9911796707
TMI Blog1999 (11) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... s as second choice, the shed appraiser had found goods to be of second choice. The goods subsequent to seizure were re-examined by the expert customs appraiser. He observed that no surface defects or rolling defects were noticed on the plates which appeared to be of prime quality but advised on physical chemical/mechanical tests. Subsequent examination by M/s. SAIL indicate that on examination of mechanical chemistry and other proprieties, the materials were of prime quality. The appeal papers contain mechanical composition, which is accepted by the appellants as related to the present case. Another certificate shows retest of the sample received from Mumbai . The results do not describe the goods at all. It appears that samples from more than one consignment under seizure were sent for in the retest. The thickness is shown to be between 1.39 to 1.40 mm. Shri V.M. Doiphode states that the thickness of the contested plates was between 6.00 mm to 6.5 mm and therefore this result does not relate to the goods imported by the present appellants. We see his point. On record is one more opinion, and that of M/s. SGS. The SGS report certified the goods to be of second quality only. The co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in, then the material ceases to be called prime materials but becomes secondary material. The ld. DR has no quarrel with this statement. 6. Ld. DR Shri Deepak Kumar however sought to distinguish this case from the cited case on the ground of the confessional statement of the importers. We have seen the statements. We have also seen the retraction. We have seen the disposal of the statements in the retraction by the Commissioner in one sentence relying upon the Supreme Court judgment in the case of K.I. Pavunny v. Assistant Collector [1997 (90) E.L.T. 241 (S.C.)]. In the cited judgment the Supreme Court permitted conviction to be based on confessional statement alone. Which statement was voluntary however the case of retraction examination was required to see whether it was obtained by improper means and whether the confession was truthful, general corroboration was held to suffice in February. The judgment of dispel enquiry that the department through the original confessionary statement and based on the retraction statement thereon. We have seen in these statements the Commissioner in stating the facts has specifically mentioned, statement of records on 15-5-1997. We have seen t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of thirty days from date of application of registration in terms of Rule 174(9) of Central Excise Rules, 1944 - Dyeing unit to be treated as factory eligible for duty exemption under proviso to Notification No. 35/95-C.E. as amended. - The appellants had applied for registration. Further, after their decision to bifurcate the composite unit the appellants had submitted the layout plan for the purpose of obtaining registration and had also submitted clarifications on 11-10-1995 and 12-10-1995 apart from making further request on 18-10-1995. In terms of Rule 174(9) the appellants would be deemed to have been granted the registration after 30 days of receipt of the application. In the face of these undisputed facts, non-obtaining of a separate registration cannot be made a ground for holding that the two units constituted one factory and therefore, not entitled to the benefit of Notification No. 35/95. Once the application has been submitted for registration under Rule 174 for the second unit as a factory, and a period of 30 days has expired, the unit engaged in the process of dyeing yarn, has to be accorded the status of factory and as a result, their claim for being treated a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said bifurcation was made with a view to avoid payment of Central Excise duty on the value addition from the spinning stage to the dyeing stage. The Department alleges that even as per the appellant s letter dated 22-4-1995, it was admitted that the dyeing unit has been separated only for administrative and operational purposes, otherwise its ownership was vested with M/s. Vardhman Spinning and General Mills Ltd. Even as per the resolution passed by the Board of Directors of the appellant Company dated 19-4-1995, it had been resolved that two units will remain integral parts of the company for all purposes. Even the electricity connection was in the name of the Company and Unit No. (2) namely, Dyeing unit, did not have any independent electricity connection. 4. The appellants in their replies to the different show cause notices maintained that there was no bar in law for bifurcation of their unit. They had bifurcated the unit into two units with effect from 9-4-1995 for administrative and operational purposes; the two units had thereafter become independent of each other in the sense that whereas Unit No. 1 manufactured yarn, Unit No. 2 undertook only dyeing and bleaching of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants had again written to the Department for approval of the lay out plan of the two units. A similar request was also made on 18-10-1995. Instead of granting permission to the lay out plan, the Department had chosen to issue a show cause notice for denying the duty exemption available to the appellants under Notification No. 35/95. Ld. Counsel emphasised the fact that the appellant company had decided to bifurcate the factory into two units even before the amending Notification No. 84/95, dated 18-5-1995 had been issued. It cannot therefore, be alleged that the appellants had bifurcated their factory only with the intention to evade payment of duty. Ld. Counsel submitted that the final order of the Tribunal dated 31-8-1999 referred to above had held that in the facts and circumstances of the case, it was clear that the appellants had bifurcated their factory into two units prior to the issue of Notification No. 35/95 on 18-5-1995. Relying on the Andhra Pradesh High Court in the case of Nizam Sugar Mills [1978 (2) E.L.T. (J 489)] holding that different factories are to be treated as distinct and separate even when they belonged to the same manufacturer, the Tribunal had upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asically a determination of the fact as to whether in the circumstances of the case, the purported bifurcation of the appellant factory into two units had in fact given rise to two separate units or entities. He relied on the Tribunal s decision in Cotah K. Prakash and Others v. CCE [1987 (32) E.L.T. 790] wherein it was observed that a factory would normally be any one premises including its precincts or in different places within one compound. Reliance was also placed on the Tribunal decision in CCE v. Shivagurunathan Synthetics Ltd. [1998 (104) E.L.T. 657] in which the Tribunal upheld the findings of the Commissioner to the effect that in terms of Section 2(e) of Central Excise Act, a factory comes into existence only on its obtaining registration under the Central Excise Rules. 10. We have considered the submissions and have perused the case law cited before us. We find that the dispute lies within narrow compass. In terms of Notification No. 84/95 a proviso was added to Notification No. 35/95 by which the exemption given to yarn falling under Chapters 51, 52, 54 or 55 would not be available to yarn cleared from a factory having facility (including plant and equi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in terms of Rule 174(9) the appellants would be deemed to have been granted the registration after 30 days of receipt of the application. In the face of these undisputed facts, we are of the view that non-obtaining of a separate registration cannot be made a ground for holding that the two units constituted one factory and therefore, not entitled to the benefit of Notification 35/95. We note that once the application has been submitted for registration under Rule 174 of the second unit as a factory, and a period for 30 days has expired, the unit engaged in the process of dyeing yarn, has to be accorded the status of factory and as a result their claim for being treated as a factory eligible for duty exemption under the Proviso to Notification 35/95 as amended cannot be denied. We also derive support from the earlier decision of the Tribunal dated 31-8-1999 and relied on by the appellants holding that since the appellants have taken steps for bifurcation before 18-5-1995, they would be entitled to being considered as a separate factory. 12. In the light of the discussion above, we allow the present batch of 8 appeals and set aside the impugned orders. Appellants will be e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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