1992 (8) TMI 170 - AT - Central Excise

Summary

Issues:
1. Eligibility for exemption under Notification No. 77/83 dated 1-3-1983 based on capital investment in plant and machinery.
2. Interpretation of the proviso to Notification No. 77/83 regarding capital investment criteria.
3. Consideration of investment in plant and machinery in multiple industrial units for exemption eligibility.
4. Application of Rule 56B facility for removal of goods to different premises.
5. Justification for combining capital investment in different units for exemption assessment.
6. Relevance of the value of capital investment in the industrial unit where goods are manufactured.

Analysis:
The appeal involved a dispute regarding the eligibility of a respondent for exemption under Notification No. 77/83 dated 1-3-1983 based on the capital investment in plant and machinery. The respondent, a manufacturer of goods, filed for exemption claiming that their investment did not exceed the specified limit. However, it was found that the investment in the premises where part of the manufacturing process occurred exceeded the limit, rendering the goods ineligible for exemption. A Show Cause Notice was issued, and duty was demanded from the respondent.

The Assistant Collector confirmed the demand, stating that the conditions for exemption were not met. The respondent appealed the decision, arguing that the investment in two separate industrial units should not be combined for assessing exemption eligibility. The Department contended that the final manufacturing process occurred in the unit with higher investment, disqualifying the goods from exemption.

The Tribunal analyzed the proviso to Notification No. 77/83, emphasizing the importance of capital investment in the industrial unit where goods are manufactured. It noted that the investment in the unit where clearances took place was below the specified limit. The Tribunal rejected the Department's attempt to combine the investments in different units, as the exemption notification did not support such an interpretation. Additionally, the Department failed to prove that the units were interconnected or that the combined investment exceeded the limit.

The Tribunal highlighted the permission granted for the Rule 56B facility, indicating that the units were considered separate entities. It concluded that there was no justification to interfere with the Collector (Appeals) decision, as the evidence did not support the Department's arguments. Therefore, the appeal was dismissed, affirming the respondent's eligibility for exemption under Notification No. 77/83.