SPECIAL MACHINES Vs. CCE

JUDGEMENT

(1.) The appellants are manufacturing welding electrodes and were claiming the benefit of small scale exemption under Notification No. 175/86/CE dated 1.3.1986. The allegation against the appellant is that they created three more units namely, (i) M/s. Industrial Products, (ii) M/s. Modern Equipments and (iii) M/s. S.M. Welding Electrodes Pvt. Ltd. It is alleged in the show cause notice issued to the appellants after completing the investigation that, the said three units do not have any independent manufacturing capabilities and are completely dependent on the appellants unit. The proposal was therefore to club the clearance of all the four units and consequently, it was alleged that the concessional excise duty benefit for small scale units enjoyed by M/s. Special Machines under Notification No. 175/86 -CE dated 1.3.1986 was not available to them. Hence duty of Rs. 78,55,951/ - was demanded and confirmed against them and penalty of Rs. 5 lakhs was imposed under Rule 173Q. The appellants are challenging the findings contained in the said order, through the instant appeal.

(2.) The show cause notice that has been issued to M/s. Special machines and the other three units had twofold proposals. The first part of the proposal was that, since the three units had also used the brand name of Special Machines in respect of Welding Electrodes cleared from their factories, each of the three units was not entitled to duty exemption and a separate duty demand against each unit was also indicated proposing its recovery. However, in the adjudication proceedings, the proposal for recovery of duty from individual units on account of use of brand name was abandoned. The order -in -original confined itself to the proposal of clubbing the clearance of the three units with that of the appellants i.e. Special Machines (S.M.), and seeking duty recovery only from the appellants. The appellant Special Machines is a proprietary firm of which Shri R.M. Jain is the sole proprietor.

(3.) The details of the various firms which are allegedly inter connected are as follows: