2002 (12) TMI 395 - AT - Central Excise

Summary

Issues:
Interpretation of notification 6/2000 entry No. 77 regarding factory exemption and registration requirement; Imposition of penalty based on the interpretation of the notification.

Analysis:
1. The case involved a Public Limited Company engaged in paper and paper board manufacturing, claiming excise duty exemption for first clearances of 3500 MT in a year under Notification No. 6/2000. The dispute arose when the department alleged that the company unlawfully availed the benefit for an additional 3500 MTs by separately clearing goods from two factories.

2. The department issued a show cause notice, accusing the company of artificially bifurcating the factory land, obtaining separate registrations under deception, and unlawfully availing duty concession. The duty liability was calculated for the excess clearances made by the new factory and the duty escaped assessment for the existing unit.

3. The Commissioner adjudicated the case, determining that the two factories were separately entitled to the exemption, and the duty demands were upheld. A penalty was imposed, which was contested by the company.

4. The main issue revolved around the interpretation of Notification No. 6/2000 entry No. 77 and whether the factory exemption was contingent upon registration. The company argued that the benefit should apply separately to each factory from the date of separate registration, challenging the Commissioner's decision to grant the benefit only from October 2000.

5. The Appellate Tribunal analyzed the notification's language and observed that the registration of the new factory was granted under Central Excise Rules, raising doubts about its classification as a separate factory. However, since the registration was not challenged, the Tribunal reluctantly accepted it from the date of separate registration.

6. The Tribunal emphasized that a factory under excise law must be recognized from the date of registration, regardless of how other authorities may view it. The duty exemption limit was upheld for the new unit, while duty liability for the earlier unit was confirmed up to the recognition of the new unit.

7. The Tribunal set aside the penalty imposed by the Commissioner, as the department had recognized and allowed the registration of the two units. The duty demands determined by the Commissioner were upheld, and the appeal was partially allowed based on the findings regarding the exemption limits and duty liability.

This detailed analysis covers the issues of factory exemption interpretation, registration requirements, duty liability, and penalty imposition, providing a comprehensive overview of the legal judgment.