CCE Vs. NATIONAL ADHESIVE AND CHEMICALS

JUDGEMENT

(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 and 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 and 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 and 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 and 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 and Co. against the penalty imposed on them by the Deputy Commissioner. The operative part of this order reads as under:

(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 and 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.