Clubbing of business

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.

 

Replies (1)

The provision of clubing of units is not applicable only when the two units are really independant. If the department prove the clubing then the department is entitled to recover duty, interest and can also impose penalty upto the duty amount.

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