1989 (10) TMI 121 - AT - Central Excise

Summary

Issues Involved:
1. Whether the benefit of concessional rate of excise duty under Notification No. 36/87-C.E., dated 1-3-1987, is admissible to the respondent.
2. Whether Chittor Cement Works is a separate and distinct factory or merely an expansion of Birla Cement Works.
3. The validity of the direction to consider the commencement date of production from the new unit as after 1-4-1986.
4. The legitimacy of the respondents' six refund claims.

Detailed Analysis:

1. Concessional Rate of Excise Duty:
The core issue in Appeal No. 239/89-C is whether the respondent is entitled to the benefit of concessional rate of excise duty under Notification No. 36/87-C.E., dated 1-3-1987. The respondents claimed this benefit and submitted a revised classification list effective from 28-2-1987, which the Assistant Collector rejected. The Collector, however, allowed the appeal, setting aside the Assistant Collector's order and remanding the matter for de novo consideration.

2. Separate and Distinct Factory:
The Revenue contended that Chittor Cement Works is not a separate factory but an expansion of Birla Cement Works, citing several points:
- The industrial licence was granted to Birla Cement Works for substantial expansion within the existing unit.
- The respondents' communications and documents, such as the letter dated 6-6-1986 and the revised layout plan, indicated an expansion rather than a new factory.
- Financial and tax records, including assessments under Income-tax and Sales-tax Acts, were maintained in the name of Birla Jute & Industries.
- The Capacity Utilisation Certificate issued by the Development Commissioner was in the name of the respondents, implying expansion of the existing factory.

The respondents countered that the licence allowed for the expansion of manufacturing capacity, not necessarily within the same factory. They argued that a manufacturer could set up a new factory to achieve the required expansion. Supporting this, they cited Section 13D of the Industries (Development Regulation) Act, 1951, which defines substantial expansion to include the establishment of a new industrial undertaking.

3. Commencement Date of Production:
The Revenue argued that the new unit began production before the cut-off date of 1-4-1986, as evidenced by the production of 1534 M.T. of cement between 28-3-1986 and 31-3-1986. The respondents claimed this was trial production using clinkers from the old factory, which should not be considered commercial production. They cited a precedent from the Commissioner of Income-tax, Pune v. Hindustan Antibiotics Ltd., which distinguishes trial production from commercial production.

4. Refund Claims:
The respondents' six refund claims were initially rejected by the Assistant Collector. However, the Collector allowed these appeals, leading to the Revenue's appeals Nos. E/240/89-C to E/245/89-C. Given the decision on the main appeal, these refund claims were also dismissed.

Conclusion:
The Tribunal dismissed all the appeals (Nos. 239 to 245/89-C) and confirmed the impugned orders, concluding that:
- The respondents are entitled to the benefit of concessional excise duty under Notification No. 36/87-C.E.
- Chittor Cement Works qualifies as a separate factory.
- The commencement date for production should be considered after 1-4-1986, with the trial production in March 1986 not constituting commercial production.
- Consequently, the respondents' refund claims are valid.