Supreme Washers (P) Ltd. Vs. The Commissioner of Central Excise, Pune  Insc
518 (4 December 2002)
Hegde & B.P. Singh. Santosh Hegde,J.
C.A.Nos.6152/99 & 6157/99)
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.
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.
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.
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 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.
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.
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.
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.
appeals are, therefore, allowed and remanded for the fresh disposal by the
Tribunal in accordance with law to the extent indicated herein above.