1988 (12) TMI 181 - AT - Central Excise

Summary

Issues:
Interpretation of the term "factory" under Notification No. 118/75-C.E.
Entitlement to exemption under Notification No. 118/75-C.E. for goods used in a different factory of the same manufacturer.
Compliance with Chapter X procedure for availing exemption.
Time-barred demands of duty.

Analysis:

Issue 1: Interpretation of the term "factory" under Notification No. 118/75-C.E.
The case involved a dispute regarding the interpretation of the term "factory" under Notification No. 118/75-C.E. The Collector (Appeals) interpreted the term "factory" as any premises where excisable goods are manufactured or where any manufacturing process connected with the production of such goods is carried out. The Collector held that a separate building for the manufacture of different excisable goods would not be covered by the term "factory."

Issue 2: Entitlement to exemption under Notification No. 118/75-C.E. for goods used in a different factory of the same manufacturer
The Collector (Appeals) denied the benefit of exemption under Notification No. 118/75-C.E. to the appellants for using steam in a distillery unit, stating that the distillery was not part of the sugar factory. However, it was acknowledged that the distillery was another factory of the same manufacturer. The Tribunal upheld that the distillery was a factory within the meaning of the Central Excises and Salt Act, and the appellants were entitled to the benefit of the notification.

Issue 3: Compliance with Chapter X procedure for availing exemption
The Collector (Appeals) held that the appellants failed to follow the Chapter X procedure and did not prove to the Assistant Collector that the goods were used in their other factory, leading to the denial of the exemption. However, the Tribunal emphasized that failure to follow certain procedures should not prevent the assessee from availing substantive benefits under statutory provisions if they can later satisfy the department of their entitlement.

Issue 4: Time-barred demands of duty
The appellants claimed that demands of duty were time-barred, but the Collector (Appeals) rejected this claim. The Tribunal noted that there was no allegation of suppression or misstatement in the show cause notice, limiting the duty payable to the normal period under the law. Duty for the extended period could not be demanded without evidence of fraud or suppression.

In conclusion, the Tribunal remanded the matter to the Assistant Collector for the appellants to demonstrate the quantity of steam used in the distillery unit. The appeal was allowed by remand, emphasizing the importance of satisfying the department's requirements for availing statutory benefits and the limitations on demanding duty for extended periods without evidence of fraud.