1996 (3) TMI 323 - AT - Central Excise

Summary

Issues: Revenue appeal against discharge of respondents from show cause notice for short levy on excisable goods due to bifurcation of manufacturing units.

In this case, the main issue revolved around the bifurcation of manufacturing units of the respondents leading to the discharge of short levy on excisable goods. The facts involved the partnership firm, M/s. Everest Industries, consisting of Shri Anil Kumar Chowdhary and Smt. Kailash Chowdhary, who later established a proprietary concern named M/s. Everest International. The Revenue alleged a short levy based on the total value of clearances exceeding Rs. 5 lakhs after the bifurcation, despite separate licenses issued to both units. The Collector held the demand as time-barred due to the Department's awareness of the operations post-bifurcation. The respondents argued that they maintained separate records and licenses, and the demand was not sustainable on both merit and time-bar grounds.

The Revenue contended that the bifurcation was an attempt to fragment the unit for exemption under Notification No. 71/78, as no value of clearances was disclosed to the Department. The Department argued that the extended period could be invoked due to the lack of declarations or returns filed by the respondents. However, the Tribunal noted that the Department was aware of the bifurcation and issuance of separate licenses to M/s. Everest International and M/s. Everest Industries. The respondents were clearing goods as separate entities under valid licenses, and the Department should have been aware of the production exceeding Rs. 5 lakhs post-bifurcation. The Tribunal upheld the Collector's findings, emphasizing that licensed units are presumed to submit assessment returns and are subject to frequent visits by Central Excise officers, despite the lack of returns produced by the respondents.

Ultimately, the Tribunal dismissed the Revenue's appeal, stating that the findings of the Collector did not warrant interference. The cross objection was also disposed of as only rebuttal. The judgment highlighted the importance of Departmental awareness post-bifurcation, the significance of separate licenses for distinct entities, and the presumption of compliance by licensed units in excisable goods manufacturing.