1989 (2) TMI 232 - AT - Central Excise

Summary

Issues:
- Appeal against order of Collector of Central Excise
- Exemption from Licensing control under various Notifications
- Treatment of two units as separate entities
- Clubbing of clearances from two units
- Interpretation of Notification No. 179/77 regarding exemption from excise duty
- Manufacturing activities in two units belonging to the same manufacturer

Analysis:
The appeal was filed by the Collector of Central Excise against an order by the Collector of Central Excise (Appeals) regarding exemption from Licensing control under specific Notifications. The case involved a partnership concern with two units manufacturing goods under different Tariff Items. The dispute arose when the Assistant Collector concluded that the respondents exceeded exemption limits for manufacturing goods without a license and without paying duty. The Collector (Appeals) treated the two units as separate entities, leading to the main issue of whether the clearances from both units should be combined or treated separately for exemption eligibility.

The Departmental Representative argued that both units belonged to the same partnership concern, affecting the exemption eligibility based on total clearances. The respondents did not contest this but argued that goods manufactured without power in one unit should not be considered for calculating the total value of clearances. The Collector (Appeals) found in favor of the respondents on these grounds, but the Tribunal disagreed, stating that clearances from both units should be considered as made by the same manufacturer.

The Tribunal analyzed Notification No. 179/77, which exempts goods from excise duty if manufactured without power. Referring to a Supreme Court case, the Tribunal clarified that if any process with power is carried out on behalf of the manufacturer in another unit related to the end product, the goods are considered manufactured with power. In this case, the manufacturer used power in one unit to make parts sent to another unit for assembly without power, leading to the conclusion that the goods were not eligible for exemption under the notification.

Ultimately, the Tribunal held that the order of the Collector (Appeals) was not legally sustainable, allowing the appeal of the Department and upholding the duty demand. The cross-objection was dismissed. The judgment emphasized the interpretation of exemption notifications and the nexus between manufacturing activities in multiple units owned by the same manufacturer.