2011 (1) TMI 806 - AT - Central Excise

Tribunal: Clearances not clubbed, SSI exemption for rural factory.

PLASTO CONTAINERS (INDIA) P. LTD. Versus COMMISSIONER OF C. EX., NAGPUR

PLASTO CONTAINERS (INDIA) P. LTD. Versus COMMISSIONER OF C. EX., NAGPUR - 2011 (268) E.L.T. 509 (Tri. - Mumbai) Issues Involved:1. Extended period of limitation.2. Clubbing of clearances of the appellant's firm and Vaibhav.3. Entitlement to exemption under Notification No. 8/2000 and No. 9/2000 for being situated in a rural area.4. Allegation of manufacturing branded goods and using the brand name of others.Detailed Analysis:1. Extended Period of Limitation:The appellants argued that the extended period of limitation is not invocable as they had disclosed the use of brand names to the department through letters dated 30-12-1999, 4-5-2000, and 1-3-2001. The Tribunal found that the department's inaction on these disclosures cannot amount to suppression of facts. Hence, the extended period of limitation was deemed not applicable.2. Clubbing of Clearances:The appellants contended that it is not a case of clubbing of clearances since both companies, the appellant's firm and Vaibhav, are separate legal entities with different directors, independent registrations, separate factory premises, and distinct financial and operational setups. The Tribunal analyzed the facts and found that both companies had separate directors, separate registrations with various authorities, independent bank accounts, and distinct operational premises. The Tribunal cited several precedents, including the Supreme Court's decision in Supreme Washers (P) Ltd. v. CCE and other relevant cases, which supported the view that clearances of separate legal entities cannot be clubbed merely based on common management or shared resources. The Tribunal concluded that the clearances of the appellant's firm and Vaibhav could not be clubbed.3. Entitlement to Exemption Under Notification No. 8/2000 and No. 9/2000:The appellants argued that their factory is located in a rural area and thus entitled to the benefit of SSI exemption under Notification No. 8/2000 and No. 9/2000. They presented certificates from MIDC, the local Gram Panchayat, Zilla Parishad, and Tehsildar, confirming that the factory is located outside the Nagpur Municipal Corporation limits and within the village limits of Digdoh. The Tribunal found that the term 'notified area committee' used in the SSI Notification should not be confused with 'notified area,' and the factory's location in a rural area was supported by the certificates provided. Consequently, the Tribunal held that the appellants are entitled to the SSI exemption.4. Allegation of Manufacturing Branded Goods:The appellants argued that even if they were manufacturing branded goods, they are entitled to the benefit of exclusion under Clause (c) of para 4 of SSI Notification No. 8/2000 and 9/2000, as their unit is located in a rural area. Given the Tribunal's finding that the factory is indeed in a rural area, the issue of using the brand name of others was rendered moot. The Tribunal did not need to further address this issue as the appellants succeeded on the ground of being situated in a rural area.Conclusion:The Tribunal concluded that the clearances of the appellant's firm and Vaibhav cannot be clubbed and that the appellant's factory is located in a rural area, making them eligible for SSI exemption under Notification No. 8/2000 and No. 9/2000. The impugned order was set aside, and the appeals were allowed with consequential relief.