1997 (9) TMI 200 - AT - Central Excise

Summary

Issues:
- Whether the two factory sheds of the appellant should be considered as one factory for the purpose of excise duty liability.
- Whether the goods produced in each of the two factory sheds are liable to excise duty.
- Whether the benefit of tariff description under Item No. 68 and Notification 85/79-C.E. is available to the appellant.

Analysis:

1. Factory Sheds Classification:
The case involved determining whether the two factory sheds of the appellant should be treated as one factory for excise duty liability. The Revenue alleged that the appellant operated as a single manufacturer with two factory sheds and should be liable for excise duty evasion. However, the appellant argued that each factory shed should be considered separately as they were on different plots with separate premises and did not fall under the definition of a factory under the Factory Act.

2. Excise Duty Liability:
The Tribunal analyzed the tariff description under Item No. 68 and Notification 85/79-C.E. to determine the excise duty liability of the goods produced in the factory sheds. It was found that the goods manufactured in each factory shed were not covered by the Factory Act's definition of a factory. Consequently, the goods were non-excisable up to a certain date and exempted from excise duty from a later date. The Tribunal concluded that no duty liability arose on the appellant due to the nature of the factory sheds and the applicable legal provisions.

3. Benefit of Tariff Description and Notification:
The Tribunal further examined whether the benefit of the tariff description under Item No. 68 and Notification 85/79-C.E. was available to the appellant. It was determined that the appellant's factory sheds were distinct entities, each registered as a Small Scale Industrial Unit. The Tribunal emphasized that the exemption from excise duty was related to the definition of a factory under the Factory Act, not an Industrial Unit. Therefore, the registration certificate as a Small Scale Industrial Unit did not impact the duty liability of the goods produced in the factory sheds.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order and providing consequential relief to the appellant. The judgment clarified that each factory shed should be treated as a separate entity for excise duty purposes, and the goods manufactured therein were not liable to excise duty based on the applicable legal provisions and the distinct nature of the factory sheds.