1. The short point for decision in this matter is whether the appellants, who have set up their factory by purchasing machinery and leasing out the premises of another manufacturer, who was a Central Excise licencee and who had already availed and almost exhausted the benefit of exemption limit from payment of Excise Duty upto the value of Rs. 5 lakhs, under Notification No. 71/78-CE dated 1.3.78, would be entitled separately to claim a further exemption upto Rs. 5 lakhs under the same Notification.
2. Shri A.V. Phandis, learned Advocate, appearing on behalf of the appellants, stated that the appellants had purchased machinery from M/s. Gajendra Fabricators and also entered into a lease deed for using the land where M/s. Gajendra Fabricators had earlier got their factory.
Thereafter, they submitted a fresh ground-plan and got a new Central Excise licence for the premises. They submitted classification lists indicating that they were entitled to the benefit of Notification No.71/78 and, on this basis, not only were their classification lists approved, but also the RT-12 returns for the month of February and March, 1980, were finalised and 'nil' assessment was made.
Subsequently, on 16.9.80 and 26.6.81, they were served demand-cum-show cause notices for the amounts of Rs. 28,218.00 and Rs. 28,040.77 respectively, on the grounds that the appellants and M/s. Gajendra Fabricators were one and the same person and, that therefore, a separate exemption of Rs. 5 lakhs was not admissible to the appellants.
Another show cause notice was received by the appellants on 27.6.1980 for a separate amount of Rs. 40,182.80 on the same grounds. The periods to which these show-cause notices related were as follows :- (1) Show-cause notice - For the period February and March, 1980.
dated 26.6.1980 (2) Show-cause notice - For the period April and May, 1980. dated 16.9.1980 (3) Show-cause notice - For the period June, 1980 to March, 1981.
dated 26.6.1981 Insofar as the show-cause notices dated 16.9.80 and 26.6.1981 were concerned, both the demands were vacated by the Assistant Collector of Central Excise, Amravati, vide his Adjudication Order dated 6.2.1982.
However, in respect of the show-cause notice dated 26th June, 1980, the demand was confirmed by the Assistant Collector, vide his Adjudication Order dated 18th March, 1981, on the ground, that the factory in question was originally owned by M/s. Gajendra Fabricators, who had already availed of the exemption quota under Notification No. 71/78 and that, therefore, as per clause (c) of the Notification, the appellants were not entitled for any further exemption. The appellants went in appeal before the Collector of Central Excise (Appeals), Bombay, who dismissed the appeal on the grounds that as per clause (c) to the Notification No. 71/78 where a factory producing the specified goods in run at different times of any financial year by different manufacturers, the value of the specified goods so cleared from such factory in any such year at nil rate of duty shall not exceed Rs. 5 lakhs. He also pointed out that there was no evidence produced by the appellants that the old machinery installed by M/s. Gajendra Fabricators was dismantled and new machinery had been installed in its place. Shri Phadnis stated that the learned Collector of Central Excise (Appeals), Bombay, failed to appreciate that the appellants were altogether a new and distinct manufacturer, having no relation with the erstwhile factory, that the old licence of M/s. Gajendra Fabricators had been cancelled and that the grant of a new Central Excise licence, on the basis of a fresh ground plan, amounts to recognising that a new factory premises had come into existence, that provisions of clause (c) of the Notification No. 71/78 would apply only where a new manufacturer starts production on the basis of an old L4 licence, that the Classification list was approved by the Excise authorities, that the appellants' position in this regard was accepted by the Assistant Collector, Central Excise, Amravati, in two of his adjudication orders and his decision in the third adjudication order amounted to reviewing his own order of classification, which is not tenable. It is claimed that there was no allegation against the appellants that they continued to use old machinery, which was in the nature of immovable or heavy equipment. The machinery used was, in fact, light movable or portable machinery which had been sold by the previous owner to the appellants.
