Full Judgment
2. The Ld. Counsel Shri D.B. Shroff for the applicants submitted that the Commissioner has held that all the three firms were in fact one and the same manufacturer and has demanded the duty. It was contended that the demand is hit by limitation and in this context reference was made to the certificates on their applications for licence submitted in 1987, where the officers have certified on visiting the factory and also they have seen the manufacturing process as to the of the applicants eligiblity for exemption under Notification No. 132/86.
Further the ld. Counsel pointed out that annual stock taking has been done in their units without any objection, and further the records have been audited for the relevant period; their classification list have been approved. Further, the ld. Counsel pointed out that the Department has addressed common communication to all the 4 units that when communicating test result, which shows that there was a knowledge on the part of the Department about the units even earlier. The Ld.
Counsel urged that in coming to the conclusion that all the 4 units ought to be considered as one manufacturer, the Commissioner has considered the certain innocuous circumstances and has indicated the fact that all the units had their own machinery registered and no discrepancy in their stock and registered was found on the day of the Panchanama. Even the interest free amounts referred to in the Commissioner's order were relating to amounts given by one unit to another and which have been subsequently set off. In the absence of financial flow back between the units and also as there was no inter-se transaction in goods between them, Commissioner went wrong in holding that the clearances of the units are to be clubbed. It was pointed out that the firms have been closed since 19-3-1994.
3. Shri S.V. Singh, the Ld. JDR pointed out that the certificates of the officers on their licence application in 1987 will not advance the applicants case on suppression because the period for which the demand is made relates to a subsequent period from 1989-94. Further this stock taking is confined to the Bonded Store Room (BSR), and their statutory registers, as also that the audit is document based audit and the audit party does not check manufacturing process. He referred to the findings in Commissioner's order which shows that effectively one set of machinery only was being used and the applicant Shri Labhubhai B. Patel was in common administrative control of all units and the units consisting all partners of the same family. Therefore no case has been made on the limitation, submitted the ld. JDR.4. We have carefully considered the submissions. On the merits of the case whether all the units should be considered as one manufacturer for duty demand is essentially one of appreciation of evidance which we cannot undertake at this stage. The issue on limitation is also in our prima facie view contentious, because there are evidence to show prima facie that the members of one family were controlling all the units, and the administrative control also in the hand one of family members.
It is ofcourse true, as settled by the judicial pronouncements, that the fact whether units are clubbed, in the circumstances cannot be based on a single factor such as common storage of raw materials but what has to be looked into is the cumulative effect of several factors and such several factors are present, in this case which have to be gone into to determine the real nature of the 4 units. Therefore, for the purpose of hearing the appeal on merits, no case has been made for total waiver of duty and penalty, and we direct that the appeals be heard on condition of the applicants making the deposit of Rs. 19.00 lacs on or before 31-8-1998, subject to which the pre-deposit of the balance duty amount and the penalty on these applicants is dispensed with and recovery stayed. The applicants are given the option to make the pre-deposit by way of cash deposit of Rs. 10.00 lacs and freezing of Rs. 9.00 lacs in their Modvat account in the RG 23.
5. Matter to come up for ascertaining compliance with this order on 7-9-1998.