2010 (6) TMI 224 - AT - Central Excise

Appellate Tribunal rules in favor of multiple units under same entity in duty payment dispute

UPADHYAY VALVES MANUFACTURERS P. LTD. Versus CCE., KOLKATA-II

The Appellate Tribunal CESTAT, KOLKATA ruled in favor of the Appellants, multiple units under the same legal entity, in a dispute over duty payment on ... Job Work - Show Cause Notice dated 26-4-2006 was issued alleging that the unit II of the Appellant company have wrongly availed the benefit of Notification No. 214/86-C.E., dated 25-3-1986. It was alleged that unit II and the supplying units being part of the same legal entity, the unit II cannot be treated as a job worker inasmuch as they were not getting job charges for the alleged job work undertaken by them. Held that- for excise law each unit required to register separately and be treated, and be treated for all practical purposes, as identical entity. Benefit of job work Notification if available for removal of inputs to a third party (different legal entity), no legal sanctity for denying concession to another unit of same legal entity. Payment of job charges cannot be criteria for levy or exemption from excise duty. Assessee’s appeal allowed. Issues:Appeal against order of Commissioner regarding eligibility for Notification No. 214/86, duty payment on final products, imposition of penalties, interpretation of job worker concept, applicability of CENVAT Credit Rules, separate registration of units within the same legal entity.Analysis:The judgment by the Appellate Tribunal CESTAT, KOLKATA dealt with several critical issues. The Appellants, consisting of multiple units under the same legal entity, were involved in a dispute regarding duty payment on final products, eligibility for Notification No. 214/86, and penalties imposed by the Commissioner. The Commissioner's order demanded duty payment on final products cleared by one unit without payment to the supplying unit, alleging violation of Notification No. 214/86. The Appellants argued that they followed the rules by intimating authorities about removal of inputs for job work. They contended that the benefit available for removal of inputs to a third party should also apply when removed to another unit of the same manufacturer. The Tribunal noted that each unit, although part of the same legal entity, is treated independently under excise law, requiring separate registration and duty liability discharge.The Tribunal analyzed the provisions of CENVAT Credit Rules, emphasizing that the Appellants, as a single legal entity with multiple units, are considered the same manufacturer. The judgment highlighted that the Appellants had taken credit for duty paid inputs and followed the necessary procedures for processing. The Tribunal disagreed with the Commissioner's view that one unit could not be considered a job worker due to the absence of job charges, stating that the payment of job charges should not determine levy or exemption from excise duty. The judgment emphasized that if the benefit is available for removal to a third party, it should also apply within the same legal entity. The Tribunal concluded that the Appellants had fulfilled the conditions of Notification No. 214/86 and set aside the Commissioner's order.Additionally, the Tribunal addressed the abatement of the appeal filed by a deceased party. As one of the Appellants had passed away, the Tribunal noted the abatement of the appeal filed by the deceased individual. The judgment provided a comprehensive analysis of the issues raised, clarifying the interpretation of job worker concepts, applicability of CENVAT Credit Rules, and the treatment of multiple units within the same legal entity under excise law.