1998 (6) TMI 278 - AT - Central Excise

Summary

Issues:
Interpretation of Notification 175/86 regarding factory location shift and exemption eligibility.

Analysis:
The appeals before the Appellate Tribunal CEGAT, New Delhi involved a common issue concerning the proper interpretation of Notification 175/86 in cases where a factory shifts its location and continues to avail exemption benefits. The Collector of Central Excise, New Delhi filed the appeals, challenging the interpretation of the notification when factories registered with the Directorate of Industries shifted locations. The respondents had obtained L-4 licenses for their new premises but faced issues regarding the validity of their registration certificates during the transition period. The Assistant Collectors initially held that the respondents were not eligible for exemption benefits during this period. However, the Collector (Appeals) overturned these decisions, leading to the department's appeals before the Tribunal.

The appellant Collector argued that the respondents were not validly registered with the Directorate of Industries during the transition period, thus ineligible for exemption benefits. The respondents, represented by their counsels, cited previous Tribunal decisions to support their stance that the exemption should not be denied due to a change in factory location. They emphasized that the exemption eligibility should be based on the total value of clearances of specified goods, not solely on the factory's address. The Tribunal reviewed the records and cited decisions, agreeing with the approach taken in previous cases. It noted that the exemption is available to a manufacturer, not limited to a specific factory location. The Tribunal highlighted the relaxation clauses in the notification, stating that even after a factory shift, if the manufacturer had been availing exemption in the preceding financial year, they should still qualify for the benefit. As long as the total value of clearances did not exceed the exemption limits, the change in factory location should not result in denial of the exemption. The Tribunal upheld the Collector (Appeals) orders, dismissing the department's appeals.

In conclusion, the Tribunal's detailed analysis of the notification's provisions and the precedents cited by the parties led to the decision that a change in factory location should not automatically disqualify a manufacturer from exemption benefits. The focus on the manufacturer's eligibility rather than the specific factory address, along with the consideration of total clearances, guided the Tribunal's ruling in favor of the respondents, affirming the Collector (Appeals) decisions and dismissing the department's appeals.