CCE Vs. NITON INDUSTRIES

JUDGEMENT

(1.) These are the Revenue's appeals against Order -in -Original No. 76/90 dated 17.10.1990 [issued on 1.11.1990 in File No. V -Adj. (Ch. 84) 15 -186/87] of the Collector of Central Excise, Bombay -II. The appellant is aggrieved by the Collector's finding that there was no conclusive evidence of mutuality of interest among the respondents viz. M/s. Niton Industries, M/s. Inventa Valve Industries (Bombay) Private Ltd., and M/s. Niton Valve Industries Private Ltd. and, therefore, their clearances of the product in question were not liable to be clubbed together for denial of the benefits of SSI exemption.

(2.) The impugned order had been passed in adjudication of the show -cause notice (SCN) dated 5.1.1988 issued by the Collector to the aforenamed three units and two individuals, namely Sh. V.R. Sharif and Sh. P.V. Jain. The gist of the allegations raised in the SCN was that M/s. Niton Industries had created the facade of two other units viz. M/s. Inventa Value Industries (Bombay) Private Ltd. and M/s. Niton Value Industries Private Ltd. with intent to evade payment of Central Excise duty on their product viz. industrial valves by unduly availing the benefits of SSI Exemption Notifications [Notification No. 105/80 -CE dated 1.3.1980 as amended by Notification No. 77/83 -CE dated 1.3.1983 as amended by Notification No. 77/85 -CE dated 1.3.1985 as amended by Notification No. 175/86 -CE dated 1.3.1986 as amended by Notification No. 216/86 -CE dated 2.4.1986] and had manufactured and cleared from their factory premises, without payment of duty and in contravention of Central Excise Rules, valves totally valued at Rs. 4,76,10,750.12 in excess of the exemption limits prescribed under the Notifications, during 1982 -83,1983 -84,1984 -85,1985 -86,1986 -87 and 1987 -88 (upto 1.11.1987). The SCN, by invoking the extended period of limitation under the proviso to Section 11 -A(1) of the Central Excises and Salt Act, 1944, proposed to recover Rs. 29,15,587.55 as duty of excise on the above excess clearance value as determined by clubbing of clearances of the three manufacturing units. It further proposed to confiscate the 154 valves which had been seized from the premises on 1.11.1987 by the Central Excise Officers, who had found that the goods had not been accounted for in RG -1 register. Land, building, plant, machinery etc. were also proposed to be confiscated under Rule 173Q(2)(i) and (ii). There were, also, proposals for imposition of penalties on the units under Rules 173Q/52A/226 and on S/Shri V.R. Shariff and P.V. Jain under Rule 209A. After considering the parties' replies to the SCN and hearing them, the Commissioner passed the impugned order, whereby all proceedings were dropped except in relation to 78 (out of 154) valves manufactured by M/s. Niton Industries. Confiscation was ordered of the 78 valves which had been found to be in fully manufactured condition but not accounted for in RG -1. Since the goods [which had been provisionally released to the party on execution of a B -ll bond and production of a Bank guarantee] were not produced by the party in terms of the bond executed by them, an amount of Rs. 10,000/ - was appropriated from the bank guarantee towards redemption fine in lieu of confiscation. M/s. Niton Industries were also directed to pay duty at the appropriate rate on the 78 valves. The Commissioner also imposed on them a penalty of Rs. 5000/ - under Rules 173Q/226.

(3.) We have carefully examined the records of the case. We note that the department's case against the parties is founded principally on the following observations and findings of its officers: