TaxTMI 
TaxTMI 
2010 (1) TMI 504
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....t, 1985 and they were availing the benefit of exemption under SSI exemption Notification No. 9/99-C.E., dated 28-2-99. The appellant had taken over this factory on lease since 14-9-99 and had started manufacturing operations in the factory w.e.f. October, 99 and they had declared the clearances of excisable goods from this factory for the period from 1-4-99 to 13-9-99 as nil. As per Clause (V) of para '2' of the Notification No. 9/99-C.E., where the specified goods are cleared by one or more manufacturers from a factory, the exemption under this notification shall apply to the aggregate value of the clearances mentioned against each of these serial numbers in the table in para 1 and not separately for each manufacturer and as per Clause (vi) of para 2 of the notification, the exemption under this notification is also subject to the condition that aggregate value of clearances of all excisable goods for home consumption by a manufacturer from one or more factories, or from a factory by one or more manufacturers, has not exceeded rupees three crores in the preceding financial year. However, the Central Excise officers found that as per the records of Jurisdictional Central Excise Ran....
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....L, ODPL and OLPL had surrendered their Central Excise licence, that on taking over the plant and machinery alongwith staff and workers of OHPL, ODPL and OLPL on lease, the appellant company applied for and obtained a fresh Central Excise Registration in September 1999 and commenced production of P&P medicines under the same brands as of those OHPL, ODPL and OLPL from October 1999 onwards, that the total clearances of excisable goods from the factory of the appellant at X-60, X-61, X-62, Okhla Industrial Area, Phase-II, New Delhi from October 1999 to March 2000 were more than Rs. One crore, and that during the period from September 1999 to December 1999, there was no addition to the existing plant and machinery. 1.2 The Appellant company availed concessional rate of duty under Notification 9/99-C.E. in respect of their clearances during the period from October 1999 to 6-12-99 and since it appeared that the appellant company during this period were not eligible for concessional rate of duty under Notification No. 9/99-C.E., a show cause notice dated 2-9-02 was issued to them as well as to Dr. Sushil Khanna, Executive Director of the appellant company, for denying the benefit of co....
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....vive their business, the appellant started manufacturing activity at X-60, X-61, X-62, Okhla Industrial Area, Phase-II, New Delhi by taking over the factories at these three plots from M/s. Shimal Investment and Trading Company and they obtained a fresh Central Excise Registration on 10-9-99 for this factory. The appellant started commercial production at this new factory at X-60, X-61, X-62, Okhla Industrial Area, Phase-II, New Delhi from 4-10-99. Prior to commencement of manufacturing operations by the appellant at the factory located at X-60, X-61, X-62, Okhla Industrial Area, Phase-II, New Delhi, these premises were occupied by OHPL, ODPL and OLPL which amalgamated with M/s. Shimal Investment and Trading Company w.e.f. 26-8-99, from whom the appellant took the plant and machinery on lease in September 1999. The appellant took these premises on lease basis till 30th June 2004 for lease rent of Rs. 51,00,000/- (Rupees Fifty One Lakh). On starting the manufacturing operations, the appellant filed a classification declaration under Rule 173B of Central Excise Rules, declaring various products being manufactured by them as well as their intention to avail SSI benefit under Notificat....
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....ral Excise Department and a registration certificate had been issued to them. If the factory of OHPL, ODPL and OLPL were the same as the factory of the appellant, there was no need for granting separate registration by the Central Excise Department to the appellant. (v) The Tribunal in the case of CCE, Madurai v. Ganesh Agro Pack (P) Ltd. reported in 1996 (84) E.L.T. 471 (Tribunal), wherein the facts are similar to the facts of the present case, has held that the clearances of the respondent could not be clubbed with the clearances of the previous owners of the factory. (vi) The question of clubbing the clearances under para 2(V) of the Notification No. 9/99-C.E. would arise only if more than one manufacturer simultaneously cleared the excisable goods from the very same factory. In the present case this is not so. (vii) The show cause notice for demanding the duty for the period from 15-10-99 to 6-12-99 had been issued on 2-9-02 by invoking extended period and alleging wilful misstatement and suppression of facts. This is factually incorrect, as the fact that prior to taking over the plant and machinery by the appellant in September 1999 from the previous owners M/s. OHPL,....
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....llant company and penalty under Rule 26 of the Central Excise Rules, 2001 has been rightly imposed on Shri Sushil Khanna, Executive Director of the Appellant company. 4. We have carefully considered the submissions from both the sides and perused the records. 4.1 The undisputed facts are that - (a) the Appellant company in their factory premises at X-60, X-61, X-62, Okhla Industrial Area, Phase-II, New Delhi had started manufacture of P&P medicines in October 1999 and they had acquired the plant and machinery, alongwith workers and staff from M/s. Shimal Investment & Trading, in September 1999 ; (b) Earlier X-60, Okhla Industrial Area, Phase-II, X-61, Okhla Industrial Area, Phase-II and X-62, Okhla Industrial Area, Phase-II, were three separate factories named OHPL, ODPL and OLPL respectively; manufacturing P&P medicines and having separate central excise registrations and these factories had been amalgamated in M/s. Shimal Investment & Trading in September 1999 and immediately thereafter, the same were taken once alongwith plant and machinery, workers and staff by the Appellant company and even the brand names by used by OHPL, ODPL and OLPL was also acquired by the App....
