2004 (3) TMI 571 - AT - Central Excise

Tribunal upholds Commissioner's decision on unit separation, penalties revoked, assessee's actions lawful

The Tribunal upheld the Commissioner (Appeals)'s decision, finding no grounds for interference. The separation of the units was part of a legitimate ... Registration - Revocation of - Notice of manufacture - Bifurcation of factory site - Registration - Eligibility for - Registration - Grant of - Appeal to Appellate Tribunal by department - Grounds Issues Involved1. Revocation of amendment/alteration in registered premises.2. Revocation of amendment in Central Excise Registration.3. Revocation of separate registrations issued to the units.4. Imposition of penalty under Rule 173Q of Central Excise Rules, 1944.5. Alleged misstatement and misdeclaration by the assessee.6. Validity of application for registration under Rule 174.7. Contravention of Rules 42, 43, and 44 of Central Excise Rules, 1944.Issue-wise Detailed Analysis1. Revocation of Amendment/Alteration in Registered PremisesThe Deputy Commissioner held that the assessee separated the POY manufacturing portion to avail concessional duty rates under Notification No. 6/2000, which was otherwise not due. The Commissioner (Appeals), however, found that the separation was part of implementing a Product Group Management concept to enhance operational efficiency and was not intended to mislead the authorities.2. Revocation of Amendment in Central Excise RegistrationThe Deputy Commissioner contended that the amendment in the registration was based on misdeclaration. The Commissioner (Appeals) disagreed, noting that the changes were communicated transparently and the authorities had approved the new registration after considering all aspects.3. Revocation of Separate Registrations Issued to the UnitsThe Deputy Commissioner revoked the separate registrations, asserting that the premises continued to function as a single unit. The Commissioner (Appeals) found that the physical and administrative segregation was substantial, with separate compound walls, gates, and administrative setups, justifying the separate registrations.4. Imposition of Penalty under Rule 173QThe Deputy Commissioner imposed penalties for alleged contraventions and misstatements. The Commissioner (Appeals) set aside the penalties, finding no evidence of intentional misstatement or suppression of facts by the assessee.5. Alleged Misstatement and Misdeclaration by the AssesseeThe Deputy Commissioner accused the assessee of misleading the department. The Commissioner (Appeals) found that the application for bifurcation was made transparently, with detailed explanations and supporting documents, and there was no misstatement or suppression of facts.6. Validity of Application for Registration under Rule 174The Deputy Commissioner argued that KSF (Prop. CEL) was not a legal person eligible to apply for registration. The Commissioner (Appeals) noted that the application was made by the division of Century Enka Ltd., which was a legal entity, and the registration process had been followed correctly.7. Contravention of Rules 42, 43, and 44 of Central Excise Rules, 1944The Deputy Commissioner cited violations of these rules. The Commissioner (Appeals) found no contravention, as the rules cited were not applicable in this context. Rule 43 pertains to new manufacturers, which was not the case here, and Rules 44 and 45 were not invoked by the Commissioner at any point.ConclusionThe Tribunal upheld the Commissioner (Appeals)'s decision, finding no grounds for interference. The separation of the units was part of a legitimate management strategy, and the authorities had duly considered all relevant aspects before granting separate registrations. The penalties and revocations imposed by the Deputy Commissioner were set aside, affirming the legality and transparency of the assessee's actions.