Separate factory status and limitation in CENVAT credit disputes turned on common premises, prior disclosure, and absence of suppression.

Separate excise registrations do not, by themselves, create separate factories where two units are within the same , under common management, and form part of one legal entity; on that basis, CENVAT credit on capital goods was treated as admissible. The commentary also notes that prior departmental correspondence and an earlier identical decision negated any finding of suppression, so the extended limitation period could not be invoked and the demand was time-barred. The impugned order was therefore unsustainable and consequential relief followed.

---

---

Issues: (i) Whether the Rourkela Steel Plant and the Rourkela Fertiliser Plant were separate factories or one factory for the purpose of availment of CENVAT credit on capital goods; (ii) Whether the demand was barred by limitation in the absence of suppression and in view of prior departmental knowledge and disposal of an identical issue.

Issue (i): Whether the Rourkela Steel Plant and the Rourkela Fertiliser Plant were separate factories or one factory for the purpose of availment of CENVAT credit on capital goods.

Analysis: Section 2(e) of the Central Excise Act, 1944 defines factory with reference to premises where manufacture is carried on. On the facts, both units were within the same premises, under common management and part of the same legal entity. Separate excise registrations granted for administrative convenience did not alter the character of the premises. The credit dispute also related to capital goods in the nature of components, spares and accessories, to which the restrictive condition in Rule 4(2)(b) of the CENVAT Credit Rules, 2002 did not apply in the manner suggested by the department. The reasoning of earlier decisions recognizing inter-unit treatment within the same factory supported the assessee's case.

Conclusion: The two units were treated as one factory and the CENVAT credit was allowable to the assessee.

Issue (ii): Whether the demand was barred by limitation in the absence of suppression and in view of prior departmental knowledge and disposal of an identical issue.

Analysis: The department had been informed of the credit position by letters in 2004, the relevant facts were reflected in the records, and an earlier identical notice had already been decided in favour of the assessee. In such circumstances, the ingredients for invoking the extended period under Section 11A of the Central Excise Act, 1944 were not satisfied. The proceedings initiated on the basis of the audit para could not justify a contrary conclusion on suppression or limitation.

Conclusion: The extended period was not invocable and the demand was time-barred.

Final Conclusion: The impugned order was unsustainable and the assessee's appeal succeeded with consequential relief.

Ratio Decidendi: Separate excise registrations obtained for administrative convenience do not, by themselves, create separate factories where the units are located in the same premises and function as one manufacturing establishment; in the absence of deliberate suppression, the extended limitation period cannot be invoked.

---