The Allahabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has quashed the central excise duty and penalties demand of Rs.15.46 lakh against the assessee who was allegedly involved in artificial division of units to claim separate SSI exemptions.
The bench of P.K. Choudhary (Judicial Member) and Sanjiv Srivastava (Technical Member) has observed that there was no evidence of common accounts, financial flow, or mutuality of interest, holding that the units were independent and eligible for SSI exemption. A significant relief for the appellants and a reaffirmation of established legal principles.
A search was conducted by the officers of Central Excise Commissionerate, Ghaziabad, in the factory premises of M/s Associated Engineering Projects, Modinagar, Ghaziabad, M/s Manglam Wire (Prior to 01.04.2010 known as M/s Laxman Steels) and Mis R. K. Industries (Prior to 01.04.2010 known as Mis Aar key Ispat), under the Panchnama dated 18.06.2010 drawn in presence of two independent witnesses separately at the said three premises.
During the course of search, various records maintained by the above units were checked and the records, which appeared relevant for further scrutiny, were resumed under proper Panchnama drawn on the spot at the premises of above units. The stock taking of finished goods as well as of raw materials was also conducted in the premises of M/s AEP and Mis R. K. Industries.
The department noted that the division among the units is artificial and superficial. In fact, the different units have been created to avail inadmissible SSI benefit only. All the four units were created to avail inadmissible SSI benefits separately, in respect of each units, whereas as per provision of Notification No.8/2003-Ce dated 01.03.2003, as amended, they should have availed such SSI benefits at the best, on the first value of clearances of Rs.1.50 Crore on the combined value of clearances of the four units.
The tribunal allowed the appeal.
Case Details
Case Title: M/s RK Industries Versus Commissioner of Central Excise & Service Tax
Case No.: Excise Appeal No.70789 of 2018
Date: 26 September, 2024
Counsel For Appellant: Anurag Mishra
Counsel For Respondent: A.K. Choudhary
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