It is urged that the word factory used in clause (c) of the Notification No. 71/78 is not consistent with the scheme of Central Excises and Salt Act, 1944, and the Rules made thereunder and that a "factory" has no independent identity without reference to owner or manufacturer. It is further stated by the appellants that the demand has been confirmed under provisions of Section 11 A, when the show-cause notice was issued on 27th June, 1980 when the said section had not taken effect. It is urged that the recovery procedure ought to have ceased with the deletion of Rule 10 of the Central Excise Rules, 1944. Shri Phadnis stated that the decision taken by CEGAT in the case of Government Ceramic Service Centre, Cannanore v. Collector of Central Excise, Cochin, Order No. 285-D/83 dated 17th May, 1983 1983-11 ETR 220, clearly supports the appellants' case in the matter.
3. Shri V. Lakshmikumaran, learned SDR, has reiterated before us the views expressed in the Order-in-Appeal. He has said that insofar as the Tribunal's interpretation of the law, in the light of the relevant Notification, is concerned, this is spelt out fully in their decision Order No. 1106-1107/83-B dated 2.12.1983, in the cases of M/s. Gaurav Equipments (P) Ltd. and Mr. Mahesh Kumar Gupta v. Collector of Central Excise, Madras 4. We have carefully considered the matter. In the case relating to Government Ceramic Service Centre, Cannanore, v. Collector of Central Excise, Cochin,' it had been held by this Tribunal that in the instant case since the Government Ceramic Service Centre, Cannanore, ' and the Kerala Ceramics Ltd., Kindera, were different legal entities, the simple fact that these were owned by the Government of Kerala could not make them one unit for purposes of Notification No. 71/78 and that the two units would be entitled to claim the benefit of the relevant Notification separately. On the other hand, the issue posed in the cases of M/s. Gaurav Equipments Pvt. Ltd. and Mr. Mahesh Kumar Gupta v.Collector of Central Excise, Madras, were exactly the same as under consideration in the present case except that it was with reference to Notification No. 80/80-CE dated 19th June, 1980, and not Notification No. 71/78. We fully endorse the view taken in this case, the operative part of which is re-produced below :- "There is no dispute that the manufacturing activity was carried on at the same factory or premises. Merely because the ownership of the factory changed hands from the partnership firm to a private limited company, it cannot be said that clearances were not from the same factory. The words used in clause (ii) of para 5 Of the notification extracted above are clear enough on the point that the aggregate value of clearances in to be determined taking into consideration the clearances by or on behalf of one or more- manufacturers. The clearances made both by the registered partnership firm and the private limited company would have to be clubbed together for determining the limit for claiming concession under the subject notification. There is no dispute that if the clearances made by the firm-partnership and the private limited company are clubbed together the limit is exceeded. The concession under the said notification is not to the manufacturer as such but to the factory.
There seems to be a purpose behind the concession. Idea appears to be that the concession is not abused by different manufacturers using same factory at different periods of time, to claim concession under the above said notification. The cases relied on by the appellants in support of their contentions are not applicable on the wording of the notification, and on the facts and circumstances of the two cases." 5. Insofar, as the foregoing view is concerned, this is not affected by the claim that the appellants are altogether a new and distinct manufacturer, having no relationship with the erstwhile factory. It is also not tenable that insofar as the concept of the "same factory" in the relevant notification is concerned, the mere cancellation of the licence of the previous manufacturer using the premises and the grant of L4 licence by the Department on a fresh ground plan would transform the existing factory into a new factory. Quite clearly, the reference to factory is related to the place of manufacture. It has not been established by the appellants that theirs was a new place of manufacture. We cannot agree that the differentiation of factory from a manufacturer is inconsistent with the scheme of the Central Excises and Salt Act, 1944. In fact, place of manufacture as well as manufacture are distinct concepts in the Act and the Rules.
6. As regards the appellants' arguments that the impugned demand cannot be confirmed under the provisions of Section 11 A, when the show cause notice was issued on 27th June, 1980, when Section 11A was not effective or that the recovery proceedings should have ceased with the deletion of Rule 10 of the Central Excise Rules, 1944, this view has already been rejected in the CEGAT Order dated 7th June, 1984, [in Appeal Nos. ED(SB) (T) 11/82-B, ED(SB) (T) 505/82-B, ED(SB) 1056/83-B, ED(SB) 1184/ 83-B, ED(SB) 1185/83-B, ED(SB) 1186/83-B and ED(SB) 1531/83-B] - 1984(17) E.L.T. 331. We are entirely in agreement with the view expressed in that decision.
7. In the light of our foregoing findings, the appeal fails and is dismissed.