Genesis Instruments Company Vs. Commissioner of C. Ex. - Court Judgment

Excerpt:
1. this stay application is filed by the applicants for waiver of pre-deposit of duty amounting to rs. 2,54,375/- and equivalent penalty under section 11ac of the act, apart from a penalties of rs. 20,000/- under rule 173q and rs. 10,000/- under rule 209a of the central excise rules and stay of the recovery proceedings.2. the counsel appearing for the applicants, in support of the stay application, submitted that strong prima facie case is in favour of the party. he said that the issue relates to clubbing of clearances. in the instant case, it is not clear from the impugned order, from whom the department wants to raise the demand. in case of clubbing of clearances, if the department wants to club the clearances effected by all the units on the ground that one of them is the manufacturer, then the correct course open to the department is to recover the duty from the main party which is the manufacturer on behalf of the other parties. apart from that, in the instant case, the clearances effected by other units cannot be clubbed in view of the fact that the appellant viz. m/s. genesis power equipment ltd. is a private limited company whereas the other units viz. m/s. genesis instruments company are either of partnership/proprietary concern. in support of his contention, he referred to the decision of the supreme court in the case of supreme washers private limited v. cce, pune reported in 2003 (151) e.l.t. 14 (s.c.) = 2002 (53) rlt 753 (sc). he said that following the decision of the supreme court, the tribunal has also held in the case of l.d. industries and ors. v. cce, pune, reported in 2003 (157) e.l.t. 459 (tri. - del.) = 2003 (59) rlt 154 (cestat-del.) that 'limited companies are to be treated as separate legal entities and their clearances are not to be clubbed'.3. shri b.r. jagadish, appearing for revenue, justified the action of the department in clubbing the clearances of these three units. it was also submitted by him that the appellants have accepted the clubbing of clearances and approached the settlement commission for settlement, but they have failed there on some other ground.4. we have carefully considered the submissions made by both sides with reference to the facts. on going through the respective orders and on considering the submissions made by both sides and in view of the ratio of the decision of the supreme court in the case of supreme washers private limited referred to above, we are of the view that prima facie case is in favour of the party to grant stay. accordingly, the stay applications are allowed.

Judgment:
1. This stay application is filed by the applicants for waiver of pre-deposit of duty amounting to Rs. 2,54,375/- and equivalent penalty under Section 11AC of the Act, apart from a penalties of Rs. 20,000/- under Rule 173Q and Rs. 10,000/- under Rule 209A of the Central Excise Rules and stay of the recovery proceedings.

2. The Counsel appearing for the applicants, in support of the stay application, submitted that strong prima facie case is in favour of the party. He said that the issue relates to clubbing of clearances. In the instant case, it is not clear from the impugned order, from whom the Department wants to raise the demand. In case of clubbing of clearances, if the Department wants to club the clearances effected by all the units on the ground that one of them is the manufacturer, then the correct course open to the Department is to recover the duty from the main party which is the manufacturer on behalf of the other parties. Apart from that, in the instant case, the clearances effected by other units cannot be clubbed in view of the fact that the appellant viz. M/s. Genesis Power Equipment Ltd. is a Private Limited Company whereas the other units viz. M/s. Genesis Instruments Company are either of partnership/proprietary concern. In support of his contention, he referred to the decision of the Supreme Court in the case of Supreme Washers Private Limited v. CCE, Pune reported in 2003 (151) E.L.T. 14 (S.C.) = 2002 (53) RLT 753 (SC). He said that following the decision of the Supreme Court, the Tribunal has also held in the case of L.D. Industries and Ors. v. CCE, Pune, reported in 2003 (157) E.L.T. 459 (Tri. - Del.) = 2003 (59) RLT 154 (CESTAT-Del.) that 'Limited companies are to be treated as separate legal entities and their clearances are not to be clubbed'.

3. Shri B.R. Jagadish, appearing for Revenue, justified the action of the Department in clubbing the clearances of these three units. It was also submitted by him that the appellants have accepted the clubbing of clearances and approached the Settlement Commission for settlement, but they have failed there on some other ground.

4. We have carefully considered the submissions made by both sides with reference to the facts. On going through the respective orders and on considering the submissions made by both sides and in view of the ratio of the decision of the Supreme Court in the case of Supreme Washers Private Limited referred to above, we are of the view that prima facie case is in favour of the party to grant stay. Accordingly, the stay applications are allowed.