Commissioner Of Central Excise vs M/S. Nachiketa Papers Ltd

[Arising out of Order-in-Original No. 68-69 /CE/04 dated 25.08.2004 passed by the Commissioner of Central Excise, Chandigarh]

For approval and signature:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Hon'ble Shri B. Ravichandran, Member (Technical)

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

Commissioner of Central Excise Appellants

Chandigarh

Vs.

M/s. Nachiketa Papers Ltd. Respondent

M/s. Nachiketa Papers Ltd.

Shri Vijay Mittal, Director

Shri Ajay Goyal, Director

Appearance:

Shri Pramod Kumar, Jt.CDR for the Appellants

Shri B L Narasimhan, Advocate for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Hon'ble Mr. B Ravichandran, Member (Technical)

Date of Hearing /decision: 19.08.2015

FINAL ORDER NO. 52818 - 52821 /2015-EX(DB)

Per B Ravichandran:

There are four appeal on the same issue by the Revenue and as such, the matter is taken up together for disposal.

2. The respondents are manufacturer of writing, printing paper, duplex and grey board. They have two units. Unit 1 was set up in 1999 for the manufacture of writing and printing paper and unit No.2 in 2000 to manufacture duplex and grey board. The respondent claimed exemption under Notification No. 6/2000-CE, 3/2001-CE and 6/2002 -CE. In respect of first clearance of 2500 MT, 3500 MTS of their products from these units. The Revenue felt that benefit of exemption notifications are not available to the respondents as the two units constitute a single factory only. Proceedings were initiated against the respondents and after due process, the original authority dropped the demands. Aggrieved by the said orders, the Revenue is in appeal.

3. In appeals, Revenue contended that that both the units of the respondents are located on the same plot. Only one pulper was installed in unit 2. whereas they are manufacturing two types of pulps namely, white pulp and grey pulp. Unit 2 has no storage facility for chemicals and the same were procured from unit 1. Only one cooking pot is installed in unit 1 and no such facility is there in unit 2. There is common electricity connection and sub meter for unit 2 is installed by the respondents only. The workers, DG set and weigh bridge are common for them. Similarly, there is no boiler or laboratory and water pump in unit 2. In appeals, Revenue contended that both the units constitute a single factory in their identity for the purpose of claiming exemption. Reliance was placed on the definition of factory as per section 2 (e) of the Central Excise Act, 1944. It was reiterated that there is inter-connected activity and operations of unit 1 and 2 as such, should constitute one factory for the purpose of claiming the exemption in terms of above notification. Existence of various mutual usage of infrastructure for manufacture and commonality of purpose is sufficient to consider them as one factory for claiming the exemption of above mentioned notification.

4. The respondent in their cross objection strongly contended the grounds of appeal by the Revenue. They have contended that these units are located in different pieces of land; have separate building as evidenced by lay out plan. They do have separate entries and exits. Regarding the various factory infrastructure, they have stated that they have separate books of accounts and the commercial arrangement clearly shows that unit 1 and 2 do exists separately. Both the units have separate roll of employees, separately registered with ESI and provident fund. If any facility is not available in one of the unit, it is availed from the other unit on a purely commercial basis and on proper record. They also contended that wording of impugned notifications are now under consideration are materially different from the previous notifications No. 138/86-CE effective upto 28.2.84. Earlier the exemption is for clearance by or on behalf of a manufacturer from one or more factory. The wording of present notification are upto 2500 /3500 MTS of paper and paper board manufactured and cleared from a factory. They have placed reliance on the decision of Honble Supreme Court in the case of Rollatainers Ltd. vs. CCE, Delhi, III [2004 (170) ELT 257 (SC)] wherein the issue relating to very same notification was decided. The Honble Supreme Court noted that in that case, two units were manufacturing different final products and were separately registered with the Central Excise department, the staff and management were separate though the overall management of the assessee company was same. The respondent also contested the appeals of the Revenue on the ground that substantial amount of demand is barred by limitation.

5. During the oral submission, the learned Counsel for the respondent apart from reiterating their points in writing as per cross objection, pleaded that original authority is correct in dropping the demands and allowing the exemption to them. All the issues raised in Revenues appeal have been categorically addressed and decided by the lower authorities. He further submitted that they have separate Central Excise registration for these two units and the Revenue cannot now consider both the units as a single factory to deny the exemption in this notification. He relied on the decision of this Tribunal in the case of CCE, Madurai vs. Rajalakshmi Paper Mills [2005 (179) ELT 161 (Tri-Chennai)]. In the said case, the Tribunal held that when the Central Excise registration is separate, Revenue cannot treat both the units as one factory for denying the concession.

6. Learned AR reiterated the grounds of appeal and held that material evidence of overlying parts and interconnectivity of these two units will establish that for the purpose of exemption, they should be considered as together.

7. Heard both the sides and examined the appeal records.

8. The point for decision is the eligibility of assessee for exemption in terms of above notification separately for unit 1 and 2. The exemption notification specifies that paper and paper board or articles made therefrom manufactured starting from the stage of pulp in the factory ..

9. The exemption claimed by the respondents were sought to be denied only on the ground that two units of respondents are to be considered as one factory. As discussed earlier, the Revenues appeal as well as the written submissions made by the respondents, the facts established are that each unit was manufacturing different final products, have separate existence or registered industrial undertaking under Industrial (Development and Regulation) Act and Factories Act. The units were granted separate registration under Sales Tax Act. They are registered separately for ESI and PF and it maintained records for accounts, balance sheet, printability submission etc. Above all, it is not disputed that they have separate Central Excise registration to comply with Central Excise law and provisions. Even if certain infrastructural requirement is considered to be not available in one of the unit, and is commercially availed from another unit, that will not affect their existence as separate units.

10. We have examined the finding of the lower authority. He had discussed very elaborately on each of the points raised in the show cause notice. He specifically pointed out on the legislative history of the exemption and relied on Budget proposal of 1994-95 which clearly states that the scope of exemption hitherto available to paper mills after clubbing the clearance from more than one factory of a manufacturer as now being extended to allow the exemption to each factory separately. The original authority also relied on the Central Excise registration given to these units separately for different products.

11. After such detailed examination, the lower authorities concluded that the exemption of Central Excise duty on specific quantity of paper and paper board manufactured by unit 1 and 2 of the respondents during the impugned period was admissible for them separately.

12. After careful consideration of the finding of the original authority we find no reason to interfere with the same as all the points raised in appeal have been discussed and decided by the original authority. We fully agree with the finding of the adjudicating authority for the reasons stated above. Accordingly, we dismiss the appeals filed by the Revenue. The Cross Objection filed by the respondents is also disposed of.

(Operative part of the order pronounced in the open court )

( Ashok Jindal ) Member(Judicial)

( B Ravichandran )

Member(Technical)

ss

6