1993 (2) TMI 177 - AT - Central Excise

Summary

Issues Involved:
1. Whether the appellants' two plants constitute separate factories.
2. Applicability of exemption under Notification 198/76 and its amendment Notification 20/77.
3. Requirement of separate Central Excise licenses for each factory.
4. Maintenance of separate records for each factory under Central Excise Rules.

Issue-wise Detailed Analysis:

1. Whether the appellants' two plants constitute separate factories:

The appellants argued that their two plants, located 3-4 kilometers apart, should be considered separate factories. They cited their separate registration under the Factories Act, 1948, and the maintenance of independent records of raw materials, power, labor, and production for each plant. The appellants emphasized that physical separation and independent operation should qualify them as separate factories. However, the Assistant Collector and Collector (Appeals) concluded that the two plants were part of the same factory, as they did not have separate Central Excise licenses and combined production figures were provided for base clearances.

2. Applicability of exemption under Notification 198/76 and its amendment Notification 20/77:

The appellants sought exemption under Notification 198/76, which provides incentives for excess production of excisable goods. They claimed a refund based on the amendment Notification 20/77, arguing that production from plant No. 2 should be excluded due to power cuts imposed by the U.P State Electricity Board. The amendment allows exclusion of production from one factory if the manufacturer cannot raise production due to specified reasons. However, the Assistant Collector rejected the refund claim, stating that both plants were treated as one factory for Central Excise purposes, and separate figures were not provided before the amendment.

3. Requirement of separate Central Excise licenses for each factory:

The appellants did not obtain separate Central Excise licenses for the two plants, which was a significant factor in the rejection of their refund claim. The Central Excise Rules, specifically Rules 174 and 175, require separate licenses for each place of business. The Assistant Collector and Collector (Appeals) emphasized that the appellants treated the two plants as one factory for Central Excise purposes, providing combined production figures and maintaining a single register for both plants.

4. Maintenance of separate records for each factory under Central Excise Rules:

The Central Excise Rules mandate the maintenance of separate statutory records for each factory, including production, clearances, and receipt of raw materials. The appellants did not maintain separate records for plant Nos. 1 and 2, which was another reason for rejecting their refund claim. The main Notification 198/76 requires that clearances be calculated based on accounts maintained under the Central Excise Rules. The appellants' failure to comply with these requirements led to the conclusion that their claim for exemption under Notification 20/77 was not sustainable.

Conclusion:

The appeal was rejected on the grounds that the appellants did not meet the requirements for treating their two plants as separate factories under the Central Excise Rules. They failed to obtain separate Central Excise licenses, did not maintain separate records, and provided combined production figures for base clearances. Consequently, their claim for exemption and refund under Notification 20/77 was not justified.