1982 (6) TMI 247 - Board - Central Excise

Summary

Issues:
1. Imposition of penalty and confiscation of capacitors by Additional Collector of Central Excise, Bombay.
2. Eligibility for exemption under Notification No. 176/77.
3. Consideration of units as separate legal entities.
4. Interpretation of duty liability under Item 68, C.E.T.
5. Compliance with Factories Act requirements.
6. Exemption under Notification No. 85/79.
7. Appeal against Additional Collector's orders.

Analysis:
The judgment pertains to an appeal by M/s. Champion Engineering Mechanical and Electrical Engineers against the penalty and confiscation imposed by the Additional Collector of Central Excise, Bombay. The Additional Collector had penalized the appellants and confiscated capacitors, citing duty liability under Notification No. 176/77 due to their clearances exceeding a certain threshold. However, the appellants argued that they and their sister concern are distinct legal entities and not factories under the Factories Act, thus challenging the duty liability under Item 68, C.E.T.

During the hearing, the appellants presented their case through representatives, explaining the manufacturing process of capacitors and the separate nature of their partnership firms. They highlighted the exemption under Notification No. 85/79 for goods produced in units not defined as factories under the Factories Act. The appellants contended that the Additional Collector misinterpreted the exemption's applicability timeline and failed to contest the fact that their production was not covered by Item 68 of the C.E.T. The Department had also confirmed their non-factory status, further supporting their argument against duty liability.

The Board, after considering the arguments, found that both the appellants and their sister concern were not factories as per the Factories Act, rendering their production not subject to duty under Tariff Item 68. Consequently, the Additional Collector's orders were deemed misconceived, leading to the Board setting them aside and allowing the appeal. This decision was based on the clear exemption criteria and the acknowledgment of the firms' non-factory status, emphasizing the legal distinction between the entities and the exemption under the Factories Act for non-factory production units.