MODERN ENGINEERING PLASTICS PVT. LTD. Vs. CCE

JUDGEMENT

(1.) Vide the impugned order, the Commissioner of Central Excise (Appeals) has upheld the finding of the Joint Commissioner of Central Excise that the value of clearances of M/s. Modern Fabricators & Engineers (herein after referred to as MFE) and M/s. Engineering Plastics Incorporation (herein after referred to as EPI) are to be clubbed with that of M/s. Modern Engineering Plastics Pvt. Ltd., (herein after referred to as MEPP) and confirming a duty demand of Rs. 6,84,128/ - against MEPP on the ground that it had exceeded the ceiling limit of clearance value and hence not eligible to the benefit of SSI exemption under Notification No. 1/93 -CE dated 28.02.1993, and imposing a penalty of equal amount on the appellants under Section 11AC of the Central Excise Act, 1944 and Rule 173Q of the Central Excise Rules, 1944.

(2.) The case of the department is that MFE had floated a shadow unit in the name of EPI during 1993 -94 and manufactured FRP/PVC products in the factory during 1993 -95 and cleared the goods in the name of EPI and during 1995 -96 a private limited company MEPP was created and the goods continued to be cleared in the name of MFE and EPI and thus clearances made in the name of the above three units were required to be clubbed and that excise duty was chargeable on clearances in excess of Rs. 30 lakhs value; up to 1994 -95 the value of dutiable goods of all the three units was within Rs. 30 lakhs but during 1995 -96 and 1996 -97, the value of clearances exceeded Rs. 30 lakhs and since MEPP had cleared the goods in the name of MFE and EPI from 1995 onwards, duty was chargeable from MEPP. The department also held that MEPP had wilfully suppressed the fact of manufacture and clearance of excisable goods in the name of other two units without payment of duty with an intention to evade payment of duty. Therefore, the extended period of limitation was attracted against MEPP who was also liable to penalty.

(3.) We find that there was no clear -cut demarcation between the factory of MEPP and that of EPI whose proprietrix was the wife of the Managing Director of MEPP. Further, raw materials for the manufacture of finished products had been stored in a single room without any identification as to which one belongs to MEPP or EPI. There was only one electricity connection for both the units. It was claimed that a sub meter had been installed but, such plea is only an after thought which has rightly been rejected by the lower authorities. EPI also had not purchased cutting machine, oven, winding machine and welding torches which were the machinery absolutely necessary for the manufacture of FRP/PVC tanks, vessels, pipes and fittings etc. as brought out from the process of manufacture as furnished by MEPP as under: