2002 (12) TMI 89 - SC - Central Excise

Whether the proviso to Section 11A of the Central Excise Act can be applied? Whether the benefit of Notification No. 85/85, dated March 17, 1985 can be availed by assessee? Held that - A person from availing the benefit of exemption under the notification if clause (a) or clause (b) applies. Had the Revenue proceeded on the basis of facts which make out a case under Para 2 of the notification, extracted above, it would have been valid for the Tribunal to have recorded the finding which it did. The show cause notice, as noted above, did not proceed on the footing that the assessee did not disclose the fact of production of goods in two factories by the same manufacturer or in a factory by more manufacturers than one. The simple case of the Revenue was that by not disclosing the fact that M/s. Freyssinet Prestressed Concrete Co. Ltd. is a subsidiary of M/s. Gammon India Ltd. of which the assessee is a division, there has been a suppression of fact which entitled the Collector to invoke the proviso to Section 11A of the Central Excise Act. On this aspect, the finding recorded by the Tribunal is not in accord with the case of the Revenue. We are, therefore, of the view that it is not open to the Revenue to make out a new case for invoking the proviso to Section 11A of the Central Excise Act. Insofar as the appeals filed by the assessee are concerned, in view of the fact that the goods produced by the assessee, a division of M/s. Gammon India Ltd., and M/s. Freyssinet Prestressed Concrete Co. Ltd., a subsidiary of M/s. Gammon India Ltd., are for and on behalf of M/s. Gammon India Ltd., clubbling of the clearance of goods cannot be said to be illegal, having regard to the provisions of the aforesaid notification. The assessee cannot, therefore, avail the exemption under the notification. The appeals filed by the Revenue as well as the assessee are dismissed.

Summary

Issues:
1. Interpretation of Notification No. 85/85 regarding exemption eligibility.
2. Clubbing of clearances for excisable goods by related entities.
3. Suppression of fact leading to the invocation of proviso to Section 11A of the Central Excise Act.

Analysis:

Issue 1: The Tribunal's interpretation of Notification No. 85/85 was crucial in determining exemption eligibility. The para 2 of the notification specified conditions for exemption, stating that it would not apply if the aggregate value of clearances exceeded a certain limit. The Revenue argued that clubbing clearances of related entities should trigger the proviso to Section 11A. However, the Tribunal found no basis in the show cause notice to support this argument.

Issue 2: The clubbing of clearances by related entities was contested. The Tribunal upheld the clubbing of clearances for both the assessee and a subsidiary, leading to the denial of exemption under the notification. This decision was based on the relationship between the entities and the nature of goods produced for and on behalf of a common parent company.

Issue 3: The Revenue alleged suppression of fact by the assessee, justifying the invocation of the proviso to Section 11A. However, the Tribunal's finding was that the Revenue did not present the case based on the relevant para of the notification. The Tribunal concluded that the Revenue could not establish suppression of fact to invoke the proviso, as the case was not presented on that basis initially.

In conclusion, the Supreme Court dismissed the appeals filed by both the Revenue and the assessee. The court upheld the Tribunal's decision regarding the clubbing of clearances for related entities and the denial of exemption under the notification. The court emphasized that the Revenue could not introduce a new case for invoking the proviso to Section 11A, as the original case did not support such a claim. The judgment clarified the application of the notification and the implications of clubbing clearances for related entities in excisable goods cases.