2013 (5) TMI 517 - AT - Central Excise

Conditions for registration u/s 6 of the Act - Manufacture of cigarettes - Rejection of the application for registration Held that - The requirement for obtaining Central Excise registration in Section 6 of the Central Excise Act, according to which any person who is engage in production or manufacture of any specified goods included in the 1st and 2nd schedule to the Central Excise Tariff Act, shall get himself registered with the proper officer in the manner prescribed. Sub-rule (3) of Rule 9 provides that registration under sub-rule (1) shall be subject to such conditions, safeguards and procedures as may be specified by the Notification by the board. The board has issued Notification No. 35/2001-CE (NT) and also Notification No. 36/2001-CE (NT) under Rule 9 (3). None of these notifications prescribe any condition regarding issue of licence under IRDA Act by Ministry of Commerce and Industry, before the issue of Central excise registration certificate. In view of this, the order passed by the Assistant Commissioner refusing the registration is not correct.

Issues:
1. Registration of a factory for manufacturing cigarettes under Central Excise Act.
2. Rejection of registration application by Assistant Commissioner.
3. Appeal before Commissioner (Appeals) against rejection.
4. Interpretation of legal provisions and circulars related to industrial licensing requirements for cigarette manufacturing units.

Issue 1: Registration of a factory for manufacturing cigarettes under Central Excise Act
The respondent set up a factory for manufacturing cigarettes chargeable to Central Excise duty. They applied for a registration certificate in accordance with Section 6 of the Central Excise Act, 1944 read with Rule 9 of the Central Excise Rules, 2002.

Issue 2: Rejection of registration application by Assistant Commissioner
The Assistant Commissioner issued a show cause notice and subsequently rejected the application for registration based on a letter from the Chief Commissioner stating that registration could be refused if the total workers in a cigarette factory were less than 50/100 for power operated/non-power operated.

Issue 3: Appeal before Commissioner (Appeals) against rejection
The respondent appealed against the Assistant Commissioner's order, and the Commissioner (Appeals) set aside the rejection with consequential relief.

Issue 4: Interpretation of legal provisions and circulars related to industrial licensing requirements
The Revenue appealed against the Commissioner (Appeals) order, arguing that industrial licensing requirements under the Industrial (Development & Regulation) Act, 1951, were mandatory for cigarette manufacturing units. The Revenue contended that the Chief Commissioner's instructions were binding and the Commissioner (Appeals) erred in not considering them.

The Tribunal considered the arguments presented by both sides. The Revenue emphasized the mandatory industrial licensing requirements for cigarette manufacturing units under the Industrial (Development & Regulation) Act, 1951. However, the Counsel for the appellant argued that the factory, with 8 to 10 workers, fell outside the purview of the Act's licensing requirements. The Counsel pointed out that neither the Central Excise Act nor the Central Excise Rules mandated a license from the Ministry of Commerce and Industries for obtaining Central excise registration.

Upon reviewing the submissions and records, the Tribunal analyzed the legal provisions. Section 6 of the Central Excise Act and Rule 9 of the Central Excise Rules outline the registration requirements for manufacturers of specified goods. The Tribunal noted that the notifications issued by the board did not impose any condition regarding the necessity of a license under the IRDA Act for obtaining a Central excise registration certificate. Additionally, the Ministry of Commerce and Industry's letter clarified that units with 8 to 10 workers manufacturing with/without power did not require licensing under the IRDA Act.

Consequently, the Tribunal found no fault in the Commissioner (Appeals) order and dismissed the Revenue's appeal. The Tribunal concluded that the Assistant Commissioner's decision to refuse registration based on the worker count was incorrect, as the factory met the registration criteria under the Central Excise Act without the need for an industrial license under the IRDA Act.

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