Commissioner cannot revoke common registration retrospectively, factory units entitled to exemption, duty demand pre-2008 unsustainable.

The Tribunal held that the Commissioner cannot retrospectively revoke common registration granted lawfully. The three units were considered part of the same factory, entitling them to exemption. The demand for duty before 7th April 2008, based on revoked registration, was deemed unsustainable. The appeals were allowed with consequential benefits.

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Issues Involved:
1. Entitlement to common registration under Notification No. 36/01-CE (NT) dated 26.6.01.
2. Legitimacy of retrospective revocation of common registration by the Commissioner.
3. Treatment of three different units as a single factory for exemption eligibility.
4. Validity of demand of duty denying exemption beyond the scope of show cause notices.

Detailed Analysis:

Issue 1: Entitlement to Common Registration
The appellant argued that the common registration given to Units II and III on 3rd March 2003, and later extended to Unit I on 6th September 2004, was lawful. The registration was granted after considering factors such as interlinked processes, common administration, and common tax assessments as per CBEC guidelines. The appellant contended that the revocation of such registration was unjustified and that there were no new developments warranting such action.

The Tribunal noted that the registration of central excise assessees is governed by Section 6 of the Central Excise Act and Rule 9 of the Central Excise Rules, 2002. Notification No. 36/01-CE (NT) allows for common registration in certain circumstances, based on factors like interlinked processes and common administration. The Commissioner has the discretion to grant common registration, considering these factors.

Issue 2: Legitimacy of Retrospective Revocation
The Tribunal held that while the Commissioner has the authority to revoke common registration if it does not meet the guidelines, doing so retrospectively was inappropriate. The revocation was based on the grounds that Unit I was 1.5 km away from Units II and III, and that Units II and III were not interlinked. However, the Tribunal found that the appellants had not provided false information and that the registration was granted after due verification.

Issue 3: Treatment of Units as a Single Factory
The Tribunal examined the definition of "factory" under Section 2(e) of the Central Excise Act, which includes the precincts thereof. The Board's guidelines allow for common registration even if premises are segregated by public roads or canals, provided other factors like common administration and interlinked processes are met. The Tribunal found that the common registration made the three premises part of the same factory, thus making them eligible for exemption.

Issue 4: Validity of Demand of Duty
The Tribunal noted that the show cause notices proposed to deny exemption based on the revocation of common registration. Since the common registration could not be revoked retrospectively, the demand for duty for the period prior to 7th April 2008 was beyond the scope of the show cause notices. The Tribunal referred to the Supreme Court's interpretation in Lohia Sheet Products vs. CC, New Delhi, which held that goods used in the factory of production are eligible for exemption.

Conclusion:
1. The Commissioner has the authority to revoke common registration but not retrospectively.
2. The common registration granted to the appellant was lawful and could not be revoked retrospectively.
3. The three units should be treated as part of the same factory, making them eligible for exemption.
4. The demand for duty for the period prior to 7th April 2008 was beyond the scope of the show cause notices and therefore not sustainable.

The appeals were allowed with consequential benefits as per law.

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