Per Jyoti Balasundaram :

The brief facts of the case are that acting on information that M/s. Kingwin Universal, M/s. Kingwin Chemical, M/s. Kingwin International, M/s. Kingwin Johnson (hereinafter referred to as KWU, KWC, KWI, KWJ respectively and also jointly referred to as 'KINGWIN', were engaged in the manufacture and clearance of Industrial cleaners, polishes, speciality chemicals for machine cleaning, water treatment and preventive maintenance, as well as cosmetics, falling under Chapter Headings 3823, 3305, 3405 without obtaining Central Excise licence/registration and without payment of Excise duty, officers of the Central Excise, Jaipur visited the factory premises on 25.10.97 and seized certain records and recorded the statement of Dr. S.N. Chadha, Prop of M/s. KWC who stated inter-alia that all the four units were engaged in the manufacture of common products in the same plot and that records of all the four units were maintained in the same plot; that Proprietors of all the four firms were, himself (Dr. Chadha), his wife Amita Chadha and his two sons Shri Ajay Chadha and Shri Sanjay Chadha); that the word 'Kingwin' is used to identify the company's product; that there was only one power connection in the name of M/s. KWC which was utilised by all units; that factory premises belongs to M/s. KWC and rent is being charged from other units etc.

2. Statement of Shri Sanjay Chadha was recorded on 26.10.93 on which date, the statement of Mrs. Susheela S. Kutty, Accountant of M/s. KWI, was also recorded. A further statement of Dr. Chadha was recorded on 26.10.93 and on 1.2.94, investigation revealed that all the raw materials for all four units were purchased by Dr. Chadha; raw material was jointly stored without any unit-wise maintenance of raw material stock accounts and that inter-unit transfer of raw materials was carried out without making any chemical analysis or without receiving any payment which indicated that the four units are not separate but are one single entity; that the units had been formed separately on paper with a view to fraudulently avail SSI benefit. The factory premises were searched on 16.7.96 when a further statement of Dr. Chadha was recorded. Enquiry further revealed that during 1995-96 with effect from 8.6.96, four units had sold all the goods manufactured by them to M/s. Kingwin Hydrochem Ltd. (referred to as KWHCL) created in February 1995 by Dr. Chadha and his family at a very low and suppressed prices when compared to the prices at which the four units had sold goods directly to their customers. It appeared to the Department that the idea behind this arrangement was to drastically reduce the clearance value so as to individually remain within the exemption limit under SSI notification. Further, the Department was of the view that sulphonated castor oil based speciality chemicals manufactured by the units were not classifiable under CET sub heading 3402.10 as declared in the SSI declarations filed by the units but under Chapter heading 3823 as Miscellaneous chemicals not elsewhere specified. Due to the existence of the common infrastructure, common financial involvement, common pricing, common control and provisions in respect of five units, the Department was of the view that the separateness of the five units was only a facade and therefore, the exemptions individually sought under Notification 175/86 and No. 1/93 by filing separate SSI declaration was not admissible and the clearance of all the five units were required to be clubbed together. As a result of clubbing, the Department charged them with having fraudulently evaded Excise duty of Rs. 1,15,20,972/- during the period from 1.4.92 to 31.1.97.

3. Based on the above investigation, a show cause notice dated 1.5.97 was issued to all the five units, proposing clubbing of clearance by denying separate unit-wise exemption, recovery of duty on the amount above mentioned and proposing imposition of penalty. The show cause notice also