Full Judgment Text
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CASE NO.:
Appeal (civil) 6161 of 1999
PETITIONER:
M/S. Supreme Washers (P) Ltd.
RESPONDENT:
The Commissioner of Central Excise, Pune
DATE OF JUDGMENT: 04/12/2002
BENCH:
N.SANTOSH HEGDE & B.P. SINGH.
JUDGMENT:
J U D G M E N T
(With C.A.Nos.6152/99 & 6157/99)
SANTOSH HEGDE,J.
The sole question for our consideration in these appeals
is whether the Central Excise & Gold (Control) Appellate
Tribunal (’the Tribunal’) was justified in accepting the
contention of the respondent Department that the three
appellants herein are so inter-connected and have mutuality of
interest among themselves, as to club their production for the
purpose of either denying them the benefit of the exemption
limit or to assess them as one unit for the purpose of levy of
central excise duty.
The tribunal while dismissing the appeals of the
appellants herein agreed with the collector of Central Excise,
Pune that the three units (the appellants herein) procured raw
materials together, they had common credit facilities from the
suppliers, had common stock accounting and planning, they are
inter-dependents in manufacturing operations, had common
stock of raw materials and semi furnished goods, were having
common use of the machinery between the three units, were
having common marketing arrangements and free flow of
finance between themselves. On these basis, the tribunal
concurred with the Collector that the three units in fact are so
inter-related that the Department was justified in clubbing their
total production as production from one unit for the purpose of
Central Excise Act.
In these appeals, Shri Joseph Vellapally, Learned Senior
Advocate appearing for the appellants contended, even
according to the material relied upon by the respondents, it is
clear that the three units are independent units, though, may be
having certain common facilities for the sake of convenience,
which does not make the unit inter-related. At any rate, it was
argued on behalf of M/S. Supreme Washers (P) Ltd., the
appellants in Civil Appeal No.6161 of 1999 that it being a
limited company, by virtue of the Circular Nos. CER(5)-
Central Excise dated 1.3.1956, the said appellants could not
have been clubbed with the two other appellants, because the
said circular being a statutory circular is binding on the
Department.
Learned Attorney General, appearing for the respondent
countering the first part of the argument of the learned counsel
for the appellants submitted on the basis of the factual material
that was available before the Tribunal, the Tribunal has come to
the just conclusion that there was mutuality of the interest
between all the three units. And it being a pure question of fact,
the said finding does not call for interference by this court. In
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regard to the applicability of the Circular referred to herein
above, the Learned Attorney General submitted, since this point
was not urged before the Tribunal, then for that limited purpose,
the matter may be remanded back to the Tribunal.
Having heard the learned counsel for the parties and
perusing the records, we are in agreement with the finding of the
Tribunal that there is mutuality of interest between the
appellants. The reliance placed by the Tribunal on facts like the
three companies having common management under Shri S.L.
Raheja, having common procurement of raw material, having
common stock accounting and planning, having inter-
dependence in manufacturing operations, having common stock
of raw materials and semi finished goods, having common use
of machinery between the three units, having common
marketing arrangements and free flow of finance between three
units cumulatively indicates inter-dependence of the three units
with each other as also inter-relationship, cumulatively
establishes the appellants inter-relationship and inter-
dependence with each other, hence, the arguments of the
appellants on this factual score must fail.
In regard to the second contention of the appellant in
Civil Appeal No.6161 of 1999, it is seen from the Circular dated
1.3.1956, which according to the appellants have been reiterated
by another subsequent Circular No.6/82 dated 29th of May, 1992
by the Central Board of Excise Customs, New Delhi that a
limited company should be treated as a separate entity for the
purpose of exemption limit. If that be the position in law, then
there may be some justification for the appellant to urge, so far
as M/S. Supreme Washers (P) Ltd. is concerned, it being a
limited company, its production can not be clubbed with the
other units. However, since this aspect of the case and
applicability of the Circulars referred herein above was not
brought to the notice of the Tribunal, we are in agreement with
the suggestion made by the Learned Attorney General that it will
be just and proper to remand this matter, for this limited
purpose, to the Tribunal for examining the applicability of the
Circular relied upon by the Appellants, M/S. Supreme Washers
(P) Ltd.
For the reasons stated above, we confirm the finding as to
the inter-relationship between the three units, as found by the
Tribunal, and remand the appeals back to the Tribunal for the
limited purpose of deciding the applicability of the Circular
referred herein above.
The appeals are, therefore, allowed and remanded for the
fresh disposal by the Tribunal in accordance with law to the
extent indicated herein above.