2006 (9) TMI 441 - AT - Central Excise

Summary

Issues involved:
The issues involved in the judgment are the confirmation of demand and imposition of penalties u/s Notification No. 6/2000-C.E. on two factories belonging to M/s. AST Paper Mills and M/s. B.K. Krafts Ltd., the interpretation of the notification regarding separate entitlement for exemption, and the impact of demerger on factory status and eligibility for benefits.

Confirmation of Demand and Imposition of Penalties:
The appellant filed appeals against the adjudication order confirming a demand of Rs. 1,99,25,965/- on M/s. AST Paper Mills and imposing penalties on the firm and individuals. The demand was based on the assertion that both factories were considered as one entity, thus not entitled to separate benefits under Notification No. 6/2000-C.E.

Interpretation of Notification and Separate Entitlement for Exemption:
The appellant argued that both factories were independent entities run by separate private limited companies, each eligible for exemption under the notification. They contended that the notification provides factory-wise exemption, even for one manufacturer with two separate factories. Citing relevant legal precedents, the appellant emphasized the distinct nature of the factories, separate registrations post-demerger, and compliance with the conditions of the notification.

Impact of Demerger on Factory Status and Eligibility for Benefits:
Post-demerger approved by the High Court, M/s. B.K. Krafts Ltd. obtained separate registrations under the Excise Act and Factory Act. The Hon'ble Supreme Court precedent highlighted that even if factories are owned by one company, they can be entitled to benefits separately if the notification conditions are met. The Tribunal's decision, later overturned by the Supreme Court, was cited to support the appellant's position. Consequently, the demand and penalties were deemed unsustainable, and the appeals were allowed.