1986 (11) TMI 266 - Commissioner - Central Excise

Issues:
1. Eligibility of appellants for relief under Notification No. 150/83 for higher production.
2. Interpretation of the term "closure" as per Notification No. 150/83 and Industrial Disputes Act, 1947.
3. Definition of "factory" under Central Excises and Salt Act for the purpose of Explanation (1)(b) to Notification No. 150/83.

Analysis:

1. The appeal was filed against the Assistant Collector's order rejecting the appellants' claim under Notification No. 150/83 for higher production. The Assistant Collector concluded that the factory was closed for 81 days in the relevant period, making the appellants ineligible for relief. The appellants argued that there was no mention of closure in the show cause notice and provided evidence to show that manufacturing activities were ongoing, albeit at a slower pace due to labor disturbances.

2. The appellants contended that the Assistant Collector's finding of closure was not based on evidence and that the factory did not meet the definition of closure as per the Industrial Disputes Act, 1947. They argued that the factory records, daily production reports, material incoming register, and other evidence demonstrated that manufacturing activities were still taking place. The Works Manager also confirmed in an affidavit that the factory was not closed but operating at a slower pace due to labor issues.

3. The appellants further argued that the Assistant Collector's interpretation of closure based on lack of production of specified goods was incorrect. They asserted that the definition of "factory" under the Central Excises and Salt Act should apply, and since manufacturing operations were ongoing in certain sections of the factory, it should not be considered closed for the purposes of the notification. They cited legal precedents and interpretations to support their claim that the word "factory" should be construed in a broader sense to benefit the assessee.

4. The Collector, in his judgment, acknowledged the force of the appellants' arguments regarding the interpretation of the term "factory" and the approach to be taken in cases of doubt. He emphasized that the Assistant Collector had not adequately considered the evidence presented by the appellants and had not delved into the meaning of "factory" in the context of the notification. The Collector referred to legal judgments emphasizing that an order must stand or fall based solely on the reasons mentioned therein and cannot be supplemented later with additional grounds.

5. Ultimately, the Collector found in favor of the appellants, stating that the department's interpretation was flawed due to inadequate appreciation of the notification's provisions. He directed the Assistant Collector to dispose of the refund claim in favor of the appellants, amounting to Rs. 4,13,344.00, on the basis that the factory was not closed during the relevant period. The appeal was accordingly disposed of in favor of the appellants.

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