B (Sh. Mahesh Kumar Gupta v. Collector of Central Excise, Madras). The two appeals have common facts and common order-in-original and are being disposed of by this common order.
2. The question for decision in these appeals is whether for the purpose of granting or rejecting concession under Notification No.80/80-C.E., dated, 19-6-1980, the clearances made by the dissolved partnership firm, M/s. Gaurav Equipments, Coimbatore (Appellants in Appeal No. 1720/83) and M/s. Gaurav Equipments (Private) Ltd., appellants in appeal No. 1721/83-B should be clubbed together.
3. M/s. Gaurav Equipments, the partnership firm consisted of three partners viz. Mr. M.K. Gupta, Mr. S.R. Gupta and Mr. Anil Gupta. They were manufacturing Electrical Mixies at 155, 5th Street, K.K. Pudur, Saibaba Mission Post, Coimbatore. Their product fell under the category of domestic electrical appliances under T.I. No. 33-C of the Central Excise Tariff. The product was eligible for exemption from duty under Notification No. 80/80-C.E., dated 19-6-1980 (hereinafter referred to as Notification) and the firm was availing of the same. When firms 'clearance of mixies' was about to cross 80% of the exemption limit, it obtains L-4 licence, required declaration in terms to aforesaid notification was also obtained by the Excise authorities from them. The total value of electrical numbering 2750 cleared by this firm between period 1-4-1981 to 10-12-1981 worked out to Rs. 13,75,000/-. On 10-12-1981, this firm was dissolved. M/s. Gaurav Equipments (Private) Ltd. purchased the business of M/s. Gaurav Equipments by virtue of the sale deeds dated 25-12-1981. This Private Ltd. company has the six partners viz. S/Sh. K.K. Jiwarajha, Vijaya Kumar Reddy, M.K. Gupta, S.R. Gupta and S. Gupta as Directors, (M.K. Gupta & S.R. Gupta are common in firm & Co.). This company filed declaration on 16-3-1982 for availing of exemption from licensing control under notification aforesaid. The company cleared 548 numbers of mixies on concessional rate of duty under aforesaid notification, in two consignments, one on 18-3-1982 and Anr. on 24-3-1982 valued at Rs. 2,74,000/-. On 26-3-1982, officers of the Excise Department visited the factory of this private limited company and checked accounts. It also appears that 224 mixies were seized on 31-3-1982 on the ground that they were sought to be removed from the factory premises without proper excise documents.
4. Show cause notices dated 26-2-1982 were served on the partnership firm M/s. Gaurav Equipments, Coimbatore. On the allegations that they were not eligible to avail of the benefit of exemption under the notification and were asked to show cause why they should not be called upon to pay duty and penalty for contravention of various provisions of the Act. Similar show cause notices dated 22-6-1982 and 24-9-1982 were also served on M/s. Gaurav Equipments (P) Ltd. 5. After following the usual procedure, the Collector of Central Excise, Madras by his order dated 19-4-1983, imposed penalty of Rs. 5,000/- each on the partnership firm and Private Ltd. Company for contravention of various provisions of the Central Excises & Salt Act, 1944 and the Central Excise Rules, 1944, ordered confiscation of 224 mixies under seizure with option to redeem the same on payment of fine of Rs. 10,000/- partnership firm was also called upon to pay duty amounting to Rs. 2,85,468.75 in respect of 2,750 mixies cleared by them during 1981-82, a duty amounting to Rs. 86,310/- was also demanded from the private limited company.
6. In the grounds of appeal, it is mainly urged that the clearances made by the partnership firm, M/s. Gaurav Equipments, Coimbatore and Private Limited Company, Coimbatore were distinct and separate. The two were separate juridical entities and therefore for the purpose of concession under notification they could not have been clubbed together.
7. At the hearing of the appeal, Sh. D.W. Stewart, Advocate with Sh.
A.S. Chander Sekhar represented the appellants in the two appeals. The respondent was represented by Sh. V. Luxmi Kumaran, Sr. D.R. They were heard.
8. The appellants have filed papers in support of their contentions documents to show that the Registered partnership firm and the private limited company are distinct legal entities. It was not disputed before us that the plant and machinery of the dissolved firm was taken over by the private limited company and manufacturing of mixies was carried on by the new company in the same premises/factory. It was also urged that the partnership firm sold their plant and machinery in as it were condition to the private limited company. The premises where the factory was situated was leasehold land, the partnership firm surrendered the lease to the landlady and the private limited company negotiated with the landlady for lease of the premises/factory.
Documents in support of these contentions have been filed. On these grounds, it was urged that the partnership was not in existence, ceased to exist and had no connection whatsoever with the private limited company and vice versa with reference to manufacture of mixies. It was therefore, urged that the excise authorities were in error in clubbing the clearances of the dissolved firm and the private limited company for determining whether the appellants could avail of the concession under the aforesaid notification. The learned Advocate for the appellants in his arguments relied on the following judgments : Assistant Collector of Central Excise and Customs v. Shri J.C. Shah, Jayantilal Balubhai and Ors. -1978 (2) E.L.T. (J 317) S.C. - Bapalal & Co. v. G.O.I. and Ors. - 1981 (8) E.L.T. 587 (Mad.) - Philips India Ltd. and Ors. v. Union of India and Ors. -1980 (6) E.L.T. 263 (All.) 9. On behalf of the respondent, Sh. V. Luxmi Kumaran, Sr. D.R. defended the orders passed by the lower authorities. He submitted that aggregate value of clearances of the specified goods cleared from such factory by or on behalf of the one or more manufacturers, for home consumption, during the financial year exceeded 15 lakhs in terms of clause (ii) of Para 5 of the subject notification (Notification No. 80/80-C.E. which would be applicable to the present case); regard being had to the appellants not having cleared from any factory during the preceding financial year the exemption contained in the notification was not applicable to the appellants and they could not claim concession under the subject notification. For ease of reference, the material portions of Notification No. 80/80-C.E., dated 19-6-1980 are extracted below : "5. Where the specified goods have not been cleared from any factory in the preceding financial year, or have been cleared for the first time on or after the 1st day of August in the preceding financial year, the exemption contained in this notification shall not be applicable - (ii) If the aggregate value of clearances of the specified goods from such factory by or on behalf of one or more manufacturers, for home consumption, during the financial years, exceeds rupees fifteen lakhs." 10. There is no dispute that the manufacturing activity was carried on at the same factory or premises. Merely because the ownership of the factory changed hands from the partnership firm to a private limited company, it cannot be said that clearances were not from the same factory. The words used in clause (ii) of para-5 of the notification extracted above are clear enough on the point that the aggregate value of clearances is to be determined taking into consideration the clearances by or on behalf of one or more manufacturers. The clearances made both by the Registered partnership firm and the private limited company would have to be clubbed together for determining the limit for claiming concession under the subject notification. There is no dispute that if the clearances made by the firm-partnership and the private limited company are clubbed together the limit is exceeded. The concession under the said notification is not to the manufacturer as such but to the factory. There seems to be a purpose behind the concession. Idea appears to be that the concession is not abused by different manufacturers using same factory at different periods of time, to claim concession under the above said notification. The cases relied on by the appellants in support of their contentions are not applicable on the wording of the notification and on the facts and circumstances of the two cases.
11. For the foregoing reasons, we find that the excise authorities were justified in clubbing the clearances and the appellants were not eligible for claiming concession under the Notification No. 80/80-C.E., dated 19-6-1980. The demand of duty from the appellants as also penalty against them is justified. Finding no force in these appeals we dismiss the same.