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2015 (2) TMI 470 - AT - Central ExciseIndependent processor - Whether the respondent having their processing unit at 269A, East Mohan Nagar, Amritsar could be treated as independent processor in terms of definition of this term as given in the Notification No. 41/98-CE (NT) dated 10/12/98 issued under Section 3A (1) of the Central Excise Act, 1944 even though they had taken on lease the knitting unit of M/s Adarsh Textiles located at 18B, East Mohan Nagar, Amritsar under a lease deed - Held that:- Exclusion clause in the definition of independent processor covers the processor acquiring proprietary interest in a factory engaged in spinning of yarn or weaving fabrics and does not cover the knitting units. Knitting of fabrics is totally different from weaving and since in this case, the respondent have taken on lease a knitting unit and not a weaving unit or spinning unit, in our view, they would be not be covered by the exclusion clause. - Moreover a person by acquiring a property on lease, only acquires the right to use without acquiring the ownership. Unless the person has acquired the title to the property i.e. the ownership, he cannot be said to have acquired proprietary interest. - Thus proprietary interest means acquiring the ownership or exclusive proprietary rights to a property. A lessee has acquired only the right to use for a specified period without the transfer of ownership/title to the property to him. Therefore, a person by acquiring a factory under a lease agreement does not become its owner or proprietor and does not acquire proprietary interest. We, therefore, hold that from this angle also, the respondent would not be covered by the exclusion clause in the definition of independent processor. Respondent was an independent processor during the period of dispute and was required to discharge duty liability in terms of the notification issued under Section 3A and as such the impugned order passed by the Commissioner is not correct. The impugned order is, therefore, set aside
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