VERMA FROST Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellants filed these appeals against the Order -in -Original, dated 6 -2 -1987 passed by the Collector of Central Excise, Chandigarh. In the impugned order, the clearances of both the appellants were clubbed for the purpose of payment of Central Excise duty. The penalties are also imposed on the appellants.

(2.) LD . Counsel, appearing on behalf of the appellants submits that M/s. Verma Frost was a proprietory concern and Shri Babu Ram Verma was a proprietor. He submits that upto 28 -2 -1983, M/s. Verma Frost were engaged in the manufacture of refrigeration equipment and were availing the benefit of Notification No. 80/80 -C.E. Ld. Counsel submits that in the year 1983 -84, M/s. Verma Frost stopped manufacturing as they were not eligible for the benefit of small scale exemption notification on the basis of clearance of previous year. Ld. Counsel submits that in the year 1983 -84, Pawan Kumar, s/o Shri Babu Ram Verma started a new concern, viz., M/s. Freezland. He submits that both the units were separate concerns and the clearance of M/s. Freezland cannot be clubbed with the clearance of M/s. Verma Frost as they are separately registered under the Sales Tax Act and they are separately assessed for Income tax purposes. He submits that the factory premises of M/s. Freezland is situated at Plot No. 402A, Industrial Area, Chandigarh and after sometime, the manufacturing activity was shifted to Plot No. 403A on which M/s. Verma Frost was also manufacturing refrigeration equipments. He submits that a written document was drawn between the father and the son on the intervention of their relatives and a separate demarcated premises in Plot No. 403 was given to M/s. Freezland. Therefore, both the units cannot be treated as one. He relies upon the decision of Hon'ble Rajasthan High Court in the case of Renu Tandon v. U.O.I., 1993 (66) E.L.T. 375 and submits that the Hon'ble High Court held that in the absence of common funding and financial flow back, the clearance of two units cannot be clubbed only on the basis of situation of the units in the same premises, having same common management, office and labour and common electric connection. He submits that in the present case, there is no finding by the adjudicating authority regarding funding or financial flow back. He, therefore, prays that the appeals be allowed.

(3.) LD . D.R., appearing on behalf of the respondents, submits that M/s. Verma Frost stopped their manufacturing activity in the year 1983 -84 as they were not eligible for the benefit of small scale exemption notification. He submits that Shri Babu Ram Verma, Prop, of Verma Frost started the manufacturing activity in the name of M/s. Freezland, which was in the name of his son and started availing the benefit of small scale exemption notification. He submits that earlier the address of M/s. Freezland was shown as 402A, Industrial Area, Chandigarh whereas after some time, M/s. Freezland shifted his manufacturing activity to the same plot on which M/s. Verma Frost were situated i.e. 403A, Industrial Area, Chandigarh. He submits that to avail the exemption, M/s. Freezland in their declaration continued to show their manufacturing activity at Plot No. 402A, Industrial Area, Chandigarh, whereas, in fact, both the units were situated on the same premises. He, further, submits that Shri Babu Ram Verma, Prop, of M/s. Verma Frost in his statement under Section 14 of the Central Excise Act admitted that the invoices shown to be issued by M/s. Freezland were, in fact, signed by him. He also submits that before the adjudicating authority, the appellants admitted the fact that substantially common labour was utilised by both the units. He relies upon the decision of the Tribunal in the case of J.N. Marshall Pvt. Ltd. v. C.C.E. reported in 1997 (96) E.L.T. 149 (Tribunal). He submits that in this case the Tribunal held that in the case of common control of production and sale or management and special financial relationship existed between the units, the clearance of such units can be clubbed. He, therefore, prays that the appeals be dismissed.