1999 (11) TMI 164 - AT - Central Excise

Summary

Issues:
- Duty demand confirmation against appellants arising from 8 show cause notices.
- Eligibility of appellants for exemption under Notification No. 35/95-C.E. and subsequent notifications.

Analysis:
1. Duty Demand Confirmation:
- Eight appeals stemmed from a common adjudication order confirming a duty demand of Rs. 3,37,51,829.25 against the appellants based on different counts covered by show cause notices.

2. Exemption Eligibility Issue:
- The main issue in all appeals was whether the appellants qualified for exemption under Notification No. 35/95-C.E. and subsequent notifications.
- Appellants were accused of splitting their unit into spinning and dyeing units post the exemption notification to avoid excise duty payment on value addition.
- The Department argued that the bifurcation was merely administrative, and both units were integral parts of the same company.

3. Appellants' Defense:
- Appellants maintained that the bifurcation was legitimate for administrative purposes, with Unit No. 1 manufacturing yarn and Unit No. 2 handling dyeing exclusively.
- They had informed authorities about the division, obtained separate registrations, and applied for factory division before the relevant notifications.

4. Commissioner's Decision:
- The Commissioner upheld duty demands based on previous orders and rejected appellants' contentions.

5. Tribunal Hearing:
- The Tribunal heard arguments from both sides, with appellants citing a previous order in their favor on a similar issue.
- Appellants argued that their dyeing unit was a separate factory eligible for duty exemption under the notifications.
- The Department contended that the purported bifurcation was only on paper, and the units were not distinct for excise law purposes.

6. Tribunal's Decision:
- The Tribunal analyzed the dispute regarding duty exemption eligibility in light of the relevant notifications and factory definitions.
- It noted that the appellants' application for separate registration under Rule 174 of the Central Excise Rules deemed them entitled to factory status for duty exemption.
- Relying on previous decisions and undisputed facts, the Tribunal ruled in favor of the appellants, setting aside the impugned orders and granting them consequential benefits.

7. Conclusion:
- The Tribunal allowed the appeals, recognizing the appellants as eligible for duty exemption benefits under the notifications based on the legitimate factory division and compliance with registration procedures.