HARISH MEHRA & ORS. Vs. CCE

JUDGEMENT

(1.) THE five appellants in these appeals are in appeal against the order of the Collector of Central Excise, Chandigarh dated 30.7.1993. The said order confirmed a duty demand of Rs. 4,68,547.75 on M/s. Continental Rubber Industries (CRI) apart from imposing a penalty of Rs. One lakh on it. Penalties of Rs. 20,000/ - each under Rule 209A were also imposed on (1) M/s. Dupont Rubber (DR) (2) Mrs. Lata Mehra, Parmer of (DR) and (3) Shri Ravinder Mehra, partner of Dupont and Shri Harish Mehra. Sole Proprietor of Continental Rubber. The matter pertains to clubbing of the production of two units, namely M/s. Continental Rubber Industries (CRI) and M/s. Dupont Rubber (DR). On the basis of information collected after a visit to the factory premises by the Central Excise Officers of M/s. CRI, Amritsar and M/s. DR, Amritsar both located at the same address, a show cause notice was issued on 6.1.1992 to M/s. CRI, DR, Shri Harish Mehra, Proprietor of CRI and the two partners of DR, namely, Shri Ravinder Mehra and Smt. Lata Mehra. The SCN alleged that M/s. DR was not an independent workable unit but was only an artificial fragmented unit set up to evade Central Excise duty since DR and CRI had united management, common labour, common machinery like vulcaniser, building, generator set, drying chambers, common production facilities and mutual interest and money transactions, inter se. It was further alleged that Shri Harish Mehra, Sole Proprietor of CRI and Ravinder Mehra were living in a joint family and Smt. Lata Mehra was the wife of Shri Vijay Mehra. It was further alleged that both the units were one and the same and, therefore, clearances made by them over and above the exemption limit for small scale industries under Notification No. 175/86 during the five years period prior to the issue of the Show Cause Notice were chargeable to duty and as per the duty demand worked out, an amount of Rs. 4,68,547.75 was recoverable from them and penalty was imposable for contravention of various provisions of the Central Excise Rules.

(2.) BY the impugned order the duty demand referred to above was confirmed and penalties imposed as referred to above.

(3.) 1. Defending the impugned order Ld. JDR Shri Sanjeev Srivastava submitted that it has to be noted that during the period in dispute neither of the units were L -4 Licensees. The machineries installed in CRI premises were subsequently scrapped and the machinery purchased in the name of M/s. Dupont was installed in the place of scrapped machinery of M/s. Continental. Further, Shri Harish Mehra, Proprietor of M/s. CRI had clearly stated that they were manufacturing only two items. There was also no dispute that Shri Harish Mehra had full control of both the units. It was also not in dispute that the production account of both the units were common. He referred to the findings in the order -in -original wherein all the case law referred to by the present appellant had been considered. The Collector (Appeals) had also distinguished the Tribunal judgment in Jagjivan Das case, supra. In the instant case, unlike in the case of Jagjivan Das, supra, where all the units were functioning, in the instant case only one unit was actually functional. All the machinery bought by DR were in fact installed at the premises of CRI. He also drew attention to the fact that L -4 licence were obtained by the two units only subsequent to the visit of the Central Excise Officers. As regards the objections raised by appellants as to the basis of the Additional Collector issuing the SCN, Ld. JDR submitted that according to the definition of 'Collector' in the Central Excise Rules at the relevant period, 'Collector' included Additional Collector as well. As regards common control being taken as a factor for clubbing the clearance of two units, he relied on the Tribunal decision Supreme Engineering Works v. CCE [ : 1996 (82) ELT 102] and the Tribunal decision in Gajanand Fabrics v. CCE [1992 (43) ECR 172]. He also relied on the following case law in support of his contention that where there were common facilities production and clearance have to be clubbed viz., Step Cosmetics v. CCE [1996 (87) ELT 734 (T)]. He also referred to the Tribunal decision in Unique Resin Industries v. CCE [ : 1993 (68) ELT 230] in support of his contention that where infrastructure facilities were common clearances have to be clubbed.