2000 (5) TMI 730 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 89/95-C.E. regarding exemption from excise duty on waste, parings, and scrap.
2. Determination of whether separate manufacturing units in the same premises constitute different factories for the purpose of excise duty exemption.
3. Imposition of penalty under Section 11AC of the Central Excise Act for non-disclosure of manufacturing activities in the same factory.

Issue 1 - Interpretation of Notification No. 89/95-C.E.:
The appeal revolved around the interpretation of Notification No. 89/95-C.E., which grants exemption from excise duty on waste, parings, and scrap arising during the manufacture of exempted goods. The contention was that the exemption should apply only to waste from the manufacture of exempted goods and not be denied based on the manufacture of other excisable goods in the same factory. The appellant argued that a purposive interpretation should be applied to uphold the intention of the notification, citing relevant case laws to support their stance.

Issue 2 - Definition of Factory and Separate Manufacturing Units:
The key point of contention was whether the separate manufacturing units within the same premises constituted different factories as per the Central Excise Act. The appellant argued that since they held separate licenses for manufacturing different products and had distinct manufacturing units approved as separate premises within a compound, each unit should be considered a different factory. However, the Department contended that the definition of a factory includes the entire premises where excisable goods are manufactured, as upheld in previous court judgments, thereby rejecting the appellant's argument.

Issue 3 - Penalty under Section 11AC of the Central Excise Act:
Regarding the penalty imposed under Section 11AC for non-disclosure of manufacturing activities of other excisable goods in the same factory while claiming exemption, the appellant argued that no mis-declaration or suppression was intended as the declaration was filed before the introduction of Section 11AC. However, the tribunal found no merit in this argument, emphasizing that the duty period in question fell after the introduction of Section 11AC, justifying the penalty imposition.

In conclusion, the tribunal rejected the appeal, upholding that the exemption under Notification No. 89/95-C.E. did not apply to waste, parings, and scrap cleared from a factory where other excisable goods were also manufactured. The tribunal affirmed that the manufacturing units within the same premises were not considered separate factories as per legal definitions, and the penalty under Section 11AC was justified due to non-disclosure of relevant manufacturing activities.