Factory-based exemption ceilings require clubbing of clearances, while excise duty must be apportioned to the actual manufacturers.
Factory-based exemption ceilings require aggregation of clearances made from the same factory by different manufacturers where the notification is framed on a factory-level limit. On the admitted facts, the combined clearances of the appellant and the other concern exceeded the prescribed ceiling, so exemption was unavailable and the clearances were rightly clubbed. Excise duty, however, is chargeable on the actual manufacturer of the goods; where production and clearance are attributable to two manufacturers operating from the same premises, the total duty liability must be apportioned between them according to their respective clearances. The exemption denial was sustained, but the duty demand was modified to reflect apportionment.
Issues: (i) Whether the clearances effected by the appellant and another concern from the same factory were required to be clubbed for determining eligibility to the exemption notifications; (ii) whether the duty liability on such clearances had to be apportioned between the two manufacturers.
Issue (i): Whether the clearances effected by the appellant and another concern from the same factory were required to be clubbed for determining eligibility to the exemption notifications.
Analysis: The exemption notifications contained factory-based ceiling provisions. One notification applied where a factory producing the specified goods was run at different times during a financial year by different manufacturers, and the aggregate value of clearances from such factory was not to exceed the prescribed limit. The later notification similarly barred exemption where aggregate clearances from a factory by or on behalf of one or more manufacturers exceeded the stipulated limit. On the admitted facts, clearances from the same factory by the appellant and the other concern together crossed the ceiling, so the exemption was not available.
Conclusion: The clearances were rightly clubbed and the appellant was not eligible for the exemption.
Issue (ii): Whether the duty liability on such clearances had to be apportioned between the two manufacturers.
Analysis: Duty under the Central Excise Rules was fastened on the manufacturer of the goods. Since the appellant contended that part of the production and clearance was attributable to the other concern operating from the premises, the duty could not be left wholly on the appellant for goods manufactured by that concern. The proper course was to allocate the total duty liability between the two manufacturers according to their respective clearances.
Conclusion: The duty liability was required to be apportioned between the two manufacturers on the basis of their respective clearances.
Final Conclusion: The exemption denial was sustained, but the duty demand was modified to require apportionment between the two manufacturers, and the appeal succeeded only to that limited extent.
Ratio Decidendi: Where exemption notifications impose a factory-level ceiling, clearances by different manufacturers from the same factory must be aggregated for eligibility, and excise duty liability must be allocated to the actual manufacturer of the goods.
TaxTMI 
AI Drafter ✕
TaxTMI 
