2000 (5) TMI 703 - AT - Central Excise

Tribunal rules in favor of company on exemption eligibility for doubled yarn under Notifications

The Tribunal allowed the appeal by the public limited company, ruling in favor of the appellant regarding exemption eligibility for doubled or ... Yarn - Exemption - Factories vis-a-vis manufacturer Issues:1. Interpretation of Notification 8/96, 4/97, and 5/98 regarding exemption eligibility for doubled or multi-folded yarn.2. Determination of whether two factories of a public limited company constitute a single unit for exemption purposes.3. Application of the distinction between a manufacturer and a factory in granting exemptions.4. Assessment of the Tribunal's decision in CCE v. Broach Textile Mills Ltd. - 1998 (79) ECR 411.Analysis:1. The appellant, a public limited company, appealed against the Commissioner's decision denying the benefit of Notifications 8/96, 4/97, and 5/98 for doubled or multi-folded yarn. The Commissioner argued that the appellant did not meet the conditions specified in the notifications for exemption.2. The issue revolved around whether the two factories of the appellant, located in different villages, should be considered as a single unit for exemption eligibility. The appellant contended that the factories were separate entities, and being a public limited company, it could have multiple factories for manufacturing.3. The Tribunal analyzed Notification 5/98, emphasizing the condition exempting yarn manufactured in a factory without facilities for producing single yarn. It distinguished between a manufacturer and a factory, asserting that the exemption applies to factories lacking such production facilities, not to manufacturers irrespective of factory capabilities.4. Referring to the decision in CCE v. Broach Textile Mills Ltd., the Tribunal highlighted the distinction between a manufacturer and a factory. It affirmed that the exemption under Notification 35/95 applied to a factory, not a company with multiple factories for yarn production.5. Consequently, the Tribunal allowed the appeal, ruling in favor of the appellant. The penalty imposed on the director was also set aside. The decision emphasized the clear separation between a manufacturer and a factory for exemption purposes, leading to the allowance of the appeal and the rejection of the impugned order.