Page 195 - ELT_1st July 2020_Vol 373_Part 1

2020 ] VENKATESWARA INDUSTRIAL PRODUCTS P. LTD. v. C.C.E.,C.&S.T.,HYDERABAD-III 105

“M/s. VIPPL is a private limited unit manufacturing cable filling com-
pound and cable cleaning compound located at 60B, IDA, Cherlapally.
M/s. VIPI is a proprietary concern manufacturing cable filling compound
(CFC) located at 60A, IDA, Cherlapally. The Directors of VIPPL include
Shri C. Ramdas and Smt. Meera Ramdas. Smt. Meera Ramdas is proprietrix
of M/s. VIPI…..”
11. He would submit that the department themselves have agreed in a
subsequent notice that VIPI is a separate manufacturer and not same as VIPPL,
although the former is a proprietary concern and the later is a limited company.
He would submit that if the turnover of VIPI is deducted from the Show Cause
Notice No. 150/92, the demand on appellant would be substantially reduced and
therefore, demand needs to be dropped to that extent. He also prays that the
penalties and fine imposed under this show cause notice in the impugned order
may be set aside.
12. We have considered the arguments on both sides. As far as this
show cause notice is concerned, the entire demand arises on the presumption
that VIPPL is the only true manufacturer and VIPI as well as Newton and AEI
are dummy entities create solely for the purpose of splitting the total turnover so
as to remain under SSI limit. The turnover during the relevant period of these
entities was as follows :

Sl. No. Name of the entity Turnover (in Rs.)
1. VIPL 37,39,694/-
2. VIPI 48,25,538/-
3. Newton 11,76,933/-
4. AEI 6,16,285/-
Total Turnover 1,03,58,452/-

13. BED is proposed to be charged @ 15% and SED @ 15% of the BED
on the above amount. In order to club these clearances the department has to
prove that the other three entities are dummy entities. The evidences on record
are the statements and results of investigation that there are no separate manu-
facturing facilities or records of stock of raw materials or finished products.
Therefore, all other three are dummy units. We find that the department them-
selves contradict this position in their subsequent notice partly by admitting that
VIPI is a separate entity. If the turnover of VIPI as shown above, therefore, needs
to be deducted from the total turnover in this show cause notice and demand
needs to be reduced to that extent. We also do not find sufficient justification for
imposition of fine and penalties in this background.
14. As far as the demand under second Show Cause Notice No. 184/94
is concerned, the allegation is that VIPI have cleared Modvat availed raw materi-
als as well as final products and then showed them as sales returns. Accordingly,
searches were conducted at various places and it was revealed that the total
clearances of VIPI as evidenced from their sales tax returns was Rs. 30,96,434/-
during 1991-92. It was further found that AEI were also operating from the same
premises and were doing second sales i.e., trading. AEI had no separate manu-
facturing premises and VIPI had been showing its own manufacture and sales in
the name of AEI. The total clearances of AEI during the period was Rs.
15,99,953/-. The total clearance of VIPI and AEI during 1991-92 was Rs.
46,96,387/- on which the duty of demand after allowing SSI Exemption works

EXCISE LAW TIMES  1st July 2020  195