1993 (1) TMI 149 - AT - Central Excise

Summary

Issues Involved:
1. Clubbing of clearances for duty determination.
2. Eligibility for exemption under Notification No. 77/83.
3. Time-barred demand for recovery of alleged short levy.

Detailed Analysis:

1. Clubbing of Clearances for Duty Determination:

The primary issue was whether M/s. Sri Ranga Industries and M/s. Llasar & Co. could be considered as a single entity for the purpose of levying duty. The Collector concluded that the two firms behaved more like departments of the same company rather than independent units based on the flexibility in receiving and executing orders and common managerial staff. However, the Tribunal found that the Collector's conclusion was not supported by specific instances or evidence. The Tribunal noted that the firms were registered separately with various authorities and had produced documentary evidence for rent payments and machinery hire, which the Collector had acknowledged. The Tribunal cited the case of Pimpri Gases v. CCE and concluded that common use of staff and facilities does not establish commonality of financial interest. Thus, the Tribunal held that the Collector's finding was not justified, and the clearances of the two units should not be clubbed.

2. Eligibility for Exemption under Notification No. 77/83:

The second issue was whether the value of the plant and machinery installed in Sri Ranga Industries exceeded Rs. 20 lakhs from 1-5-1983 onwards, disqualifying them from the exemption under Notification No. 77/83. The Collector based his conclusion on a declaration to the DGTD and a bill dated 16-4-1983 for machinery. The Tribunal found that the machines in question were likely installed by the end of July 1983, based on ledger entries for freight charges. Therefore, the Tribunal held that the value of the plant and machinery exceeded Rs. 20 lakhs from 1-8-1983, not from 1-5-1983 as the Collector had determined.

3. Time-barred Demand for Recovery of Alleged Short Levy:

The third issue was whether the demand dated 21-3-1987 for the recovery of alleged short levy during the period 1-4-1983 to 31-7-1985 was time-barred. The Collector invoked the proviso to Section 11A, alleging misrepresentation by the appellants. The Tribunal disagreed, noting that the Collector's primary basis for invoking the proviso was the alleged commonality of the two units, which the Tribunal did not find sustainable. Consequently, the Tribunal concluded that the charge of misrepresentation could not survive, and the extended period for demand under Section 11A was not applicable. Therefore, the demand was time-barred.

Conclusion:

The Tribunal set aside the impugned order and allowed the appeal, concluding that:
1. The clearances of M/s. Sri Ranga Industries and M/s. Llasar & Co. should not be clubbed.
2. The value of the plant and machinery exceeded Rs. 20 lakhs from 1-8-1983, not from 1-5-1983.
3. The demand for recovery was time-barred and not permissible under the extended period of Section 11A.