[Order per : Archana Wadhwa, Member (J)]. - Being aggrieved with the order passed by the Commissioner (Appeals) revenue has filed the present appeal. We have heard Shri Sanjay Jain, learned DR for the revenue and Shri Mayank Garg, learned advocate for the respondent.

2. Brief facts of the case are that a team of Central Excise Officers of Agra visited the factory of M/s. R.R. Foundry, Agra on 5-8-1995. The officers, at the time of taking round in the factory premises of the Respondent No. 1 observed certain doors interconnected with an adjacent unit working in the name and style of M/s. Sharad Industries, Agra. It was reported that the Proprietor of the Respondent No. 1 is Mr. Avdesh Kumar Gupta and the Proprietor of the Respondent No. 2 is Smt. Kamlesh Gupta W/o Shri Avdesh Kumar Gupta. The officers during the course of investigation observed the following points :-

(a)     M/s. R.R. Iron Foundry and M/s. Sharad Industries had common office, situated at the factory premises of Appellant No. 1 in order to have better control,

(b)     the records of both the units were also kept and maintained therewith, doors between both the units were created and common labours were being utilized in both the units but according to convenience the labours were being deployed in any of the two units,

(c)     ‘RRIF’ Brand was owned by Respondent No. 1 and the ‘KIRTI’ & ‘VATAN’ Brand were owned by Respondent No. 2, whereas, seizure of 152 Pcs. of ‘VATAN’ Brand C.I. Casting found in excess at the factory premises of Respondent No. 1 and 18,700,00 Kgs. of ‘RRIF’ Brand C.I. Casting was recovered from the factory premises of Respondent No. 2,

(d)    Proprietor of Respondent No. 2 was Smt. Kamlesh Gupta, W/o Shri Avdhesh Kumar Gupta, who was the Proprietor of Respondent No. 1 was looking after the entire work relating to Respondent No. 2 with regards to production, clearances, procurement of orders and operation of bank accounts under the Authority of Power of Attorney,

(e)     Shri Rakesh Kumar Gupta, was authorized to look after the

Kanpur vide his said Order-in-Original dated 31-10-2000 by confirming the demand of Rs. 9,32,114/- &

“the two firms are owned by husband and wife and general Power of Attorney is with the husband to run the business which is in wife’s name and the products are with the Brand name which is admittedly belonging to their family therefore prima-facie it appears that the benefit of both the units is accruing to the same set of persons constituting a family. Merely because they are having separate records for the requirement of Trade Tax Act etc, the two cannot be considered separate. The acid test in such case is recipient of the benefit. Unless the wife or husband are professional and engaged in separate business by virtue of their professional standing and practice it is difficult to hold that enterprises having common product, common management and common brand name etc. are separate. Though the noticee have argued that prior to year 1991 M/s. Sharad Industries was a partnership firm but there is nothing to prove that the other partner Smt. Kamlesh Gupta was a person not closely related to the family. Moreover, the period prior to year 1991 is not subject matter of these Show Cause Notices. In the case of Ashok Enterprises v. CCE - the Tribunal held that the two partnership firms owned by son and daughter in law producing the other product with the same brand name were related and their clearances were liable to be clubbed.”

3. Aggrieved with the said Order-in-Original, both the assessees preferred Appeals before Commissioner (Appeals) on the following grounds that :-

1.      M/s. R.R. Iron Foundry was started in the year 1973 with Shri Avdhesh Kumar Gupta as Partner subsequently he became the Proprietor of the firm,

2.      M/s. Sharad Industries was established in 1979 with Smt. Kamlesh Gupta as Partner, subsequently she became the Proprietor of the factory,

3.      the concept of brand name was introduced in the exemption Notification vide Explanation No. VIII in Notfn. No. 175/86, dated 1-3-1986,

4.      the brand name R.R.I.F. was being used both M/s. R.R. Iron Foundry and M/s. Sharad Industries years before (about 6 & 7 years), the introduction of Notfn. No. 175/86. At the time when the family agreement was drawn neither R.R. Iron Foundry nor M/s. Sharad Industries could dream that they will face some trouble on account of the Brand name R.R.I.F. which was owned and was being used by both the units,

5.      validity of such an agreement come up for consideration before the Hon’ble CEGAT, New Delhi in the case of Bentex Motors Control Industries v. Collector, Central Excise, New Delhi - (Tri.-New Delhi). The double Member Bench ruled that as per agreement deed all the

