Whether for computing the SSI limit the Turnover of two units separately registered but centrally managed be clubbed if these are controlled and managed by the same person?

PJ/Case Law /2016-17/3286

Case:- LIBRA ENGINEERING WORKS Versus COMMISSIONER OF C. EX., AHMEDABAD-I

Citation:- 2016 (339) E.L.T. 610 (Tri. - Ahmd.)

Brief Facts:-This is an appeal filed against OIA No. 158/2008(Ahd-1)CE/ID/Commr(A), dated 19-8-2008 passed by the Commissioner of Central Excise (Appeals), Ahmedabad.
Briefly stated the facts of the case that the appellant’s unit and the Unit of M/s. Accurate Engineers, were visited by the Central Excise Officers on 22-12-2006. It was found that both these units were engaged in the manufacture of “Industrial valves” falling under Chapter 84 of CETA, 1985 and clearing goods without payment of duty by availing value based SSI exemption Notification No. 08/2003-C.E., dated 1-3-2003. On completion of necessary investigation, it has been alleged that both units were managed and controlled by the Proprietor of the appellant Mr. Asgarali A. Siddiqui, therefore, these units are one and the same, hence in computing the total clearance value of excisable goods of the Appellant’s Unit, the clearance value of M/s. Accurate Engineers, be clubbed for the purpose of determining the eligibility of SSI exemption Notification No. 08/2003-C.E., dated 1-3-2003. It was further alleged that during the financial year 2005-06, the appellant had exceeded the exemption limit by Rs. 13,20,981/- involving Central Excise duty of Rs. 2,15,584/-. Consequently, a demand notice was issued on 29-10-2007 for recovery of duty and imposition of penalty. On adjudication, the demand was confirmed with interest and penalty imposed. Aggrieved by the said order, the appellant filed an appeal before the Ld. Commissioner (Appeals), who in turn rejected their appeal. Hence, the present appeal.
Appellant’s Contentions:- The appellant has filled a written submission dated 30-5-2016 with a request to decide the case on merit. In their written submission, mainly they have assailed the order of the authorities below arguing that the clubbing other clearance values of M/s. Accurate Engineers with that of M/s. Libra Engineering Works, is incorrect as both these units are having separate legal entity, inasmuch as they possess separate PAN No., Sales Tax Registration, file separate Income Tax and Sales Tax returns, accordingly each unit is eligible to the exemption limit of 100 Lacs prescribed under notification No. 8/2003-C.E., Dated 1-3-2003.They referred to various case laws on the in support of their argument.
Respondent’s Contentions:-Ld. AR for the Revenue reiterates the findings of the Ld. Commissioner (Appeals). He submits that on the day of visit of the Units, the officers recorded the statement of Shri Asgarali A. Siddiqui, proprietor of the appellant. In his statement, he has categorically accepted that the other unit, namely, M/s. Accurate Engineers, was also a proprietorship unit, whose proprietress was his wife Smt. Halimakatun Asgarali Siddiqui and its existence is for names sake; all the management/control and day to day affairs of M/s. Accurate Engineers, had been handled by him. Ld. AR further brought to our notice, the statement of Smt. Halimakatun A. Siddiqui recorded much later i.e. on 25-5-2007, whereunder she has also accepted that all activities carried out in their factory were looked after by her husband Shri Asgarali A. Siddiqui, and she was not aware of anything about the working of the said unit; she had only signed the documents as and when placed before her. It is the contention of the Ld. AR that these statements had never been retracted nor contradicted, therefore, the plea that both the units are separate for the purpose of availing Notification No. 8/2003-C.E., dated 1-3-2003 has been rightly rejected by the authorities below. It is his submission that the case laws referred to by the appellant are on different set of facts & circumstances and hence not applicable.

Reasoning Of Judgement:- We have considered the written submission of the appellant and also the submission of the ld. AR for the Revenue. The short issue involved in the present case for determination is : whether the clearance value of M/s. Accurate Engineers be clubbed with that of M/s. Libra Engineering Works for the purpose of extending the benefit of SSI exemption Notification No. 8/2003-C.E., dated 1-3-2003 or otherwise?
On analysing the evidences on record, we find that the Central Excise officers visited the unit of the appellant, that is, M/s. Libra Engineering Works and after taking stock of the machineries installed in the said unit, visited the premises of M/s. Accurate Engineers also to ascertain the machineries installed therein. After drawing necessary panchnama at both these units, the statement of Proprietor of the appellant, that is, Shri Asgarali A. Siddiqui, was recorded who has admitted that both units were engaged in the manufacture of Industrial valves falling under Chapter 84 of CETA, 1985 and availing SSI exemption Notification No. 08/2003-C.E., dated 1-3-2003 separately. Also, he has further stated that the other unit in which his wife was the proprietress had been handled/controlled by him. The officers during the course of investigation also recorded the statements of buyers who equivocally stated that for the purpose of purchase of finished goods, invariably they contact Shri Asgarali A. Siddiqui, and the goods were sent in the invoices of M/s. Accurate Engineers. The proprietress Smt. Halimakatun A. Siddiqui, in her statement admitted that she was a housewife and not involved in the management of the business of manufacturing/selling of industrial valves. Analysing these uncontradicted evidences, we do not harbour any doubt that even though M/s. Accurate Engineers, on record, a separate unit, but, its day to day function and management was handled by Shri Asgarali A. Siddiqui, proprietor of M/s. Libra Engineering Works and his wife Smt. Halimakatun A. Siddiqui has lent her name as proprietress of the firm. In other words, for all practical purposes, the management/control of the business of manufacture and sale has been handled by Mr. Asgarali A. Siddiqui, proprietor of the Appellant. In these circumstances, we do not find any error in the order of the authorities below in clubbing the clearance value of both the units for the financial year 2005-06 in computing the eligible limit of 100 Lacs for the Appellant Unit prescribed under Notification No. 08/2003-C.E., dated 1-3-2003 and confirmed the duty short paid and penalty imposed.
Decision:-In the result, the impugned order passed by the Ld. Commissioner (Appeals) is upheld and the appeal is rejected.
Comment:- If the units are managed and controlled by the same person then it can taken that the although the units were separately registered but in real sense it was one hence the turnover shall be clubbed.

Prepared By- Tushar Gupta

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PJ/Case Law /2016-17/3286

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