COMMISSIONER OF CENTRAL EXCISE COIMABTORE Vs. MADHU ALIAS C V MAADHESH
SUPREME COURT OF INDIA
COMMISSIONER OF CENTRAL EXCISE,COIMBATORE
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Rajendra Babu, J. -
(2.)A notice was issued by the appellant on 25.7.2000 under the Central Excise Act, 1944 (hereinafter referred to as the Act) to M/s Komalagowre Textiles and M/s Selvaganapathy Textiles to show cause as to why duty should not be demanded jointly from them. The stand of the Department is that the respondent had floated dummy units for the purpose of removal of cotton yarn on cone manufactured by M/s Komalagowre Textiles without payment of duty during the relevant period; that M/s Komalagowre Textiles and M/s Selvaganapathy Textiles were functioning under fictitious names even though the real control and ownership of both these textile units was with the respondent herein.
(3.)A Writ Petition was filed before the High Court contending that the unit with the name of M/s Komalagowre Textiles was a registered RC holder till 31.3.1999; that
RC was surrendered and cancelled on 1.4.1999; that thereafter the unit with the name of M/s Selvaganapathy Textiles, a separate registered small scale industry unit, filed declaration and later granted RC on 14.2.2002; that the cancellation of RC of M/s Komalagowre Textiles and acceptance of the declaration and later granting RC to M/s Selvaganapathy Textiles clearly established that both the units are separate and independent; that one unit was not in existence when the other unit was functioning; that the goods seized related to the other unit; that, therefore, the issue of a joint show cause notice or initiation of joint proceedings was not permissible under law relying upon the decision of the Allahabad High Court in Music Time Electro Cottage v. Union of India 1988 (38) ELT 19(All) (Allahabad) wherein it had been held that joint show cause notice or joint proceedings was not permissible and therefore, directed the Department to bifurcate the notice in respect of two cases. It was also contended before the High Court that in the notice there was no allegation that even after surrender and cancellation of RC, the respondent continued to manufactured and clear the goods and thus joint liability for any such irregularity committed by the other assessee, which is a separate unit, could not be sustained and, therefore, the issue of show cause notice for payment of excise duty for the period 1999-2000 could not arise at all because as early as on 1.4.1999 the RC had been surrendered.
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