1987 (9) TMI 196 - AT - Central Excise

Summary

Issues Involved:
1. Time-barred demand of Rs. 2,85,544.59.
2. Classification of installed capacity for concessional assessment under Notification No. 128/77.
3. Requirement to club installed capacities of separate units for exemption purposes.

Detailed Analysis:

1. Time-barred demand of Rs. 2,85,544.59:
The Collector of Central Excise (Appeals) set aside the demand of Rs. 2,85,544.59, holding it as time-barred. The Assistant Collector had demanded this duty for the period 18-6-1977 to 30-4-1979, invoking a longer time limit. The Tribunal observed that the appellants had declared and filed classification lists for both paper and straw board with the jurisdictional Central Excise authorities, which were approved from time to time. The Tribunal held that the departmental authorities were in possession of the information that the appellants were manufacturing both straw board and paper in two separate plants. The authorities should have made necessary inquiries before approving the classification lists if they had any doubts about the applicability of the exemption. Therefore, the longer time limit was not available to the Revenue for raising the demand, and the demand of Rs. 2,85,544.59 was held to be time-barred.

2. Classification of installed capacity for concessional assessment under Notification No. 128/77:
The appellants claimed the benefit of Notification No. 128/77 based on the installed capacity of the paper plant alone, without clubbing it with the straw board unit. The Notification exempts paper from so much of the duty of excise leviable thereon as specified, depending on the installed capacity of the paper mill. The Tribunal observed that the benefit of the notification is available to paper manufactured and cleared from a paper mill based on the annual installed capacity of the paper mill for all varieties of paper and paper boards. The Tribunal held that for the purpose of concessional assessment, the total installed capacity of the paper mill in respect of all varieties of paper and paper board has to be taken into consideration.

3. Requirement to club installed capacities of separate units for exemption purposes:
The Tribunal examined whether the installed capacities of the paper plant and the straw board plant should be clubbed for the purpose of concessional assessment under Notification No. 128/77. The Tribunal noted that both plants were located in the compound of M/s. Dhampur Sugar Mills Limited and were part of a common complex. The Tribunal referred to the definition of "mill" and concluded that a mill may contain more than one plant, each producing different categories of goods. In the case of a paper mill, both paper and board are manufactured therein. Since both plants function under the same management and are in the same campus, the Tribunal held that the two plants are part of the same mill. Therefore, for the purpose of the notification, the installed capacity of the two has to be clubbed. The Tribunal upheld the order of the Collector of Central Excise (Appeals) regarding the rate at which the benefit of the notification is available to the appellants.

Conclusion:
The Tribunal rejected both the appeal of the Revenue and the appeal of the appellants, upholding the orders of the Collector (Appeals). The demand of Rs. 2,85,544.59 was held to be time-barred, and the installed capacities of the paper plant and the straw board plant were required to be clubbed for the purpose of concessional assessment under Notification No. 128/77.