 The Commissioner (Appeals) allowed the appeal of the

“Both the Appellants submitted in support of their claim that they have separate Sales Tax Registration, Directorate of Industries Registration, Income Tax Registration, Electricity Connection, Telephone Connection & ESI Registration etc. In this regard, I am of the considered view that in the absence of conclusive evidence of financial flow back from one unit to the other, clubbing of two different units having no proprietary interest in each other and registered separately under Income Tax Act, Sales Tax Act and for other purposes such as separately Registration from Directorate of Industries & ESI etc. will not be correct. In the instant case, there is nothing on record to show that there was any financial flow back from the Appellant No. 1 to Appellant No. 2 or vice-versa. The other common facilities and features i.e. common brand, common doors etc. noted in the impugned order, in my view, cannot in absence of evidence of financial flow back sustain allegation of clubbing. No doubt business is being conducted by the same person namely Shri Avdhesh Kumar Gupta by way Power of Attorney given to him but from this no irresistible conclusion could be drawn that both the firms virtually constitute one unit in the eyes of law, especially when both still stand registered separately from the very inception, with the Income Tax Authority, Sales Tax Authority & other statutory bodies and there is no proof of flow back on money from one firm to another. Further, the Brand “RRIF” is neither registered in the name of Appellant No. 1 nor Appellant No. 2. Both can be used it as per agreement executed. Also this is not a case of use of Brand name by another person. Thus, I hold that the firms Appellant No. 1 and No. 2 could not be treated as one unit for clubbing their clearances for the purpose of payment of duty.

Moreover, I also observe that in the Show Cause Notice it has been nowhere alleged and identified that which of the two firms was a dummy or a firm, which only existed on papers and not in reality. The duty demand had been raised from both the firms. Even the Adjudicating Authority has failed to record specific finding regarding the dummy character of any of these two firms. He has likewise confirmed the duty against both of them and had made them liable to pay individually or severally. It is well settled in a case of clubbing of clearances of two units, it has to be alleged and proved by the Department that which one was only a dummy and non-existent unit and which was the principal/main unit. Therefore, not only the Show Cause Notice issued but also the impugned orders are bad in law.”

5. Revenue in the memo of appeal have reiterated the reasoning adopted in the order-in-original and have submitted that lack of financial flow back is not the sole reason to decide the common ownership inasmuch as the same is only one of the ingredients of clubbing. It stand further contended that inasmuch as the Bank account of respondent no. one was handled by the husband of the proprietor of that the unit, this is a substantial piece of evidence of management and financial control of the husband over both the units. It is further contended that they were having common office and common accountant etc. The recovery and seizure of goods of one unit, from the of premises of other unit and vice versa were also indicative of the two units being one and the same. Similarly power of attorney given by Smt. Kamlesh Gupta the proprietor on records of unit one to her husband Shri Avdhesh Kumar Gupta, the proprietor of other unit, to look after the entire work of production, sale, purchase, handling of bank account etc. amount to and is indicative of the commonness of the both the units. Revenue has also referred to and relied upon the some decisions of the Tribunal.

6. We, after appreciating the submissions of both the sides find that there is not much dispute on factual position. It is not the Revenue’s case that two units owned by Smt. Kamlesh Gupta and her husband Shri Avdesh Kumar Gupta not complete units having all the necessary machines and infrastructure for manufacture of their final product. Both the units have separate Sales Tax Registration, Industries Registration, Income Tax Registration, Electricity Connection, Telephone Connection & ESI Registration etc. Merely because there is a door between the two units and power of attorney stand given to her husband to look after the job of her unit, by itself cannot be held to be a ground for holding both the units as one. Admittedly, husband and wife are entitled to their own business and if the husband is looking after the business of the wife that will not make the unit owned by the wife as a dummy unit. The prime requirement, for clubbing the clearance of two units is not having complete independent machinery and infrastructure to manufacture the goods. If both the units are complete by itself, capable of manufacturing the goods without any help from the other unit, it has to be held that both the units are independent units. The various decisions of the Tribunal referred to and relied upon by Commissioner (Appeals) in his impugned order are applicable to the facts of the present case. It stands held in precedent decision that financial flow back and financial intertwining between the two units is the main reason for reflecting upon the fact of their being independent or not. One such reference can be made to in decision of the Hon’ble High Court in the case of M/s. Renu Tandon v. Union of India - (Raj.). Similarly in the case of M/s. Electro Mechanical Engg. Corporation v. CCE, Jaipur - (Tri.), Girish Electricals Industries v. CCE, Mumbai - (Tri.) it was held evidence of common office premises, common staff and common maintenance of records, etc. cannot be held to be sufficient to club the clearances of the units, who have different registrations in all the departments and in the absence of any financial flow back.

7. In view of foregoing discussion we find no reason to interfere in the order of Commissioner (Appeals). The same is accordingly upheld and Revenue appeal is rejected.

(Pronounced in the open Court on 6-2-2013)