2008 (7) TMI 721 - AT - Central Excise

Summary

Issues:
1. Interpretation of condition VI in the SSI Notification.
2. Whether the siblings should be considered as separate manufacturers.
3. Liability for duty payment and penalties based on manufacturing activities.

Analysis:
1. The judgment revolves around the interpretation of condition VI in the SSI Notification. The Notification states that the exemption applies to the aggregate value of clearances mentioned against each serial number, not separately for each manufacturer. The assessee (brother) argued that since he manufactured goods within the exemption limit, his sister's clearances should not be considered his. On the contrary, the Revenue viewed both siblings as manufacturers from the same factory, thus liable to be clubbed under condition VI.

2. The Tribunal analyzed the manufacturing setup where the siblings operated in adjoining premises with a partition wall. They shared the same machinery, used by the brother in the first half of the year and the sister in the second half. The Tribunal concluded that the entire premises should be treated as a 'factory' for the entire financial year. Therefore, the siblings are considered as manufacturers who cleared goods from the same factory. This interpretation aligns with the purpose of the condition to prevent circumvention of duty liabilities.

3. Considering the financial hardships pleaded by the brother and his accumulated losses, the Tribunal directed him to pre-deposit a specified amount within a deadline. Compliance would lead to a waiver of pre-deposit and a stay of recovery for penalties imposed on both siblings and the remaining duty amount demanded from the brother. This decision aimed to balance the duty enforcement with the financial circumstances of the assessee.

In conclusion, the judgment clarifies the application of condition VI in the SSI Notification, determines the siblings as joint manufacturers from the same factory, and addresses the duty payment and penalty liabilities based on their manufacturing activities.