1989 (11) TMI 174 - AT - Central Excise

Summary

Issues:
Classification of Acid Slurry and Scouring Powder, demand of duty due to clubbing production of Acid Slurry by two units, whether the production of Acid Slurry in two units could be considered as one unit, and which unit should be considered as such.

Detailed Analysis:
The case involves an appeal against the order of the Collector of Central Excise, Madras, regarding the classification of Acid Slurry and Scouring Powder. The lower authority accepted Scouring Powder as exempt from duty but demanded duty from the appellant due to exceeding the limit for Acid Slurry clearances. The lower authority considered the production of Acid Slurry by two units as one unit due to production for the same brand name under a single contractor. The appellant contested this clubbing of production by arguing that the units were separate proprietory concerns. The Senior D.R. argued that the production was effectively from one place, orchestrated to stay within the duty limit. The issue before the Tribunal was whether the production of Acid Slurry in the two units could be treated as that of one unit and, if so, which unit should be considered as such.

The Tribunal observed that the lower authority had not provided sufficient evidence to support the clubbing of production. While the units shared some common features like a common contractor for labor, common electric mains, and space, there was no substantial evidence to prove that the operations were managed as one unit. The lower authority did not establish that one unit was merely a name-lender, and no evidence indicated that all operations were controlled by one unit. The Tribunal referred to a previous case where evidence showed all operations were conducted by one set of partners, leading to clubbing of clearances. However, in the present case, no such evidence was presented. The Tribunal emphasized the need for concrete proof to club clearances of separate units.

Ultimately, the Tribunal held that the case against the appellant had not been proven beyond a reasonable doubt. They found the lower authority's order unsustainable in law and set it aside, allowing the appeal. The Tribunal stressed that mere commonalities between units could not substitute for concrete evidence of unified operations. Since the Collector recognized the units as separate proprietory concerns, the production of Acid Slurry by the other unit could not be attributed to the appellant. Therefore, the demand for duty based on clubbing the production of Acid Slurry by the two units was not upheld.