JUDGMENT This is a Tax Case under Section 35H(1) of the Central Excise Act, 1944. Following are the grounds of reference: a) Hon'ble CEGAT appears to have not appreciated that M/s Xenon has a separate identity as a manufacturer of goods and have camouflaging their identity as a facade unit with sole purpose to irregularly avail SSI exemption with intent to evade payment of Duty on goods manufactured and cleared by their own registered premises. b) The Hon'ble CEGAT has erred by not appreciating that M/s Xenon is a facade for the purpose of Notfn. No.175/86-CE only which can not extinguish their liability to observe Central Excise provisions. c) Hon'ble CEGAT appears to have not appreciated that the decision of the Hon'ble Supreme Court reported in 1997(92) ELT 451 relates and restricts to liability to pay the Duty demanded. 2. It will be appropriate to take note of the fact stated in the Reference Application itself, which are as under : M/s Xenon, Adityapur, Jamshedpur (hereinafter referred to as the said assessee) is a partnership firm and are engaged in the manufacturing of Motor Vehicles Parts falling under Chapter heading no.87.08 of the CETA'85, as per the specifications of M/s TELCO Ltd., Jamshedpur. The assessee is availing the SSI exemption in terms of the Norfn. No.175/86-CE dt. 01.03.86 (as amended). The factory of the assessee is adjacent to the M/s Samarth Engg. Co Pvt. Ltd., Adityapur, Jamshedpur (hereinafter referred to as M/s SECO) who is also availing SSI exemption under 175/86-CE dt. 01.03.86 (as amended) and manufacturing the same goods that the assessee is manufacturing. On visit of the factory premises by the officers of the Preventive unit of Central Excise Commissionerate, Jamshedpur it was found that the unit of the assessee was formed by dubiously and artificially fragmenting M/s SECO with a view to misutilize the benefits of aforesaid SSI exemption notification. A.S.C.N. no.V(84)(15)49-Adj./ 94/17589 - 90 dt. 20.12.94 was issued to both the units as to why the manufacture and clearances as shown by them separately should not be clubbed together as manufacturer and clearances of a single unit viz. M/S SECO in terms of provisions of Notfn. No.175/86-CE dt. 01.03.86 and 1/93 (as amended) and why duty amounting to Rs.16,27,340.74 should not be demanded in terms of Rule 9(2) of CER'44 read with Sec. 11A of the CEA'44. M/S SECO in terms of provisions of Notfn. No.175/86-CE dt. 01.03.86 and 1/93 (as amended) and why duty amounting to Rs.16,27,340.74 should not be demanded in terms of Rule 9(2) of CER'44 read with Sec. 11A of the CEA'44. They were also required to show cause as to why the penalty should not be imposed on them under Rule 9(2), 173Q and 226 of CER'44. The Commissioner of Central Excise, Jamshedpur confirmed the duty demanded vide his O/O no.34/Commr/97 dt.22.10.97 issued on 24.10.97. He also imposed a penalty of Rs.2.5 Crores on M/S SECO and Rs.1 Crore on the assessee under Rule 173Q, a penalty of Rs.2000.00 each under Rule 9(2) and a penalty of Rs.2000.00 each under Rule 226 of the CER'44. The liability against M/S SECO have been settled under KVSS'98 and settlement Certificate in Form 3 has been issued to M/S SECO on 03.05.99. The CEGAT, Caltutta vide its order no.A-943/CAL/2000 dt.07.07.2000 disposed the appeal of M/S SECO as the disputes have been settled under KVSS'98. The CEGAT, Calcutta vide its order no.A-1200/CAL/2000 dated 03.08.2000 allowed the appeal of the assessee by setting aside the portion of the impugned Order-In-Original dt.22.10.97 imposing penalty of Rs. One Crore under Rule 173Q, Rs.2000.00 each under Rule 9(2) and 226 of CER'44. 3. The facts stated in the Reference application itself reveals specifically in Paragraph-2 that a A.S.C.N. no.V(84)(15)49-Adj./94/ 17589-90 dt. 20.12.94 was issued to both the units specifically asking them to show why the manufacture and clearances as shown by them separately should not be clubbed together as manufacturer and clearances of a single unit viz. M/S SECO. Both the companies failed to show that the manufacture and the clearances made by them were separate and were not by the single unit-M/s SECO. This finding of fact has attained finality as has been recorded in the adjudication proceeding in the order dated 24.10.1997, a copy of which has been sent to this Court by the Commissioner, Central Excise, Jamshedpur. The adjudicating authority the Commissioner, Central Excise, Jamshedpur, specifically held at page no.22 that acceptable goods cleared by M/s SECO and M/s Xenon during the relevant period by wrongly availing the excise exemption under Notification of 175/86 and 1/93 and cleared the goods without payment of proper duty of excise as required under Rule 9(1) of ECR'194. 4. The adjudicating authority the Commissioner, Central Excise, Jamshedpur, specifically held at page no.22 that acceptable goods cleared by M/s SECO and M/s Xenon during the relevant period by wrongly availing the excise exemption under Notification of 175/86 and 1/93 and cleared the goods without payment of proper duty of excise as required under Rule 9(1) of ECR'194. 