9911796707
TMI Blog1999 (11) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... s as second choice, the shed appraiser had found goods to be of second choice. The goods subsequent to seizure were re-examined by the expert customs appraiser. He observed that no surface defects or rolling defects were noticed on the plates which appeared to be of prime quality but advised on physical chemical/mechanical tests. Subsequent examination by M/s. SAIL indicate that on examination of mechanical chemistry and other proprieties, the materials were of prime quality. The appeal papers contain mechanical composition, which is accepted by the appellants as related to the present case. Another certificate shows "retest of the sample received from Mumbai". The results do not describe the goods at all. It appears that samples from more than one consignment under seizure were sent for in the retest. The thickness is shown to be between 1.39 to 1.40 mm. Shri V.M. Doiphode states that the thickness of the contested plates was between 6.00 mm to 6.5 mm and therefore this result does not relate to the goods imported by the present appellants. We see his point. On record is one more opinion, and that of M/s. SGS. The SGS report certified the goods to be of second quality only. The co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions given therein, then the material ceases to be called prime materials but becomes secondary material. The ld. DR has no quarrel with this statement. 6. Ld. DR Shri Deepak Kumar however sought to distinguish this case from the cited case on the ground of the confessional statement of the importers. We have seen the statements. We have also seen the retraction. We have seen the disposal of the statements in the retraction by the Commissioner in one sentence relying upon the Supreme Court judgment in the case of K.I. Pavunny v. Assistant Collector [1997 (90) E.L.T. 241 (S.C.)]. In the cited judgment the Supreme Court permitted conviction to be based on confessional statement alone. Which statement was voluntary however the case of retraction examination was required to see whether it was obtained by improper means and whether the confession was truthful, general corroboration was held to suffice in February. The judgment of dispel enquiry that the department through the original confessionary statement and based on the retraction statement thereon. We have seen in these statements the Commissioner in stating the facts has specifically mentioned, statement of records on 15-5- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g unit after expiry of thirty days from date of application of registration in terms of Rule 174(9) of Central Excise Rules, 1944 - Dyeing unit to be treated as factory eligible for duty exemption under proviso to Notification No. 35/95-C.E. as amended. - The appellants had applied for registration. Further, after their decision to bifurcate the composite unit the appellants had submitted the layout plan for the purpose of obtaining registration and had also submitted clarifications on 11-10-1995 and 12-10-1995 apart from making further request on 18-10-1995. In terms of Rule 174(9) the appellants would be deemed to have been granted the registration after 30 days of receipt of the application. In the face of these undisputed facts, non-obtaining of a separate registration cannot be made a ground for holding that the two units constituted one 'factory' and therefore, not entitled to the benefit of Notification No. 35/95. Once the application has been submitted for registration under Rule 174 for the second unit as a factory, and a period of 30 days has expired, the unit engaged in the process of dyeing yarn, has to be accorded the status of factory and as a result, their cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices. 2. The common issue raised in all the appeals is whether the appellants are eligible for exemption provided under Notification No. 35/95-C.E., dated 16-3-1995 (upto 23-7-1996) and thereafter under Notification No. 8/96-C.E., dated 23-7-1996 and superceded by Notification No. 4/97, dated 1-3-1997. 3. The appellants are engaged in the manufacture of cotton and acrylic yarn falling under Chapters 52 and 55 of the Schedule to the Central Excise Tariff Act, 1985. The common allegation against the appellant is that prior to 15-5-1995, they were paying the Central Excise duty on the goods at the stage at which they were cleared by them. After coming into force of Notification No. 35/95, dated 16-3-1995, under which the process of dyeing was exempted, according to the Department, the appellants had deliberately split their unit into two units, Unit No. (1) becoming the spinning unit and Unit No. (2) becoming a dyeing unit, with the intention of availing the benefit of Notification No. 35/95 by which the process of dyeing came to be exempted. It was alleged that the said bifurcation was made with a view to avoid payment of Central Excise duty on the value addition from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 18-5-1995, a proviso was added to the Notification stating that the exemption would not apply to clearances of yarn from a factory having facility (including plant and equipment) for producing single yarn. He submitted that even before the amendment, the Board of Directors of the appellant Company had passed a resolution on 19-4-1995 to divide the appellant's factory into two units and on the very same day, the appellants had informed the jurisdictional Superintendent of Central Excise about the said decision followed by a subsequent letter dated 28-4-1995 stating that two separate units, one consisting of the spinning mills and the other engaged in the process of dyeing and excise duty was being paid by the appellants on clearances of yarn from Unit No. 1 before it was received at Unit No. 2 for dyeing. A lay out plan in respect of the two units had also been submitted to the Officer concerned on 24-9-1995. Further appellants had also applied on 6-5-1995 to the Directorate of Factories for obtaining separate registration under the Factories Act in respect of the dyeing unit. Appellants had again written to the Department for approval of the lay out plan of the two units. A simil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent purpose and was intended to be in furtherance of the objects of that Act. For purposes of Central Excise Law, 'factory' as defined in Section 2(e) of the Central Excise Act, 1944, alone was relevant. According to the said definition, 'factory' meant any premises including precincts thereof in which or in a part of which excisable goods other than salt were manufactured. There was no dispute that the appellants were manufacturing yarn in Unit No. 1 and sending the same for dyeing to Unit No. 2 on payment of duty. However there was no sale. The transfer of yarn from Unit No. 1 to Unit No. 2 was not on a principal to principal basis. It was only after dyeing the yarn, the yarn was sold to various customers or transferred to the depots. The process carried out in two units was a continuous process and the two units were under the direct control and supervision of the same Board of Directors. He referred to the observations made in the order-in-original passed by the Commissioner on 28-8-1997 which had been relied upon in the impugned order stating that the question involved was basically a determination of the fact as to whether in the circumstances of the case, the purported bifu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larification given to the Department by letters dated 11-10-1995 and 12-10-1995, the authorities had refused to grant a separate registration. Such denial of registration could not be made a ground for denying the benefit they were entitled to under the Exemption Notification. 11. We find from a reading of the provisions of Rule 174 (9) of the Central Excise Rules relating to Registration of manufacturers of excisable goods, that the proper officer has to grant a registration certificate under Rule 174 within 30 days of receipt of application for such registration. Where such registration certificate is not granted within the said period, the registration applied for shall be deemed to have been granted. The Department has not disputed the fact that the appellants had applied for registration. Further, after their decision to bifurcate the composite unit and the appellants had submitted the lay out plan for the purpose of obtaining registration and had also submitted clarifications on 11-10-1995 and 12-10-1995 apart from making further request on 18-10-1995. We find that in terms of Rule 174(9) the appellants would be deemed to have been granted the registration after 30 days ..... X X X X Extracts X X X X X X X X Extracts X X X X
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