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TMI Blog2004 (6) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of Central Excise indicates that it was categorically stated by them that upon bifurcation, each unit would have separate machinery lines from the pulp stage to the final product stage of paper and would function independently from 29-8-2000. It was further claimed by them that it was necessary to have two units with separate registration for having effective control over the production of various types of paper. It was also pointed out to the Assistant Commissioner that four other companies working under the same Range had been granted separate registration in respect of their second Units created by bifurcation. These submissions of the party were not properly considered by the original authority. This infirmity in the decision of the original authority was rightly detected by the Commissioner (Appeals) and, therefore, the latter directed the former to grant registration to the party after verification of the particulars furnished by them. We do not see any reason to interfere with the order of the lower authority. Accordingly, the Appeal is rejected. Admittedly, Unit II of each of the respondent-companies was recognised as factory within the meaning of this expression under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion No. 6/2000-C.E., dated 1-3-2000 as amended by Notification No. 36/2000-C.E., dated 4-5-2000. While so, on 14-7-2000, they submitted an application under Rule 174 for deleting the MG paper-making portion of the factory from its existing ground plan and for separate registration of that portion in the name of M/s. Rajalakshmi Paper Mills Limited - Unit II. The Assistant Commissioner of Central Excise rejected the application, holding that the request for bifurcation of the factory and separate registration of Unit II under Rule 174 had been made with the mala fide intention to take undue advantage of the exemption benefit under Notification No. 6/2000-C.E., (as amended). Against this decision of the original authority. Unit II of M/s. Rajalakshmi Paper Mills Ltd. (present respondents) preferred an appeal to the Commissioner (Appeals) and the latter allowed the appeal. Hence the present appeal of the Revenue. 3.The essential facts are similar in the remaining appeals also. Each of the respondent-companies was engaged in the manufacture of paper of all sorts falling under Chapter 48 of the CETA Schedule. Sometime in the year 2000, they bifurcated the factory into two separate unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the above case law, the finding of the Commissioner (adjudicating authority) that the Notification was factory-based was not correct. The question whether the two manufacturing units of each company were to be treated as one factory or not should be examined with reference to the definition of "factory" under the Factories Act as in the case of Grauer Weil (India) Ltd. (supra). The two units of each company was working on a common plot of land, using common utilities such as water supply, steam, power etc. They were under a common administration and were maintaining a common Bank account. Common fund was used for the purchase of raw materials and capital goods. In view of these commonalities, the units should have been treated as a single factory, argued ld. JCDR. He stressed the applicability of the definition of "factory" under Section 2 (m) of the Factories Act to the case on hand, by submitting that the said provision was substantially similar to Section 2(e) of the Central Excise Act defining "factory". It was, therefore, argued that the lower authorities had erred in treating the two units as separate factories for the purpose of Notification No. 6/2000-C.E. (as amended). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te quantity not exceeding 3,500 M.Ts. Counsel pointed out that it was clear from the above wording of Condition No. 15 that the exemption in terms of Sl. No. 77 of the Table annexed to Notification No. 6/2000-C.E. (as amended), was available to paper cleared for home consumption from a factory. Unit II was a factory with separate Central Excise registration during the period of dispute and, therefore, its first clearances upto 3,500 M.Ts. in the financial year 2000-01 were to be exempted from payment of duty. 6.A further argument advanced by Shri V.M. Doiphode was that, though Rule 174 authorised the proper officer of Central Excise to grant separate registration to two or more units of the same manufacturer, the Rule did not expressly authorise revocation of such registration. Relying on the Hon'ble Madras High Court's ruling in India Pistons Ltd. v. Asst. Collector [2000 (117) E.L.T. 545 (Mad.)], ld. Counsel submitted that the very proposal for withdrawing the registration of Unit II was without jurisdiction as there was no provision in the Central Excise Act or in the Central Excise Rules authorising such withdrawal. It was further argued that the grant of separate registration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 'colourable device' of bifurcating the parent unit with intent to avail undue benefit of exemption under Notification No. 6/2000-C.E. (as amended). With regard to this ground, we find that the company had resolved to bifurcate their manufacturing unit into (Units I and II) as early as on 7-2-2000 as evidenced by a certified copy of the relevant resolution of the Company's Board Meeting, available on record. This Resolution of the Company was prior to the issuance of the subject Notification. Hence it will be incorrect to presume that the decision to bifurcate the manufacturing unit was taken with mala fide intention of availing undue benefit under the Notification. The correspondence between the Company and the Assistant Commissioner of Central Excise indicates that it was categorically stated by them that upon bifurcation, each unit would have separate machinery lines from the pulp stage to the final product stage of paper and would function independently from 29-8-2000. It was further claimed by them that it was necessary to have two units with separate registration for having effective control over the production of various types of paper. Before the Assistant Commissioner, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actory - (a) during the period from 1st March, 2000 to 31st March, 2000, upto first clearances of an aggregate quantity not exceeding 210 Metric Tonnes; and (b) on or after the 1st day of April, 2000, in any subsequent financial year upto first clearances of an aggregate quantity not exceeding 3500 M.Ts. vide Notification No. 36/2000, dated 4-5-2000." (Emphasis added) According to the above condition, the exemption was applicable to paper and paperboard cleared for home consumption from a factory on or after the first day of April, 2000 upto first clearances of an aggregate quantity not exceeding 3500 M.Ts. The language of the text of the above provision is clear and unambiguous and, accordingly, the exemption was factory-based as held by the adjudicating authority. It has been argued by Id. JCDR that 'factory' should be understood as defined under the Factories Act. In this connection, he has relied on the Supreme Court's decision in Grauer Weil (supra). In the case considered by the apex Court, the question was whether the goods manufactured by one unit of the company and removed to another unit of the same company to be used as input by the latter unit could be said to have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1994 (69) E.L.T. 193 (Cal.)], relied on by the JCDR, was only a remand order and we have not found any binding precedent therein. In the case of Rollatainers Ltd. (supra), this Tribunal considered Notification No. 6/2000-C.E. (as amended), and examined the question whether the benefit of the Notification was available to separate divisions of the company. It was found that both the divisions were situated in the same premises and, therefore, they could not be treated as different factories. The instant case is factually different inasmuch as units I and II were having separate registration during the material period, whereas, in the case of Rollatainers Ltd., the two divisions did not have separate registration. In any case, the Revenue can make no useful reliance on the Tribunal's decision in Rollatainers as it has been set aside by he apex Court vide 2004 (170) E.L.T. 257 (S.C.). None of the decisions cited by the JCDR has advanced the Revenue's case. Therefore, we hold that, during the subsistence of the separate registration certificate issued to Unit II by the proper officer of Central Excise, it was not open to the department to treat Units I and II as a single factory and d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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