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....l apply to the aggregate value of clearances mentioned against each serial number in the table to the notification and not separately for each factory." 4.2.1 Though the word "factory" is not defined in this notification, the same, is defined in Section 2(e) of the Central Excise Act, 1944, as "any premises, including the precincts thereof, wherein or in any part of which excisable goods other than salt, are manufactured or wherein as in any part of which, any manufacturing process connected with the production of these goods is being carried on or is ordinarily carried on." 4.3 The first point of dispute is as to whether or not the Appellant company is hit by Clause (V) of para 2 of the notification and accordingly whether or not it is eligible for the concession rates of duty. The second point of dispute is that if it is held to be ineligible for the exemption under Notification No. 9/99-C.E., whether the show cause notice dated 2-9-02 for recovery of allegedly short paid duty during period from October 99 to 6-12-99 is within time or in other words whether the Appellant company can be said to be guilty of wilful misstatement or suppression of facts with intent to evade the....
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....ise his option in writing for availing the exemption under this notification before effecting the first clearances of specified goods and such option shall be effective from the date of exercise of the option which shall not be withdrawn during the remaining part of the financial year. (ii) while exercising the option under condition (i), the manufacturer shall inform in writing to the jurisdictional Assistant Commissioner of Central Excise with a copy to the Superintendent of Central Excise giving the following particulars, namely :- (a) name and address of the manufacturer; (b) location/locations of factory/factories; (c) description of specified goods produced; (d) date from which option under this notification has been exercised; (e) aggregate value of clearances of specified goods (excluding the value of clearances referred to in para 3 of this notification) till the date of exercising the option. (iii) where a manufacturer opts for availing the exemption under this notification in terms of condition (i) above, the clearances of specified goods already made during the financial year, prior to the exercise of such option, shall be taken into account for com....
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.... manufacturers from a factory, the exemption shall apply to the aggregate value of clearances mentioned against each of the serial numbers in the said Table and not separately for each manufacturer; (vi) the aggregate value of clearances of all excisable goods for home consumption by a manufacturer from one or more factories, or from a factory by one or more manufacturers, has not exceeded rupees three hundred lakhs in the preceding financial year." From reading of this notification, it is clear that an SSI unit availing Modvat scheme is eligible for concessional rates of duty of "60% of the normal rate" for clearances of specified goods upto aggregate value not exceeding Rs. 50,00,000/- made on or after day of April of any financial year, and for the next Rs. 50,00,000/- worth clearances, the concessional rate of duty is "80% of the normal rate". Clearances beyond Rs. 1,00,00,000/- (Rupees One crore) attract the normal rate of duty. Para 2 of the notification enumerates the conditions subject to which the concessional rates mentioned in para 1 are available and condition (V) mentioned in para 2 is that where the specified goods are cleared from a factory by one or more manuf....
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....ve factory premises at X-60, X-61, X-62 have to be treated as the clearances from the factory of the appellant. Since OHPL, ODPL and OLPL during the period from April 1999 to September 1999 had made clearances of specified goods from their respective factory premises which are now part of the factory premises of the appellant, the clearances of the appellant from September/October 1999 onwards have to be clubbed with the clearances of OHPL, ODPL and OLPL during April 1999 to September 1999 period for determining the eligibility of the appellant for the concessional rate of duty under Notification No. 9/99-C.E. Since there is no dispute about the fact that during April 1999 - 13th September 1999 period, the clearances of OHPL, ODPL and OLPL were about Rs. 7.40 crores, the clearances of appellant from their factory, which started in October 1999, would not be eligible for concessional rate of duty. 6. Next comes the question as to whether the longer limitation period under proviso to Section 11A(1) of the Central Excise Act is available to the Department. The department's allegation is that the appellant while filing the classification declaration have deliberately mis-stated the ....
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.... respect of the units mentioned at Sl. No. 1 to 3 above. 4. Whereas, all the above mentioned three units were registered with Central Excise Department for the manufacture of P&P medicines and surrendered their Central Excise Registration Certificates in September, 1999." 6.1 The para 3 & 4 of the show cause notice show that the Department, from the very beginning was aware of the fact that during April 1999 to 13-9-99 period, from the same premises i.e. X-60, X-61, X-62, Okhla Industrial Area, Phase-II, New Delhi, three predecessor units OHPL, ODPL and OLPL had made clearances of specified goods and the value of those clearances was Rs. 7,40,81,698/- and if those clearances are taken into account the appellant even from day one would not be eligible for concessional rate of duty under Notification No. 9/99-C.E. The Department, however, still accepted the classification declaration filed by the appellant without raising any objection and thereafter even the monthly RG-12 returns showing the payment of duty by availing the concessional rate were also accepted. Even in the letter dated 7-10-99 forwarding the classification declaration, the appellant have only stated that they h....