1998 (10) TMI 127 - AT - Central Excise

Summary

Issues:
1. Whether the appellants are liable for duty on goods manufactured at their Baroda unit.
2. Whether the appellants are entitled to exemption under Notification 179/77-C.E.
3. Whether the appellants qualify for exemption under Notification 46/81-C.E.
4. Whether the appellants can avail the benefit of Notification 77/83-C.E.

Issue 1:
The case involved a dispute regarding duty liability on goods manufactured at the appellants' Baroda unit. The Revenue alleged that since the partners in both the Bombay and Baroda units were the same, the clearances from the Bombay unit exceeded the limit, affecting the Baroda unit's eligibility for exemption. A show cause notice was issued for non-levy of duty, resulting in confirmation of duty, confiscation of goods, and imposition of a penalty. The appellants challenged this decision.

Issue 2:
The appellants claimed exemption under Notification 179/77-C.E., arguing that the goods at Baroda were not manufactured with power but assembled without power, thus qualifying for total duty exemption. However, the lower authority rejected this claim, stating that testing, essential for manufacturing, was done using a powered machine at the Baroda unit. The Tribunal found that the testing machine's presence indicated essential testing, denying the benefit of the notification to the appellants.

Issue 3:
Regarding exemption under Notification 46/81-C.E., the appellants contended that their factory had less than 20 workers, thus meeting the exemption criteria. However, as the testing of goods with power was crucial for marketing, the Tribunal upheld the lower authority's decision that the factory fell under the Factories Act, disqualifying the appellants from this exemption.

Issue 4:
The final plea focused on whether the appellants could avail the benefit of Notification 77/83-C.E. The appellants argued that the partnership firm in Baroda was distinct from the one in Bombay, citing a Tribunal judgment. The Revenue contended that since the partners and business were the same in both units, they should not be considered separate manufacturers. The Tribunal agreed with the appellants, following the precedent set in the G.D. Industrial case, and granted them the benefit of the notification, setting aside the duty payment, confiscation, and penalty.

In conclusion, the Tribunal allowed the appeal, ruling in favor of the appellants based on the distinct nature of the partnership firms at Bombay and Baroda, granting them the benefit of Notification 77/83-C.E. The judgment emphasized the importance of specific circumstances in determining duty liability and exemption eligibility under various notifications.