2005 (10) TMI 136 - AT - Central Excise

Summary

Issues:
Entitlement to SSI notification based on clearances made by another firm.

Analysis:
The appellants, engaged in manufacturing P.P. medicines, were availing the benefit of SSI Notification No. 175/86. They were getting goods manufactured by another firm, M/s. Varma Pharmacy Pvt. Ltd., also availing the same benefit. The main issue was whether the appellants' entitlement to the SSI notification should consider clearances made by M/s. Varma Pharmacy Pvt. Ltd. on their behalf.

The appellants argued they were an independent SSI unit entitled to full clearance under the notification. They claimed the clearances made by M/s. Varma Pharmacy Pvt. Ltd. should not be clubbed with theirs as they had no control over the manufacturing activity of the other firm. However, authorities disagreed, citing the need to club clearances from multiple factories on behalf of one manufacturer as per Notification No. 175/86 and referring to a Gujarat High Court decision.

The Tribunal noted that both companies were independent manufacturers in different locations. Even though M/s. Varma Pharmacy Pvt. Ltd. manufactured goods for the appellants independently, they had to be treated as separate entities. The Tribunal referenced previous cases to support the appellants' argument that clearances should not be clubbed without evidence of control or supervision over the manufacturing process.

In line with previous decisions, the Tribunal concluded that the clearances from the appellants' factory and M/s. Varma Pharmacy Pvt. Ltd. should be computed separately and not clubbed. It emphasized that the goods were manufactured by two independent entities based on a principal-to-principal agreement, indicating that the goods were not made on behalf of the appellants. Therefore, the impugned order was set aside, and the appeals were allowed in favor of the appellants.