2018 (6) TMI 187 - AT - Central Excise

N/N. 6/2002-CE dated 1.3.2002 - Concessional rate of duty availed by two units of appellant separately - the two units having separate registration and existence - Clubbing of clearances - Department contended that both the units are not eligible to avail the concessional rate of duty separately - Held that - It was held in the case of Rollatainers Ltd. vs. CCE, Delhi 2004 (7) TMI 92 - SUPREME COURT OF INDIA that simply because both the factories are in the same premise that does not lead to an inference that both the factories are one and the same - In the present case, from the facts, it is apparent that though the factories are situated in the same premise and managed by the same authority, they have separate labour force, electricity connection, license of the boilers department, license of the factories department and Central Excise department also. Both Units 1 and 2 managed by the appellants are different factories so as to make them eligible separately for the exemption contained in the Notification No.6/2002 - appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of Notification No.6/2002-CE for concessional rate of duty eligibility for separate units within the same factory.

Analysis:
The case involved a dispute regarding the eligibility of two units within the same factory to avail a concessional rate of duty separately under Notification No.6/2002-CE. The Department contended that both units should be clubbed for the purpose of limiting the concessional rate of duty to a specific quantity of kraft paper. Show-cause notices were issued proposing recovery of duty, interest, and penalties. The adjudicating authority upheld the notices, leading to appeals by the appellants (M/s. Cochin Kagaz Limited).

The appellants argued that the exemption under Notification No.6/2002-CE applies to goods cleared from a factory and not a manufacturer cleared from different factories. They presented evidence of separate labor force, electricity connection, and certifications establishing the units as distinct factories. The appellants also highlighted a previous favorable decision by the Commissioner (A) and contended that the demand in one of the appeals was time-barred. They referenced relevant case laws to support their position.

The Department's representative argued that despite separate Central Excise registrations, both units were divisions of the same factory due to common premises, management, financial records, and bank accounts. However, upon examining the facts and submissions, the Tribunal found that the case aligned with Supreme Court decisions in Rollatainers Ltd. vs. CCE and Amaravathi S. V. Paper Mills Ltd. These precedents established that separate factories within the same premise, managed by the same authority but with distinct characteristics like labor force, utilities, and departmental licenses, could be considered eligible for separate benefits under the exemption notification.

The Tribunal concluded that Units 1 and 2 of the appellant were indeed distinct and separate factories, meeting the criteria for individual eligibility under Notification No.6/2002-CE. Emphasizing that the intention of the notification was to benefit paper and paperboard manufactured in a factory, the Tribunal allowed the appeals, citing the Supreme Court decisions as a basis for their decision. The judgment provided consequential relief to the appellants, underscoring the distinct nature of the units within the same factory.

This detailed analysis of the judgment showcases the legal interpretation of Notification No.6/2002-CE and the application of relevant case laws to resolve the dispute concerning the eligibility of separate units within the same factory for a concessional rate of duty.