1993 (2) TMI 275 - AT - Central Excise

Summary

Issues: Allegation of two partnership units being one entity; Benefit of exemption under Notifications 85/79 and 46/81; Allegations of dummy unit and insufficient machinery.

Analysis:
1. The case involved an appeal by the Revenue against the order passed by the Collector of Central Excise, Chandigarh, alleging that two partnership units, Panesar Bros. and Panesar Engineering Works, were one and the same entity. The Revenue contended that Panesar Bros. was a dummy unit of Panesar Engineering Works. The department also alleged that Panesar Bros. did not have sufficient machinery or space for manufacturing certain products.

2. The Collector, in the impugned order, held that Panesar Bros. was not covered by the definition of a factory under the Factories Act, 1948, as it only had six workers. Consequently, Panesar Bros. was entitled to full exemption under Notifications 85/79 and 46/81. The Collector also ruled that the value of clearances fully exempt under other notifications need not be computed for aggregate clearance purposes under relevant notifications.

3. During the hearing, the Revenue reiterated the facts from the CBEC order and cited tribunal decisions to support their argument that the two units should be considered one entity for clubbing workers and clearances. The Revenue sought to set aside the impugned order and sustain the demand of Rs. 1,00,371 against the units.

4. The advocates for Panesar Engineering Works and Panesar Bros. argued that even if the units were considered the same, Panesar Bros. was eligible for the exemption under Notifications 85/79 and 46/81 due to having less than 10 workers. They contended that there was no evidence to support the allegations of insufficient machinery or being a dummy unit. They highlighted that Panesar Bros. was an older establishment than Engineering Works and had been engaged in manufacturing before the latter's existence.

5. The tribunal agreed with the advocates for Panesar Engineering Works and Panesar Bros., holding that the benefit of the exemption notifications was correctly accorded by the adjudicating authority. The tribunal found no sufficient evidence to establish that the two units were one and the same or that Panesar Bros. was a dummy or shadow unit of Engineering Works. Consequently, the appeal by the Revenue was dismissed, and cross-objections were deemed non-maintainable as the respondents had been granted complete relief by the adjudicating authority.