Clubbing of business

LAXMIKANT JAIPURKAR (Practicing Company Secretary/Tax Consultant)   (403 Points)

10 July 2010  

There are two units. one is public limited company which is having excise regn. another is proprietory concern which is non-excisable unit and availing ssi exemption. Proprietor of non-excisable unit is director in the public limited company with 50% share in shareholding.

Excisable unit has supplied goods to non-excisable goods without any consideration. This is even not accounted in the books of accounts of both the companies. But excisable unit has availed the cenvat credit.  On objection of excise department, the cenvat credit is reversed. But  now they are initiating the action for clubbing of two businesses ?

What are the penal provisions ? Can excise department will succeed in clubbing of business ? How to protect the client from clubbing of business ? Pl. suggest.