Factory Units Consolidation Decision: Separate Divisions in Same Premises Not Eligible for Individual Exemptions

The Tribunal held that M/s. Rollatainers Ltd.'s Paperboard Division and Speciality Paper Mills, despite having separate units, are situated in the same premises and thus cannot be considered as different factories. They emphasized that any premises where manufacturing activity is carried out is deemed a factory under Section 2(e) of the Central Excise Act. Citing relevant precedents, the Tribunal concluded that the benefit of the exemption under Notification No. 6/2000-C.E. cannot be claimed separately for each product manufactured in the same factory, ultimately upholding the Commissioner's decision to deny the separate exemption for the two divisions.

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Issues Involved:
1. Whether the benefit of exemption u/s Notification No. 6/2000-C.E., dated 1-3-2000 is available separately to the paper and paperboard manufactured by the appellant in their Paperboard Division and Speciality Paper Mills.

Summary:

Issue 1: Exemption Benefit u/s Notification No. 6/2000-C.E.
The primary issue in these appeals is whether M/s. Rollatainers Ltd. can avail the benefit of exemption under Notification No. 6/2000-C.E. separately for their Paperboard Division and Speciality Paper Mills. The Notification exempts paper and paperboard manufactured from pulp containing less than 75% by weight of certain materials, with specific clearance limits for different periods.

Commissioner's Decision:
The Commissioner confirmed the demand of duty and imposed a penalty on the appellants, stating that the paperboard unit and paper unit are parts of a single premises belonging to the same company. The Commissioner relied on precedents such as Graver & Well (India) Ltd. v. CCE and Bongaigaon Refinery & Petroleum Ltd. v. CCE, concluding that it is one factory and separate exemption for clearances from different divisions is not admissible.

Appellant's Argument:
The appellants argued that they have separate units for Paperboard Division and Speciality Paper Mills, each with distinct machinery, raw materials, and operational setups. They emphasized that both divisions have separate entrances, labor forces, and registration certificates under Rule 174 of the Central Excise Rules. They relied on decisions such as Assistant Collector, Central Excise v. Nizam Sugar Factory Ltd. and Gujurat Aluminium Extrusions (P) Ltd. v. CCE, Vadodara, arguing that separate registration should entitle them to separate exemptions.

Respondent's Argument:
The respondent countered that the resolution to treat Shed No. 3 as a separate factory was effected only after the issuance of Notification No. 6/2000-C.E. They argued that both divisions are part of a single premises with a common boundary wall and gate, making them one factory under Section 2(e) of the Central Excise Act. They cited cases like CCE, Meerut v. Dhampur Sugar Mills Ltd. to support their stance that the entire premises should be considered one factory.

Tribunal's Decision:
The Tribunal held that both the Paperboard Division and Speciality Paper Mills are situated in the same premises and thus cannot be treated as different factories. They referred to the definition of "factory" u/s 2(e) of the Central Excise Act and concluded that any premises where manufacturing activity is carried out is considered a factory. The Tribunal cited precedents such as J.K. Synthetics Ltd. v. CCE and Dhampur Sugar Mills Ltd. v. CCE, Meerut, affirming that the benefit of the notification cannot be claimed separately for each product manufactured in the same factory. The appeals were rejected, upholding the Commissioner's order.

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