UMIYA CERAMICS Vs. COMMISSIONER OF C. EX., RAJKOT

JUDGEMENT

(1.) ALL the appeals are being disposed of by a common order as they arise out of the same impugned order passed by the Commissioner of Central Excise (Appeals). We have heard Shri H. Modh, learned Advocate appearing for the appellants, and Shri Samir Chitkara, learned SDR for the Revenue.

(2.) AS per facts on record Umiya Ceramic as also Mor Ceramic are engaged in the manufacture of Refractory Fire Bricks falling under Chapter 69 of the Central Excise Tariff Act, 1985. Inasmuch as both the said units are located in the same premises, the said premises were visited by the Central Excise officers on 19 -12 -1997. As a result of various checks and verifications, officers entertained a view that though both the units exist separately on paper, factually they are one and the same. Accordingly the records maintained by both the units were seized under Panchnama dated 19 -12 -1997. Statement of Shri Denish Motilal Patel, Managing Partner of Umiya Ceramic was also recorded on 19 -12 -1997 wherein he deposed that he is partner of Umiya Ceramic and Manager of Mor Ceramic drawing a salary of Rs. 1000/ -; he is holding Power of Attorney of Mor Ceramic; that the factory premises for both the units are common; that the partners of both the units are close relatives of each other; that a part of the premises belonging to M/s. Umiya Ceramic has been leased out to M/s. Mor Ceramic on a monthly rent of Rs. 2000/ -; that Umiya Ceramic is using tunnel kiln of Mor Ceramic for the last 4 years inasmuch as Down Draft kiln of Umiya Ceramic is lying closed. It was further disclosed by Shri Denish Motilal Patel that they are not maintaining separate records/stock register either of raw material or finished goods. Another statement of the said appellant was recorded on 13 -10 -1998 wherein he admitted that Tunnel Kiln of Mor Ceramic is being used by Umiya without payment of any rent and it was only furnace oil used during the process being supplied by Umiya Ceramic.

(3.) BASED upon the above facts, proceedings were initiated by way of issuance of show cause notice dated 7 -9 -1999 alleging that two units are actually one and have been bifurcated for the purpose of availing small scale exemption benefit. The above allegation were based upon the fact that the said two units are located in the same premises without any demarcation; that no separate accounts for raw material and finished products are being maintained; that the work of both the units is being looked after by Shri Denish Motilal Patel; that the two units do not have complete machinery for manufacture of the goods and the kiln belonging to Mor Ceramic is being used by Umiya Ceramic for the last 4 years without payment of any rent etc. The said show cause notice culminated into an order passed by Additional Commissioner of Central Excise vide which he held that the clearances of both the units are to be clubbed. Accordingly, he confirmed the demand of duty of Rs. 5,18,349/ - against Umiya Ceramic along with confirmation of interest and imposition of personal penalty of identical amount under Section 11AC of Central Excise Act, 1944. In addition personal penalty of Rs. 3 lakhs imposed upon the appellants in terms of provision of Rule 173Q(1) of Central Excise Rules. Personal penalty of Rs. 3,50,000/ - was imposed upon Mor Ceramic under Rule 173Q and of Rs. 2 lakhs each was imposed upon Shri Denish Motital Patel, partner of Umiya Ceramic and Shri Motilal V. Patel, working partner of Mor Ceramic in terms of proviso to Rule 209A of Central Excise Rules, 1944. He also confiscated land, plant and machinery belonging to Umiya Ceramic with an option to redeem the same on payment of redemption fine of Rs. 2.50 lakhs. On appeal against the above order, the Commissioner (Appeals) upheld the order of clubbing of clearances of both the units, and hence, confirmed the demand. He, however, set aside the confirmation of interest and imposition of penalty upon Umiya Ceramic on the ground that Section 11AB and 11AC can not be pressed to service in respect of offences committed before the date of their enactment. He also set aside the confiscation of plant and machinery. He, however, upheld the penalty on Mor Ceramic but reduced the same from Rs. 3.5 lakhs to Rs. 2 lakhs. Similarly, he upheld the imposition of personal penalty on Shri Denish Motital Patel but reduced the same from Rs. 2 lakhs to Rs. 1.25 lakhs. Personal penalty on Shri Motilal Patel was set aside. The said order of the Commissioner (Appeals) is impugned before us.