2010 (5) TMI 787 - AT - Central Excise

Summary

Issues involved: Determination of whether separate enterprises can be treated as independent units for the levy of excise duty under the Central Excise Act, 1944.

Summary:

Issue 1: Whether Kandhar Separators Industries, Jeet Enterprises, and Hi-Tech Electronics Industries could be considered independent units for excise duty purposes.

The investigation revealed that these units, along with Kandhari Radio Corporation, were involved in manufacturing and sale of accumulators. The Commissioner (Appeals) held that the goods were manufactured in a common factory premises by Kandhari Radio Corporation, entitling them to exemption benefits. However, M/s. Hi-Tech Electronics Industries were considered separate and independent units by the Commissioner (Appeals).

Issue 2: Interpretation of Section 2(f) of the Central Excise Act in determining the manufacturer.

Section 2(f) defines "manufacture" and "manufacturer," stating that even the use of machinery owned by others qualifies a person as a manufacturer. The adjudicating authority observed that the doctrine of approbate and reprobate applied, as the units formed by Shri Avtar Singh were trying to evade duty by seeking exemption benefits. The Commissioner (Appeals) erred in granting exemption based solely on machinery ownership without sufficient evidence of production by only one unit.

Conclusion:

The Tribunal found no infirmity in the Additional Commissioner's order regarding independent production by each unit. The Commissioner (Appeals) erred in reducing the penalty and granting exemption beyond the scope of the show cause notice. The appeals filed by M/s. Hi-Tech Electronics Industries and Shri Avtar Singh were dismissed, and the department's appeals succeeded, setting aside the Commissioner (Appeals) order and restoring the adjudicating authority's decision.