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2016 (1) TMI 194 - AT - Central ExciseDuty demand - Duty on the basis of annual capacity of production - Compounded Levy Scheme - benefit of duty on the basis of capacity of production was available only to those independent processors who do not have proprietory interest in any factory primarily and substantially engaged in the spinning of yarn or weaving or knitting of fabrics, in terms of Explanation-1 under Rule 96ZNA - Revenue contends that appellant did not qualify for the benefit available to an independent processor as they were having proprietory interest in other manufacturing facilities of weaving/knitting - Held that:- Documents did not reveal that the assets of the partners became the property of the appellant by bringing them into its stock. It does not seem to be established that the partnership firm had proprietory interest in another firm when a legal distinct deed of partnership firm is separate from its partner as an arguable point under Central Excise. Without going into the merits of the case, we find that the department for a long period had not communicated any objection to the information provided by the appellant in June, 2001. There does not appear to be any fact which could not have been verified by the department from the information given by the appellant in June, 01. The information supplied to the Defence Deptt. was for purposes of facilitating overall assessment and registration based on facility/services of vendors. Merely because it was informed to Defence Deptt. that they had weaving and knitting facilities owned by partners does not necessarily lead to the conclusion that they had, under Central Excise Law, proprietory interest in them. - it was open to department to verify all the assets of the partners and the facilities the partnership firm intended to use. Thus, a show-cause notice issued under extended time period is unsustainable. There is no evidence that inquiries were made from the appellants which were not replied to. Whatever information was sought by the department, the same was given by the appellant. Still the show-cause notice was issued after 4 years. In these circumstances, it cannot be held that there was a deliberate fraud or mis-statement on the part of the appellant. The conclusion that the appellant had proprietary interest in some other concern has been arrived at on the basis of legal interpretation of various aspects of the terms such as letter of partnership, proprietary interest, connected undertakings etc. There is no justification for invoking the extended period merely on the grounds of such interpretation - impugned order is set aside - Decided in favour of assessee.
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