TMI Blog2014 (4) TMI 607X X X X Extracts X X X X X X X X Extracts X X X X ..... istration certificate issued to them was absolutely incorrect. Since the two units have to be treated as one factory only, they cannot avail the exemption notification no.4/97-CE and its successor notification separately and for the purpose of availment of these exemptions, the clearances of the two units will have to be clubbed. Therefore, the impugned order dropping the duty demand by treating the two units as two separate factories is not correct. As the common registration certificates had been granted in the year 1994 after due verification and thereafter each unit was submitting separate RT-12 Return wherein the availment of exemption under notification no.4/97-CE and its successor notification was being shown. There is no allegation that there was collusion between the assessing officers and the assessee or that any disciplinary action on vigilance grounds has been taken against the assessing officers. In view of this, we hold that the only normal limitation period would be available to the department for recovery of short paid duty which must be quantified by the Commissioner. Since the allegation of wilful mis-statement, suppression of facts or fraud, contravention of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paper and paper board and articles made thereof in a factory starting from the stage of pulp, which contains not less than 75% by weight of pulp other than bamboo, hardwoods, soft wood, reeds (other than sarkanda) or rags. This exemption was available in respect of first clearance in a financial year upto a specified limit as mentioned in the notification. 1.3 The unit set up with the name OPAI in 1994 was renamed as M/s. Mukerian Papers Unit No.II by a decision taken in the board meeting of MPL held on 30.11.1994. Thus, in November, 1994, the OPAI was got renamed as Mukerian Paper Mills Unit No.II. 1.4 Sometime in the year 2001 investigations were started to ascertain as to whether the MPL Unit No.II is actually a separate factory or not and in this regard, investigating officers visited the factory premises, studied the manufacturing process of both the units and conducted inquiry with their various officials. The inquiry revealed that - (a) Both the units were located within a common compound wall and as such, there was no wall/boundary dividing the two units and there was a common entry gate and a common exit gate; (b) There was a common electricity connection for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Excise Rules, 2002 and on Shri H.R. Darwesh, Executive Director and Shri Ramesh Jain, Manager Excise under Rule 26 of the Central Excise Rules, 2002. This show cause notice also sought cancellation of the separate registration given to Mukerian Papers Unit No.II. 1.7 Both the show cause notices were adjudicated by the Commissioner of Central Excise Jalandhar by a common order-in-original no.87/88/CE/JAL/04 dated 30.06.2004 by which the Commissioner upheld the issue of separate registration certificate to the Mukerian Paper Unit II and accordingly, dropped the proceedings initiated by the two show cause notices against the Respondent for denial of exemption notification no.4/97-CE dated 1.3.97 and its successor notifications and for demand of duty along with interest. In this order the Commissioner held that these two units of the Respondent are to be treated as separate factories, and that the exemption under notification no.4/97-CE dated 1.3.97 and its successor notifications, is factory-wise and is not assessee-wise. 1.8 The above order of the Commissioner was examined by the Committee of Chief Commissioners for its legality and propriety and since the Committee was of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of wages was common, that in the application dated 8.7.95 made to Regional Provident Fund Commissioner, the new unit of OPAI was not presented as a separate factory but the Respondent had stated that they may be issued separate code number for the new unit for administrative convenience, as the unit has been started by the same management as that of MPL and accordingly, a separate code number had been allotted to OPAI, that the two units cannot be treated as separate factory in terms of the definition of this term as given in Section 2(e) of the Central Excise Act, 1944, that when the manufacturing process of the two units is interlinked and one unit cannot function without the other unit inasmuch as the boiler for generating steam of the two units is common and the facility for production of calcium hypochlorite is common and similarly the facility for bleaching and imparting brightness to the pulp in order to manufacture writing and printing papers is common, it cannot be said that the two units are separate factories, that in terms of the guidelines regarding registration issued by the CBEC as supplementary instructions, separate registration is required in respect of sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the judgement of the Tribunal in the case of Rollatainers Ltd. Vs. CCE, Delhi-III reported 2002 (150) ELT 383 (Tribunal-Delhi), which has been upheld by the Apex Court vide judgement reported in 2004 (170) ELT 257 (SC), that the two units of the respondent have to be treated as separate factories, that separate registration to unit II has been granted by the jurisdictional central excise officers in the year 1994 after due verification, that just because there is common electricity connection and water storage and some common manufacturing facilities, it cannot be said that two units are not