By TIOL News Service

NEW DELHI, JUNE 26, 2014 : THE respondent is engaged in manufacture of paper and paper board chargeable to central excise duty. Sometime in the year 1994, they made a declaration to the jurisdictional central excise authorities that they have set up another factory for manufacture of the same products and applied to the jurisdictional central excise authorities for separate excise registration. The plot location of both the units I &II is the same. The jurisdictional Superintendent of Central Excise, after verification issued central excise registration to the other unit also.

Both the units, were manufacturing the same final products and both of them were availing of exemption under notification no.47/97-CE dated 1.3.97 and its successor notifications no.5/98-CE dated 2.6.98, no.6/2000-CE dated 1.3.2000 and no.3/2001-CE dated 1.3.2001 respectively which exempted paper and paper board and articles made thereof in a factory starting from the stage of pulp, which contains not less than 75% by weight of pulp other than bamboo, hardwoods, soft wood, reeds (other than sarkanda) or rags. This exemption was available in respect of first clearance in a financial year upto a specified limit as mentioned in the notification.

Department entertained a view that the respondent is not entitled for the exemption separately for two units and issued Show Cause Notice demanding duty. The same was dropped by the Commissioner and the department is before the Tribunal.

After hearing both sides, the Tribunal held:

On going through the records, it is found that not only the two units are situated at the same plot of land, within the common boundary walls with common entry and exit gates, but the units also have

(a) common electricity connection;

(b) common water storage tank and pump house;

(c) common godown for storage of raw materials;

(d) common testing laboratory;

(e) common foam tank, facility for manufacture of production of calcium hypochlorite and clorine ;

(f) common mud washer, liquid clarifier and effluent treatment plant;

(g) Common electrical and mechanical workshops;

(h) Common boiler for generation of steam;

(i) Common facilities for staff; and

(j) Common sales to organization.

In this case, the two units are manufacturing the same excisable goods, there is not even a dividing walls between the two units. On the contrary the same are within the same compound and with one entry and exit gate and the two units share a common electricity connections and pump house, common boiler and a number of other processes. Therefore, in this case, issue of separate registration for the two units is wrong and notwithstanding the issue of separate excise registration, in view of the Apex Court's judgement in case of Dhampur Sugar Mills Ltd (2002-TIOL-476-CESTAT-DEL), both the units are to be treated as one single factory.

However, on limitation, the Tribunal held - as the common registration certificates had been granted in the year 1994 after due verification and thereafter each unit was submitting separate RT-12 Return wherein the availment of exemption under notification no.4/97-CE and its successor notification was being shown, and as there is no allegation that there was collusion between the assessing officers and the assessee or that any disciplinary action on vigilance grounds has been taken against the assessing officers, only normal limitation period would be available to the department for recovery of short paid duty.

(See 2014-TIOL-1124-CESTAT-DEL)