1983 (7) TMI 307 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility for exemption under Notification No. 89/79.
2. Contravention of Central Excise Rules.
3. Limitation period for issuing show cause notices.
4. Territorial jurisdiction for adjudication.

Summary:

Issue 1: Eligibility for Exemption under Notification No. 89/79
The primary issue was whether the benefit of exemption under Notification No. 89/79 should be availed based on the value of goods cleared from each factory owned by the appellants or if the clearances from all three factories should be aggregated due to common partners. The Tribunal held that each partnership firm is a separate legal entity, and the goods cleared by each should not be aggregated. The term "manufacturer" applies more appropriately to the firm rather than individual partners. The Tribunal relied on precedents such as the Supreme Court decision in *Asstt. Collector of Central Excise & Customs v. Shri J.C. Shah and Others* and other High Court rulings, which established that a partner in a firm is distinct from the firm itself. Consequently, the goods cleared by the three firms could not be aggregated for the purpose of the exemption.

Issue 2: Contravention of Central Excise Rules
The appellants were alleged to have contravened various Central Excise Rules by jointly removing excisable goods without payment of duty and without observing statutory formalities. The Tribunal found that the appellants had not contravened any rules as they were recognized as separate entities by the Central Excise authorities, who had issued separate L-4 licenses to each firm. The adjudicating authority's decision to treat each partner as a "manufacturer" was incorrect, and thus, there was no contravention of the rules.

Issue 3: Limitation Period for Issuing Show Cause Notices
The Tribunal examined whether the show cause notices issued on 17-12-1981 were barred by limitation. It was held that the larger period of limitation of five years under Section 11A of the Central Excises and Salt Act, 1944, was inapplicable as there was no wilful mis-statement, suppression of facts, or fraud by the appellants. The notices for the year 1979-80 were barred by limitation, and the notice for 1980-81 was vitiated due to improper aggregation of goods without considering the exemption.

Issue 4: Territorial Jurisdiction for Adjudication
The appellants contended that the show cause notices and adjudication order were vitiated due to the absence of territorial jurisdiction. The Tribunal found no substance in this plea, stating that the notifications did not exclude factories situated in diverse jurisdictions when referring to a "manufacturer" having multiple factories.

Conclusion:
The Tribunal allowed the appeals, setting aside the adjudication order and the demand for payment of duty. The appellants were recognized as separate entities, and the aggregation of goods for exemption purposes was deemed incorrect. The show cause notices were found to be barred by limitation or vitiated due to improper aggregation.