LUBRICARE RELAYS PVT. LTD. AND ORS. Vs. CCE

JUDGEMENT

(1.) IN these seven appeals filed by M/s. Lubricare Relays Pvt. Ltd. and others, the matter relates to the clubbing of clearances of the seven notices for the purposes of availing of small scale exemptions under the provisions of the central excise duty exemption notifications providing for exemption to the small scale manufacturing units. The Collector of Central Excise, Pune, who had adjudicated the matter confirmed the demand of Rs. 47,60,833.39/ - and imposed a penalty of Rs. 12,00,000/ -. A redemption fine in lieu of confiscation of land, building etc. of Rs. 12,30,000/ - was also imposed on the notice units. The matter was heard on 15.9.1998, when Shri Vikas Khare, Co. Secretary, appeared for all the appellants. Shri D.S. Negi, SDR, represented the respondent/Revenue.

(2.) SHRI Vikas Khare, Co. Secretary, submitted that out of the seven appellants, five were private limited companies and two were partnership concerns. They were producing different type of goods and had come into existence at different point of time. It was only for the purpose of inviting foreign buyers that the units were projected as one group. It was a common strategy to raise resources, to effect modernisation, to improve efficiency and to extend the market share that all the units operated as a group. It was admitted that their Chartered Accountant, Company Secretary, Quality Control Executive, Labour Adviser etc. were common, but it was argued that it was on account of the fact that the each individual unit could not afford the services of independent experts in their field. It was also admitted that monthly sales targets were fixed by one agency and that there were common loans and that a common list of creditors was prepared. It was, however, argued that none of these could be taken to mean that all the units were one. The purpose of the meetings taken by Shri Madhave Kirloskar was to apprise him with the activities of different companies. Shri Madhave Kirloskar was held in high esteem by the units and it was only to seek guidance and to take help with regard to the external agencies that the units approached him from time to time. The main concern was the speedy disposal of the issues that were coming up for consideration from time to time. As regards mutuality of interest, he submitted that there was only temporary accommodation of each other units and that there were two -way financial transactions. There were genuine financial arrangements. Each unit was cooperative with others and no one was charging interest. Machinery were given on loan and it generated income to the group. As regards limitation, he submitted that all units were within the same Range and within the same Division. The Departmental Officers were regularly visiting the units. Their inter -relationship was known to the Department. It was his submission that the manufacturer was not duty bound to disclose their relationship with other units and that there was no justification for invoking the extended period of limitation.

(3.) WE have carefully considered the matter. The issue for our consideration is whether each of the seven notice units were eligible for small scale exemption or whether the eligibility or non -eligibility to the benefit of small scale exemption was to be determined after taking into account the total value of clearances of all the notice units together.