Full Judgment
2. Shri R. Raghwan, learned Advocate, submitted that out of total duty confirmed against them the Appellants are not contesting the demand of duty amounting to Rs. 2,81,223/-. In view of this the said demand of duty is upheld.3. Learned Advocate mentioned that the appellants manufacture excisable goods falling under Chapter 84 of the Schedule to the Central Excise Tariff Act; that there is another unit functioning in the name and style of M/s. VME Foundary (Pvt.) Ltd. The department has made out a case that value of clearances of both the units is required to be clubbed for the purpose of levying the Central Excise duty; that an Order-in-original No. 96/96, dated 22-6-96 was passed by the Commissioner confirming duty against them and imposing penalty; that on Appeal filed by the Appellants with Appellate Tribunal which vide Final Order No. 1585/2001, dated 13-9-2001, set aside the said Order-in-original and remand the matter to the original Authority for de novo consideration after following the principles of natural justice and after taking into consideration all the submissions made by them.
He mentioned that their main plea before the Appellate Tribunal, in the said Appeal, was that clubbing of value of clearances of two units can not be ordered without issuing a show cause notice to both the units; that the Tribunal has, therefore, remanded the matter for re-adjudication after following the principles of natural justice; that the Commissioner again, while passing the impugned order, has not issued show cause notice as per direction of the Appellate Tribunal in Final Order No. 1585/2001; that without issue of show cause notice to the other unit whose value of clearances is to be clubbed with the value of clearances of the Appellants, the Department can not club clearance of other unit. He relied upon the decision in the case of Dawn Fireworks Factory v. CCE, Madurai [1999 (31) RLT 104 (CEGAT)] wherein it has been held by the Tribunal that non-issue of show cause notice to all the units whose clearance are proposed to be clubbed vitiates the proceedings. Alternatively, the learned Advocate has also relied upon a number of decisions in support of his contention that the value of clearance of the Appellants and other units are not required to be clubbed as both are separate entity. Some of the decisions are as under :-International Dyestuff Manufacturing Co. v. CCE - 1991 (53) E.L.T. 85 (Tri.).
4. Countering the arguments, Shri A. Jayachandran, learned Departmental Representative, reiterated the findings as contained in the impugned order and submitted that one Shri Ravinder had floated both the units for the purpose of availing the exemption under Notification No.175/86, dated 1-3-86; that in such circumstances, question of issuing separate show cause notices does not arise since these two units are not to be treated as a separate entity. Reliance has been placed on the decision in the case of CCE v. V. Madhu @ CV Maadhesh [2002 (146) E.L.T. 252 (S.C.)] wherein it has been held by the Supreme Court that splitting up of the show cause notices of two units is not necessary when the stand of the department is that one firm is a fictitious business firm or a dummy of the other. Learned Departmental Representative submitted that the other unit M/s. VME Foundary Pvt.
Ltd. was floated when the turnover of the appellant had exceeded Rs. 15 lakhs and Shri N. Ravinder, proprietor of the appellants unit created a lease deed for the land and building owned by him in favour of M/s. VME Foundary Pvt. Ltd. and made his wife as one of the Directors; that even the machines owned by the Appellants were shifted to newly floated Company and workers were also transferred to the new unit. He stated that taking into consideration all the facts of the matter both the units are one and the same and their value of clearance has to be clubbed for the purpose of availing the benefit of small-scale exemption Notification. He relied upon the decision in the case of Campion Plastic Industries Ltd. v. CCE, Madras [1997 (91) E.L.T. 153] and Steel Weld (India) v. CCE 4. We have considered the submissions of both the sides. When the matter was heard first time by the Tribunal against Order-in-Original No. 96/96, dated 22-9-96, the appellants had submitted that they were only contesting the clubbing of two units and non-issue of show cause notice to one of the units which is a mandatory requirement. The Tribunal, after considering the submissions of both the sides, had set aside the said Order and remanded the matter for de novo consideration after following the principle of natural justice vide Final Order No.1585/2001, dated 15-9-2001. The Commissioner, in the impugned order, has specifically mentioned in Para 22 that one of the submissions made by the Appellants was that the earlier order confirming the demand treating the units as one had been issued whereas notice has not been issued to the second unit. In the present impugned order the Commissioner had not considered it necessary to issue the notice to the second unit whose clearance are to be clubbed relying on the decision of the Supreme Court in the case of V Madhu @ CV Maadhesh (supra). The judgment in the case of V Madhu @ CV Maadhesh is not applicable to the facts of the present matter as the facts therein are entirely different. First of all, in the said judgment show cause notice had been issued to both the units which is apparent from Para 2 as well as Para 6 of the judgment where it is clearly mentioned "a show cause notice has been issued to both M/s. Komalagowre Textiles and M/s.
Selvaganapthy Textiles. Secondly, the Supreme Court observed that no prejudice has been caused to either of the parties and it was not necessary to split the show cause notice in respect of M/s. Komalagowre Textiles and Selvaganapthy Textiles. In any case the Supreme Court has further mentioned in the judgment that "if appropriate objections are raised before the authorities concerned, the same may be examined and, if necessary, separate proceedings may be held in regard to M/s.
Komalagowre Textiles and M/s. Selvaganapthy Textiles". In the present matter, the contention of the Revenue is that the other unit M/s. VME Foundary Equipment Pvt. Ltd. has been created with a view to avail the benefit of small-scale exemption wrongly. Once the existence of a unit is being questioned by the Department, an opportunity has to be extended to the said unit to present its own case. We, further observe from the various evidence mentioned in the earlier Tribunal's Final Order dated 13-9-2001 that both units are situated at different premises having different small-scale Registration number, Central Excise registration number, GST registration, CST registration number and separate Income-tax PAN number. It has also been mentioned therein that they have been filing RT 12 returns which have been duly approved by the Department and both of them have discharged duty liability on the goods cleared by them during the financial year 1992-1993 and 1993-94. In view of these facts, non-issue of show cause notices to M/s. VME Foundary Pvt. Ltd. makes the proceedings assailable as the Department have not been given any opportunity of proving to them that they are not a dummy unit. Learned Advocate has relied upon the decision in the case of Dawn Fireworks Factory (supra) wherein the Tribunal has held that if show cause notice is not issued to all the units whose clearances are said to be clubbed together, the proceedings are vitiated. Similar views have been expressed by the Tribunal in the case of CCE, Jaipur v. Sethia Foods wherein it has been held that "principle of natural justice requires that assessee should be put to notice regarding their commission or omission for following the principles of Central Excise Act or Rules. In the present case, the Revenue wants to club the clearance of M/s. Sethia Foods with M/s. Sethia Sweet Products without issuing notice to M/s. Sethia Sweet Products which is not permissible". Thus following these decisions, we are of the view that clearance of both the Appellants and M/s. VME Foundary Pvt. Ltd. can not be clubbed together as no show cause notice had been issued to the other unit that is M/s. VME Foundary Pvt. Ltd. Accordingly, without going into any other aspect of the matter on merits, we set aside the impugned order on this aspect alone and allow the Appeal.