1993 (3) TMI 238 - AT - Central Excise

Summary

Issues:
- Whether the two units should be treated as one entity for the purpose of Excise duty.
- Whether the order of the Collector dropping charges against the respondents was legally correct.
- Whether the machinery and goods were manufactured at the premises of M/s. Kathiravan Motors and Pumps.

Analysis:

1. The appeal was filed by the Revenue against the order of the Collector of Central Excise, Coimbatore, who dropped charges against the respondents, stating that there was insufficient evidence to treat M/s. Kathiravan Motors and Pumps and M/s. Kathiravan Industries as one entity for Excise duty purposes. The show cause notice alleged that the units were related, shared resources, and were trying to evade excise duty.

2. The Central Board of Excise & Customs directed the Collector to appeal to CEGAT. The appeal questioned the legality of the Collector's order and sought confirmation of the demand for duty and imposition of penalties. The matter was reopened as it was observed that goods were manufactured at M/s. Kathiravan Motors and Pumps, not at M/s. Kathiravan Industries.

3. The Revenue argued that evidence showed machinery for manufacturing goods was only at M/s. Kathiravan Motors and Pumps, not at M/s. Kathiravan Industries. They contended that all goods were manufactured at the former, justifying the demand for duty. The Advocate for the respondents supported the Collector's decision, stating each unit should be treated separately.

4. The Tribunal noted that common ownership or workforce does not necessarily make units one entity. Case laws were cited to support the view that units must function as a single financial entity to be treated as one. It was found that all motors were manufactured at M/s. Kathiravan Motors and Pumps, leading to the decision that duty should be demanded from that unit.

5. The Tribunal allowed the Revenue's appeal, directing the lower authority to determine the duty demandable from M/s. Kathiravan Motors and Pumps considering the goods manufactured by them. The decision emphasized the importance of machinery ownership and production location in determining duty liability.