In a recent ruling, the Customs, Excise and Service Tax Appellate Tribunal held that values of clearances of goods manufactured from single common factory premises by two firms can be clubbed for exemption to Small Scale Industries (SSI exemption).
Assessee, Girish Vadhara is an individual engaged in the business of manufacture of the transformer, SMPS transformer, choke coil, power supply, etc., falling under Chapter 85 of the Central Excise Tariff Act.
During the period of search in the assessee company, it was found that the invoice books of another firm named as M/s Numinous Systems Pvt. Ltd. Which shows clearances of transformers. There was no segregation of the inputs, goods in progress and final products of the two firms and goods valued at Rs. 1,26,511 found in the premises were seized. However, the Central Excise duty amounting to Rs. 21,77,878 was demanded along with interest and penalty of equal amount. A penalty of Rs. 2,00,000 was also imposed on the assessee company.
On appeal CIT (A) also upheld the order of the department and confirmed the penalty imposed by them. Aggrieved by the order of the lower authorities assessee approached the Tribunal on further appeal.
Before the Tribunal council for the assessee advocate Ms. Priyanka Goel submitted that the aforementioned both firms such as M/s Electro-Industrial Supplies Corporation, as well as M/s Numinous Systems Pvt. Ltd. had separate identity, even though they were manufacturing similar products and both units are registered separately for Income Tax and Sales Tax, etc., therefore SSI exemption will be independently available for both units.
While considering the submissions made by both the parties, the Tribunal bench comprising of President Justice Satish Chandra and Technical Member V. Padmanabhan observed that notification in terms of SSI benefit read as “where the specified goods are cleared by one or more manufacturers from a factory, the exemption shall apply to the aggregate value of clearances mentioned against each of the serial numbers in the said Table and not separately for each manufacturer.”
The bench further observed that “in the present case the factory premises is found to be common where goods have been manufactured and cleared under the invoices of both firms separately. Even though both the firms have been shown to have the separate existence, since the goods have been manufactured from single common factory premises, the values of clearances of both the firms are required to be clubbed in terms of the above provision of the Notification”. While concluding the issue the bench declared that values of Clearances of Goods manufactured from single common factory premises by two Firms can be clubbed for SSI Exemption.