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1997 (8) TMI 280 - AT - Central Excise
Issues:
1. Whether the combined clearances of two units exceeded the limit specified in a notification. 2. Whether the second unit manufacturing soap could be considered a manufacturer. 3. Whether the officers were aware that two factories belonged to the same manufacturer. 4. Whether the value of clearances of both units should be combined for duty calculation. 5. Whether the demand for differential duty was justified. Analysis: 1. The appellants were availing benefits under a notification for manufacturing shoes, but the department found that another unit of the same manufacturer was manufacturing soap, leading to combined clearances exceeding the specified limit. A show cause notice was issued alleging suppression of facts to evade duty. The impugned order confirmed the demand and imposed penalties on the manufacturer and individuals involved. 2. The appellant argued that the second unit manufacturing soap should not be considered a manufacturer based on a Supreme Court judgment and a Tribunal's decision. They contended that the clearances of the soap unit should not be clubbed with the shoe unit's clearances. The Tribunal found that both units were manufacturers as per Section 2(f) of the Act, disagreeing with the appellant's interpretation. 3. The appellant claimed that since both units were under the same Collectorate, the officers should have been aware of the connection between the factories, making the extended period unavailable to the department. However, the Tribunal did not find this argument persuasive in the context of the case. 4. The Collector noted that the soap factory exclusively manufactured branded soap for another company and did not have independent production. Citing a Tribunal judgment, it was established that the value of clearances of the soap factory should not be added to the shoe factory's clearances for duty calculation. Consequently, the demand for differential duty was deemed unjustified by both parties. 5. Based on the analysis, the Tribunal allowed the appeal, setting aside the order confirming the demand and penalty on the assessees. However, no decision was made regarding the penalties imposed on individual directors.
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