separate factories but are one factory, that in any case, since the separate registration had been granted to the Respondent in respect of their second unit by the jurisdictional central excise officers and thereafter, the Respondent company started availing exemption under notification no.4/97-CE and its successor notification separately in respect of both the units and was declaring this fact in the ER-I Returns being filed by each unit separately, the Respondent cannot be accused of suppressing the relevant facts from the department or committing a fraud and hence longer limitation peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption under these notifications even though the same were owned by the same company, M/s. Mukerian Papers Ltd. and linked with this dispute is the dispute as to whether MPL Unit I and MPL Unit II both owned by the Respondent could be treated as separate factories. 6. Notification no.4/97-CE and its successor notification exempted paper and paper board or articles made therefrom manufactured starting from the stage of pulp in a factory subject to condition that such pulp contains not less than 75% by way of pulp made from materials other than bamboo, hardwoods, soft wood, reeds (other than Sarkanda) or rags and these exemptions are subject to quantity limit as specified in these notifications. There is no condition in any one of these notifications, that when such goods are manufactured and cleared from more than one factory of the same manufacturer, the exemption would be available only in respect of the aggregate quantity of the goods cleared from all the factories and not separately in respect of each factory. In view of this, we hold that this exemption would be available separately to each factory owned by a manufacturer if the conditions of the notifications are satisf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s inter linked if - (a) A product manufactured produced in a premises is substantially used in other unit for manufacture of another final product; (b) a large number of raw materials are common and received commonly for both the premises, (c) There is common electric connection; (d) There is common labour force/work force; (e) There is common administration/works management; and (f) There is common sales tax, registration assessment and income tax assessment. In this case, the two units are not divided by any public road, canal or railway line and there is no boundary wall separating the two units and on the contrary, the two units are within the same compound wall and have only one entry and exit gate. Not only this, their electricity connection, water storage and water pump is common and besides this, storage of raw materials; facilities of boiler for generation of steam, production of clorine and hypochloride and also the lime mud washer, liquid clarifier and effluent treatment plant are common for both the units. We are, therefore, satisfied that the two units cannot, by any stretch of imagination, be treated as separate factories, as in terms of Section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actory, even if separate central excise registrations have been issued in respect of different final products. 7. The Tribunal in the case of Balrampur Chini Mills Ltd. reported in 2002 (149) ELT 286 (Tribunal-Delhi) also held that two divisions of assessee manufacturing sugar and chemicals have to be granted a common registration under central excise rules even if the same are separated by a road as their processes are inter-linked. Same view was taken by the Tribunal in the case of Escorts Limited reported in 2011 (273) ELT 415 (Tribunal-Delhi) wherein relying upon the Apex Court s judgement in the case of Lohia Sheet Products reported in 2008 (224) ELT 349, it was held that common registration to different premises of the same manufacturer is to be granted even if the same are divided by canal, road, if their manufacturing processes are interlined and there is common staff, raw materials, common procurement, etc. even if the different units are manufacturing different excisable goods. 8. In this case, the two units are manufacturing the same excisable goods, there is not even a dividing walls between the two units. On the contrary the same are within the same compound and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilful mis-statement, suppression of facts or fraud etc. on the part of the assessee. The interest on sort paid duty would be chargeable under Section 11 AB only in respect of clearances w.e.f. 11.5.2001. 11. In view of the above discussion, while holding that the Unit No.I and II of the Respondent company are to be treated as one factory and not separate factories and for this reason, they would not be separately eligible for the exemption under Notification no.4/97and its successor notification, and that for the purpose of these exemptions, the clearances from the two units are to be clubbed, we set aside the impugned order and confirm the duty demand only for the normal limited period. The interest under Section 11 AB on the short paid duty would be chargeable only in respect of clearances w.e.f. 11.5.2001. No penalty under Rule 173 Q (1)(d) of Central Excise Rules, 1944 or under Section 11AC of the Central Excise Act, 1944 would be imposable on the appellant. The duty demand within normal limitation period and the interest thereon under Section 11 AB, if any chargeable, is to be quantified by the Commissioner. The appeal is partly allowed. - - TaxTMI - TMITax - Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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