Clubbing of both units based on ownership for SSI Exemption: CESTAT Approves Excise Duty against Himalaya Equipment

In a significant, the Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) approves excise duty against Himalaya Equipment since the clubbing of both units is based on ownership for SSI Exemption.

Himalaya Equipments, the petitioner challenged the Order-In-Original passed by the Commissioner Central Excise, Ahmedabad-III whereby, the differential demand of Central Excise Duty was confirmed against M/s. Himalaya Equipments on the ground that one other unit M/s. Himalaya Engineers and Manufactures have the same partners of equal sharing, the clearance of M/s. Himalaya Engineers and Manufacturers are required to be included in the value of M/s. Himalaya Equipments and consequently, exceeding the eligible limit of SSI exemption under notification no. 8/2003-CE, the appellant is liable to pay the excise duty.

Shri Amal Dave, who appeared on behalf of the appellant submits that it has been admitted in the adjudication order that the appellant and M/s. Himalaya Engineers & Manufacturers have separate registration, bank account and all other registrations and licenses with various government authorities and despite this position, the value of M/s. Himalaya Engineers and Manufacturers were clubbed with that of the present appellant.

It was contended that without the issuance of show cause notice, the value of the said unit cannot be clubbed with the value of the appellant. On the other hand, Shri Rajesh Agarwal, who appeared on behalf of the revenue reiterates the finding of the impugned order.

From the details submitted the CESTAT observed that both the firms of the partners are the same with the same sharing of 25% each, and viewed that even though there is a different name of the firm but both the firms are owned by the same partners therefore, there is a common ownership by same partners. As per notification no. 8/2003-CE dated 01.03.2003 the exemption shall apply for the clearance of one or more factories and the aggregate value of clearance of excisable goods for home consumption by the manufacturer from one or more factories should not be exceeded Rs. 300 lakhs in the preceding financial year.

It was viewed by the CESTAT that the ownership of both the units i.e. M/s. Himalaya Equipments and M/s. Himalaya Engineers and Manufactures is with the same partners which are to be considered that the one manufacturer has cleared the excisable goods from both the factories therefore, for exemption limit as well as for eligibility limit of Rs.300 lakhs, the value of clearance of both the factories have to be taken together.

A two-member bench comprising of Mr Ramesh Nair and Mr C L Mahar observed that the clubbing is not based on the common facility between both the units but because of the common ownership, being the same partners in both the firm. Since both the units are owned by one owner, there is no need to issue a show cause notice to another firm.

While dismissing the appeal, the Tribunal upheld the view of the adjudicating authority who clubbed the value of clearance of both the units and demanded excise duty from M/s. Himalaya Equipments.

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