2003 (3) TMI 394 - AT - Central Excise

Summary

Issues:
1. Denial of exemption under Notification 1/93 for goods cleared by the appellant.
2. Inclusion of clearances by other firms in the total value for exemption eligibility.

Issue 1: Denial of exemption under Notification 1/93:
The case involved Krone Trading Co., engaged in manufacturing pillows and cushions, selling products to Kurlon Ltd. The appellant's goods were sent to Sunitha Enterprises for labeling with Kurlon Ltd.'s brand name. The notice proposed denying the exemption under Notification 1/93, alleging Sunitha Enterprises was a job worker, violating paragraph 7 of the notification. The Commissioner confirmed duty demand and penalties. The appellant argued that the notice did not allege Sunitha Enterprises was a dummy, and the Tribunal's precedent stated that labeling by a non-manufacturer does not breach the notification. The Commissioner failed to prove Sunitha Enterprises was a dummy, and the appellant's connection with one of Sunitha Enterprises' partners did not establish it as a dummy. The Tribunal ruled in favor of the appellant, allowing the appeal and setting aside the order.

Issue 2: Inclusion of clearances by other firms in exemption eligibility:
Regarding the inclusion of clearances by United Polypillows and Madan Pushp Enterprises in the total value for exemption eligibility, the appellant argued that multiple manufacturers operating in the same factory were not illegal. The notification allowed goods to be cleared by one or more manufacturers from a factory. The Commissioner's order did not contest the existence of the other firms or provide grounds for aggregating their clearances with the appellant's. The Tribunal agreed with the appellant, stating that utilizing one factory for multiple manufacturers was neither illegal nor uncommon. The Tribunal emphasized that while taxpayers should pay due taxes, they are not obligated to maximize their tax payments. Consequently, the Commissioner's order lacked a valid basis, and the appeals were allowed, with the impugned order set aside, granting consequential relief to the appellant.