2009 (4) TMI 185 - AT - Central Excise

Clubbing of clearances - Whether three manufacturing facilities of the respondent, are to be treated as three different factories as claimed by the respondents or as three different units of the same factory as claimed by the Department - We are also in agreement with the findings of the Commissioner that the three factories were having separate boilers registered separately with the boiler department; and that the three factories had separate laboratories and the common facility was a lab which was meant only for special testing, as the department has not refuted the same with supporting evidence. - Evidence cannot lead to conclusion that the factories set up at different point of time by different legal entities can be treated as a single factory. Exemption available revenue appeal rejected

Summary

Issues:
Whether three manufacturing facilities should be treated as separate factories or units of the same factory for the purpose of claiming exemptions under specific notifications.

Analysis:
The dispute in this case revolves around whether three manufacturing facilities of the respondent should be considered as three different factories, as claimed by the respondent, or as three different units of the same factory, as claimed by the Department. The respondent argued that each factory should be eligible for separate exemptions under various Notifications covering different periods. The history of the formation of these facilities was examined, showing that they were established by different legal entities at different times. The Commissioner accepted the respondent's defense, concluding that the three facilities could be considered as separate factories and thus eligible for individual exemptions.

The Department challenged the Commissioner's decision, arguing that the units were located adjacent to each other without specific demarcation and shared common facilities, suggesting they should be treated as one factory. They relied on legal precedents to support their position. In response, the Advocate for the respondent defended the Commissioner's order, emphasizing that the facilities were established at different times by different entities and had separate infrastructure.

Upon careful consideration, the Tribunal agreed with the Commissioner's findings. They noted that the facilities were set up by different legal entities at different times and that the common ownership after amalgamation did not change the independent nature of each facility. Citing a Supreme Court decision, the Tribunal highlighted the lack of commonality between the facilities, such as separate entrances, different end products, separate registrations, and distinct management structures. The Tribunal found no grounds to interfere with the Commissioner's order and rejected the Department's appeals, affirming the separate factory status of the respondent's facilities.

In conclusion, the Tribunal held that the appeals by the Department lacked merit, and the cross-objection was also disposed of accordingly. The decision upheld the separate factory status of the respondent's manufacturing facilities, allowing them to claim exemptions individually under the relevant notifications.