4. In view of the above, the adjudicating authority held that both the units have contravened the provisions of Rule -9 and Rule 173F of CER'1944. After recording other findings held that the aggregate value of the clearances of M/s SECO and M/s Xenon are liable to be clubbed together in terms of the provisions of SSI Exemption Notification No.175/86-CE dated 1.3.1986 as amended and 1/93- CE dated 28.2.1993 as amended for the purpose of determining the duty liability. The adjudicating authority therefore ordered that M/s SECO to pay the deferential duty of Rs.16,27,340.74 paise. The penalty of Rs.2.5 Crores has been imposed upon M/s SECO with a separate penalty of Rs.2000/- under Rule 173Q and Rule 9(20 of the CER'1944 respectively. In addition to above, a penalty of Rs.One Crore was imposed upon M/s Xenon under Rule 173Q of CER'1944. 5. A question arises in this Tax Case is whether in a case one company is declared to be dubious company of another and all the transactions made by the dubious company are treated to be a transaction made by the original company and the duties imposed upon that original company, whether the penalty can be imposed against the alleged declared dubious company. 6. Learned counsel for the Revenue vehemently submitted that this fact cannot be disputed that there existed two companies. Both companies had their different registration and they obtained different Exemptions Certificates. Therefore, in that situation, the other company, which is dubious company of the original company, cannot be said to be non-existent company. Since the said dubious company was also found involved in taking wrong benefits of the exemption certificate, therefore, that company is also liable to the penalty. Both companies had their different registration and they obtained different Exemptions Certificates. Therefore, in that situation, the other company, which is dubious company of the original company, cannot be said to be non-existent company. Since the said dubious company was also found involved in taking wrong benefits of the exemption certificate, therefore, that company is also liable to the penalty. Learned counsel for the Revenue tried to justify the judgment delivered in case of Gajanan Fabrics Distributors, Sangli and Others Versus Collector of Central Excise, Pune reported in (1997) 11 SCC 66 , and submitted that the Gajanan Fabrics Distributors' case was decided in the facts of that case and it was nowhere laid down that in such type of transactions, the penalty cannot be imposed upon the dubious company. It is submitted that in fact in the Gajanan Fabrics Distributors' case, there were seven units, which were found to be dubious companies and the tribunal failed to give due attention to the fact that the Collector had confirmed the demand made in the show cause notice upon all the seven units and their partners and or Directors and then in that situation, observed that “having regard to his conclusion that all the units other than Gajanan Weaving Mills were fictitious units, the sequitur one would have assume could only be that it was Gajanan Weaving Mills which was the assessee and liable to pay the demand”. The Hon'ble Supreme Court has further observed that by confirming the demand upon all the seven units, the Collector appears to have treated them all as assessee and, implicitly, recognized their independent existence. The Supreme Court has not decided the issue whether any penalty can be imposed upon such dubious company whose existence cannot be denied because of the reason that the said dubious company in fact existed and obtained the excise certificate. 7. Learned senior counsel for the respondent Mr. Poddar justified the order passed by the Central Excise & Gold Control Appellate Tribunal, Kolkata, dated 3.8.2000 wherein it has been held that after having held M/s Xenon company as dubious company separate penalty could not be imposed upon the said company. 8. 7. Learned senior counsel for the respondent Mr. Poddar justified the order passed by the Central Excise & Gold Control Appellate Tribunal, Kolkata, dated 3.8.2000 wherein it has been held that after having held M/s Xenon company as dubious company separate penalty could not be imposed upon the said company. 8. We have considered the submissions of the learned counsel for the parties and perused the reasons given in the Reference in the said case as well as the reasons given in the order dated 3.8.2000 and the reasons given in the case of Gajanan Fabrics Distributors' case. So far as the contention of the learned counsel for the Revenue is concerned, that the dubious company does not mean that it was never existed is concerned, we are of the considered opinion that in the facts of this case, it may be held that the declared dubious company M/s Xenon in fact existed and obtained the Exemption Certificate under the Rules. The question is not that whether the said dubious company existed or not, but the question is that who did the transactions and incurred the liability of the duty and in case of the violation of the Rules, was liable to pay the penalty. Once it is held that one was the original company and another was the dubious company, further finding is recorded in this case that the other company in fact did not indulge in the manufacture and the clearance of the goods, and therefore, the Revenue gave show cause notice to both the companies giving them opportunity so that they can show that they separately did the transactions under consideration. The Revenue itself fully satisfied that they did not do the manufacture and clearances separately, but it was the total transactions done by the M/s SECO in terms of the provisions of the Notification No.175/86 -CE dated 1.3.86 and 1/93.Therefore, all the transactions and the exemptions sought were treated to be the transactions undertaken by the M/s SECO, and therefore, after recording such finding, the liability of duty has been found to be of M/s SECO. 9. If the arguments of the learned counsel for the Revenue is accepted that mere because of the existence of the dubious company, the said dubious company be treated to have undertaken the dealings, then in that situation, the finding of the dubious company could not have been recorded. 