by the appellants herein.

(2.) The brief facts of the case are that all these appellants herein are engaged in the manufacture of RTS grills, clamps, distribution boxes, etc. for use in the manufacture of Reinforced concrete poles for supplying to Tamil Nadu Electricity Board. M/s. Vivekananda Industries, one of the appellants herein was a partnership firm during the relevant period viz. 1 -9 -87 to 28 -2 -90 with three partners viz. R.D. Pandian, P. Janarthanan, and P. Jagadesh. P. Janarthanan died of road accident and thereafter the firm continued with remaining partners and after some time P. Jagadesh also retired from the partnership as he wanted to start an independent business. On dissolution of partnership, R.D. Pandian had taken over the assets and liabilities of the erstwhile firm and converted the said firm into a proprietory concern. Four factories were functioning in the same premises. As it appeared to the department that the above units were individually lacking the machines required for manufacture of the goods and that all the units are one and the same and in fact only one unit was manufacturing the goods by using the machines of other units, and raw materials, power, finance, employees are shared by each unit with a view to avoid payment of Central Excise duty, show cause notices were issued to all of them which culminated in the order of adjudication passed by the original authority by order -in -original No. 9/2001, dated 10 -9 -2001 by which he has come to a conclusion that clubbing of clearances of all the unit is justified and accordingly demanded duty of Rs. 27,80,571.67 under Section 11A of the CE Act, 1944 and imposed penalty of Rs. 1,000/ - on each of the appellant, under Rule 173Q of the CE Rules, 1944. However, while confirming duty, the adjudicating authority did not specify as to whom the duty liability lies while at the same time penalty has been imposed on all the units. On appeal, the Commissioner (Appeals), it appears, without going in detail, upheld the order of the original authority. Aggrieved by the said order -in -appeal, the appellants have come in appeal.

(3.) Shri R. Ramaswamy, learned Counsel appeared for all the appellants and submitted that all the four units are separate and independent entities and they are separately assessed under the Sales Tax and Income -tax Laws and are not dummy unit created by Shri R.D. Pandian of Vivekananda Industries. He has pointed out that no separate show cause notice was issued to Shri R.D. Pandian, who has been alleged to be the brain behind creating the dummy units. He has further pointed out that in this case, though the original authority has come to the conclusion that value of clearances of all the units are to be clubbed as three units have been created for the purpose of evading duty, while demanding duty he has not specified as to who is to discharge the duty liability while at the same time, he has imposed penalty on all the appellants. On the aspect of merits of the case, he has submitted that no evidence whatsoever has been let in by the department in support of the allegations contained in the show cause notice and the order -in -original has been passed without the backing of any evidence whatsoever. He has further submitted that the appellants supply the goods to Tamil Nadu Electricity Board based on tenders floated by them and the goods are not supplied based on any contractual obligations and on satisfaction of the buyer i.e. TNEB that they are able to supply the goods as per the requirement of their buyer, tenders are accepted by the buyer viz. M/s. TNEB. He submitted that the finding of the lower authorities that the appellants are individually lacking the indispensable machines for the manufacture of the goods is because of the lack of knowledge of the departmental officers. He has further submitted that no sophisticated machines are required for manufacture of RTS grills, clamps etc. and therefore this reasoning of the authorities below that the appellants lacked indispensable machines for manufacture of the goods is totally baseless. He has submitted that it is not the case of the department that they have visited the premises with any expert in the field before coming to a conclusion that they were lacking the indispensable machines for the manufacture of the goods. He has also invited our attention to the judgment of the Hon'ble Supreme Court in the case of Gajanan Fabrics Distributors v. CCE, Pune reported in 1997 (92) E.L.T. 451 (S.C.) wherein it has been held that "By confirming the demand on all the seven units the Collector appears, however to have treated them all as assessees and, implicitly recognised their independent existence" and the matter was remanded by the Apex Court. He has also invited our attention to the order of this Bench of the Tribunal in the case of N. Sundareswaran Tin Factory reported in 1999 (105) E.L.T. 330 wherein in identical facts and circumstances, the matter was remanded for reconsideration. He has also invited our attention to the decision of the Bombay Bench of the Tribunal in the case of Sanjay Electrical Works v. CCE, Mumbai -VI reported in 1999 (114) E.L.T. 405 wherein it was held that demand can be raised against main unit when only one unit was found as real manufacturer and other units as merely shadows and the matter was remanded. He has further pleaded that inasmuch as in the instant case the impugned order has been passed without any evidence, the order impugned may be set aside and the appeals allowed.