2024-VIL-1103-CESTAT-BLR-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise – SSI Exemption - Clubbing of clearances - appellant is engaged in trading of sealing machines manufactured by various independent units called Decentralized Mother Units (DMUs). The DMUs claimed SSI exemption under Notification No. 8/2003-CE dated 01.03.2003 - Revenue alleged that the DMUs are dummy units created and controlled by the appellant to claim SSI exemption, and the appellant is the actual manufacturer of the sealing machines - Revenue also alleged that the sealing machines were incomplete when received by the appellant and became complete and marketable only after the appellant's processes of quality check, branding, packaging, and providing warranty - Whether the clearance value of sealing machines manufactured by the DMUs be denied the benefit of SSI exemption and the duty be demanded from the appellant as the 'manufacturer' - imposition of penalty under Rule 26 of the Central Excise Rules, 2002 – HELD - The evidence on record does not show any pervasive financial control or management control of the appellant over the DMUs. The negotiations, understandings, and business support provided by the appellant to the DMUs are in the nature of commercial relations and do not make the DMUs as dummy units - The sealing machines manufactured by the DMUs were complete and marketable when received by the appellant, and the subsequent processes of branding, packaging, and providing warranty do not amount to 'manufacture' - Revenue failed to establish the appellant's control over the DMUs or the incompleteness of the sealing machines. Therefore, the appellant is entitled to the benefit of SSI exemption, and the demand on the appellant as the 'manufacturer' is not sustainable. Consequently, the issue of confiscation of seized goods, imposition of penalty on the appellant, and penalty on other appellants under Rule 26 become academic and set aside – the impugned order is set aside and the appeals are allowed
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