9. If the arguments of the learned counsel for the Revenue is accepted that mere because of the existence of the dubious company, the said dubious company be treated to have undertaken the dealings, then in that situation, the finding of the dubious company could not have been recorded. At the cost of the repetition, we may observe that the existence of one company cannot create liability under the provisions of the Central Excise Act or the Rules of 1944 and the liability is created only on account of the actual transaction. Once it has been held that the company which was in existence in fact did not do the transactions and the transactions shown by the dubious company was done by the original company, then only this finding can be recorded that the transactions were done in the name of the dubious company by the original company resulting it into the clubbing of the transactions shown in the name of the dubious company as of the original company, and thereafter, only the full duty of entire transactions done in the name of the original company and the dubious company falls upon the original company. So has been done in the order by the adjudicating authority -the Commissioner, Central Excise, Jamshedpur in its order dated 24.10.1997. The transactions, which have been done by the M/s SECO, the original company, cannot make liable M/s. Xenon for the penalty, who in the opinion of the adjudicating authority itself did not do any of the transaction, then, in that situation, in our opinion, no penalty can be imposed upon the company who did not do any transaction. 10. The judgement of Gajanan Fabrics Distributors clearly indicates the above position. In the Gajanan Fabrics Distributors' case, the Hon'ble Supreme Court has questioned the two findings recorded by the Collector viz -a-viz finding recorded by the tribunal. The Collector held that the seven units are only a corporate for facade, both have registered with the various authorities with a view to camouflage with the actual identity and thereby availed the exemption which, otherwise, cannot be inadmissible to them. This finding was upheld by the tribunal. The Collector held that the seven units are only a corporate for facade, both have registered with the various authorities with a view to camouflage with the actual identity and thereby availed the exemption which, otherwise, cannot be inadmissible to them. This finding was upheld by the tribunal. This finding also clearly indicate that in this case also seven companies /firms were in existence and they obtained the exemption certificate, but, for the purpose of benefit of M/s Gajanan Fabrics Distributors, and therefore, they were declared to be fictitious company/firms. The Hon'ble Supreme Court observed that, at one place this finding is there which attained the finality and at other side, the tribunal failed to give the attention to the fact that the Collector had confirmed, in the sum of Rs.11,84,708.51 paise, the demand made in the show cause notices upon all the seven units and their partners or Directors. The Supreme Court observed that having regard to his conclusion that all units other than Gajanan Weaving Mills were fictitious units, the sequitur one would have assumed could only be that it was the Gajanan Weaving Mills which was the assessee and liable to satisfy the demand. Therefore, in the Gajanan Fabrics Distributors' case also the Hon'ble Supreme Court by implication held that there cannot be two contradictory findings, one holding that the fictitious company is liable to pay the duty and another is that they are fictitious company of any other company. It has been made clear by the Hon'ble Supreme Court in the same paragraph of the Gajanan Fabrics Distributors' case, by observing -”by confirming the demand upon all the seven units, the Collector appears, however, to have treated them as assessees, and implicitly, recognized their independent existence”. This word “independent existence” in the last of the line does not denote the physical existence of the fictitious company, but, it denotes the existence of independent transaction by the company, which cannot be accepted in a case when it is found by the Revenue that the said company is a fictitious company of other original company who did the transactions. 11. 11. In view of the above reasons, we are of the considered opinion that the tribunal was right in holding that the penalty could not have been imposed upon the fictitious company which, in fact did not do any transaction and all the transactions were done by the original company and rightly interpreted the judgment of the Gajanan Fabrics Distributors case and the question referred above raised before us are answered that in the facts of this case, no penalty could have been imposed upon the respondent M/s Xenon company. 12. The Tax Case is answered and disposed of accordingly. Answered accordingly.