2016 (12) TMI 24 - AT - Central Excise

Eligibility of exemption under N/N. 10/96-CE dated 23.07.1996 - manufacture of PVC footwear - EVA blanded compound arising at intermediate stage - whether the denial of exemption on the ground that EVA compound made in one premises is cleared to another premises which is a different factory, justified? - Held that - We find the department contested the impugned order only on the ground that the premises are separated by quite some distance and as such cannot be considered as one factory since the respondent assessee did not apply for Central Excise registration, it cannot be presumed that they will be covered by a single registration. We find no force in the argument by the Revenue. Admittedly, as examined in the impugned order both the premises belong to the same respondent and involved in the process of manufacture of footwear. Some process like preparation of EVA compound is carried out in one premises and consumed for manufacture of footwear in another premises, both belonging to the same respondent-assessee. In such situation, we find no justification to deny the exemption in the absence of evidence to the effect that both are to be treated as separate factory - appeal dismissed - decided against Revenue.

Summary

Issues: Eligibility for exemption under Notification No. 10/96-CE for blended EVA compound; Determination of whether two premises constitute separate factories for excise duty purposes.

Analysis:
1. The appeal before the Appellate Tribunal CESTAT NEW DELHI involved the eligibility of the respondent-assessee for exemption under Notification No. 10/96-CE concerning the blended EVA compound used in the manufacture of PVC Footwear. The Revenue contended that the EVA compound produced at an intermediate stage was not eligible for exemption as it was transferred between premises belonging to the same assessee but considered as different factories. The original authority imposed duty demand, penalty, and ordered confiscation of goods, which was set aside by the Commissioner (Appeals), leading to the Revenue's appeal.

2. The Tribunal considered the definition of "factory" under Section 2(f) of the Central Excise Act, 1944, which includes any premises where manufacturing processes related to excisable goods are carried out. The impugned order found that the respondent had a single registration under various laws, and both premises were under their control. It was established that both locations were part of one factory, enabling the consumption of the EVA compound within the factory for footwear production, thus qualifying for the exemption under the notification.

3. The Revenue argued that the physical separation of the premises and the lack of separate Central Excise registration implied they should be treated as distinct factories. However, the Tribunal disagreed, emphasizing that both locations were owned by the same assessee and involved in the footwear manufacturing process. The process of preparing the EVA compound in one premise and using it in another did not warrant denying the exemption, especially when no evidence suggested treating them as separate factories. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the eligibility of the respondent-assessee for the exemption under Notification No. 10/96-CE.

4. In conclusion, the Tribunal's decision on 28.10.2016 clarified that the interconnected premises of the respondent-assessee constituted a single factory for excise duty purposes, allowing the blended EVA compound's exemption in the manufacture of PVC Footwear. The judgment highlighted the importance of ownership and control in determining factory status, rejecting the Revenue's argument based on physical separation alone.