1989 (10) TMI 155 - AT - Central Excise

Summary

Issues:
1. Whether two units can be treated as one entity for Central Excise purposes.
2. Availability of benefits under Notification 130/82 and Notification 253/82 to the appellants.

Analysis:

Issue 1:
The case involved an appeal against the order of the Collector of Central Excise regarding two units, M/s. Annapoorna Mills and M/s. Abirami Mills, found processing textile fabrics. The officers treated M/s. Annapoorna Mills as the manufacturing unit and M/s. Abirami Mills as a shadow unit, denying them the benefit of certain notifications. The Collector observed commonality in partners, rent payment, premises, and storage of materials. However, the appellants argued for separate entity status citing legal partnership and claimed benefits under different notifications. The Tribunal noted the lack of evidence showing operations of the two units were merged and emphasized the need for proof of business operations being intertwined. The Tribunal referenced a previous case to highlight the importance of demonstrating operations as one unit, which was lacking in the present case. Ultimately, the Tribunal gave the benefit of doubt to the appellants due to insufficient evidence of the units functioning as a single entity and overturned the lower authority's order.

Issue 2:
Regarding the availability of benefits under Notification 130/82 and Notification 253/82, the Collector had ruled against the appellants, demanding duty and imposing a penalty. The appellants argued for separate eligibility based on the nature of processing carried out by each unit. The Tribunal considered the legal status of the units as separate partnerships and assessed the lack of evidence showing the operations were interconnected. The Tribunal emphasized the necessity of proving the operations of the two units were merged into one entity. Despite suspicions raised, the Tribunal found no conclusive evidence to establish the units' operations as a single entity. As the department failed to provide sufficient evidence, the Tribunal granted the benefit of doubt to the appellants and set aside the lower authority's order, allowing the appeal in favor of the appellants.