1987 (2) TMI 253 - AT - Central Excise

Summary

Issues:
1. Whether the Appellant and M/s. Perfect Agencies are considered as two separate entities.
2. If not, whether the value of clearances by both entities should be combined for determining eligibility to certain benefits.
3. Whether the Appellant contravened provisions in Rules 9(2) and 173(Q).
4. Whether the penalties imposed under Rule 173-Q and Rule 9(2) are justified and maintainable.

Analysis:

Issue 1: Appellant vs. M/s. Perfect Agencies
The case involved allegations of unity of ownership between the Appellant and M/s. Perfect Agencies. The Appellant admitted to manufacturing and clearing cartons exceeding exempted limits but claimed that the excess was attributable to M/s. Perfect Agencies, a separate partnership concern leasing their premises. The contention was that goods manufactured by M/s. Perfect Agencies should be assessed separately, placing the Appellant within exemption limits.

Issue 2: Clubbing of Clearances
Notifications No. 80/80 and 83/83 set ceiling limits for clearances from a factory by different manufacturers. The tribunal found that even if the entities were separate, their clearances needed to be combined to determine the factory's ceiling limit. As the combined clearances exceeded the limit, the Appellant was deemed ineligible for exemption benefits.

Issue 3: Contravention of Rules
The Appellant was found liable to pay duty for exceeding clearance limits and contravening Rules 9(1) and 173-Q. The tribunal noted that the Appellant accepted the position and sought leniency only in penalty matters.

Issue 4: Penalties Imposed
Penalties under Rule 173-Q and Rule 9(2) were levied on the Appellant. The tribunal modified the order, directing the duty liability to be apportioned between the two manufacturers, the Appellant and M/s. Perfect Agencies. The matter was remanded for allocation of duty liability based on respective clearances of both entities.

In conclusion, the tribunal dismissed the appeal while modifying the order to allocate duty liability between the Appellant and M/s. Perfect Agencies. The decision highlighted the importance of combining clearances from different manufacturers for determining exemption eligibility and emphasized the duty liability on manufacturers as per Rule 7 of the Central Excise Rules.