- (1.) The appellant is engaged in the manufacture of Polymer Vinyl Acetate, prepared glues and other prepared adhesives holding a central excise registration number. The appellant filed a declaration under Rule 173B of the Central Excise Rules, 1944 (hereinafter referred to as the Rules) effective from 1st April, 1997, 1st September, 1997, 2nd June, 1998, 28th February, 1999 and 1st April, 1999 mentioning therein that they are a small scale industry unit and would therefore, be availing excise duty at concessional rate as per Notification No.7/97-CE dated 1st March, 1997, Notification No.38/97-CE dated 27th June, 1997, Notification 9/98-CE dated 2nd June, 1998 and Notification No.9/99-CE dated 28th February, 1999.
(2.) On scrutiny of the records, the department noticed that the appellant M/s Premium Suitings (P) Ltd. (Chemical Division) was not a separate manufacturer and that it was a division of M/s Premium Suitings (P) Ltd., who were also engaged in the processing of man made fabrics and cotton fabrics, which were having common Directors and were housed in the same premises and also had common income tax and trade tax registrations. The department was therefore, of the opinion that the two factories could not be treated as separate legal entities merely because they were holding separate excise registration and that the clearances had to be clubbed together for the purposes of granting the benefit under the notifications. Accordingly, seven show cause notices were issued to the appellant for different periods proposing a total demand of duty of Rs.4,04,171/- along with penalty and interest. The said notice after receiving a reply culminated in the passing of an order in original in which the adjudicating authority confirmed the demand of duty of Rs.4,04,171/- and also imposed a penalty of Rs.50,000/-. Being aggrieved, the assessee preferred an appeal, which was allowed. The appellate authority held as under:- "I have carefully gone through the grounds of Appeal, the impugned Order-in-Original, cited case laws and record of personal hearing held on 10.12.2004. In this case, the Adjudicating Authority held in his order that the Appellants and M/s Premium Suitings (P) Ltd. are one unit being common Directors, common balance sheet, common Income Tax/ Sales Tax Registration and located in same premises. On going through the setting of Management of M/s Premium Suitings (P) Ltd., I find that there are three Directors. However in the case of the Appellants, the Management consists of only two Directors. Therefore, Management of the both the unit is different. Regarding housed in the same premises, I find that both the unit have separate passage/entrance and common wall between these units not be termed as one unit. Thus, it is also clear that both the units have different. They is why, the Department had issued Central Excise Registration on the basis of separate ground plan depicting its a new and one factory. Therefore, it is beyond doubt that both the unit have their separate premises. Regarding common Income Tax/ Sales Tax Registration the considered view that commonality between Income Tax/Sales Tax Registration cannot lead the conclusion that both the unit have same and are legal entity. There is nowhere mention in the Central Excise Act, which stipulates that two factory being common Income Tax/Sales Tax Registration may be treated as one factory. Even definition of "factory" as defined in Section 2(e) of the said Act cannot stipulate any such conditions. I also notice that the end product is also different one manufacturer Chemicals/Adhesives and other manufacturers Cotton Fabric. The raw materials used by them are also different. Both the unit have their separate skilled staff. Both have separate Central Excise Registration. From the above discussed facts, I find that there is no commonality between the two factories. In a similar matter, the Hon'ble Supreme Court in the case of M/s Rollatainers Ltd. Vs. CCE, Delhi-III clearly held that "two factories in the same premises owned by same owner and having common balance sheet not treatable as one factory when they are separately registered with Excise Department, having separate staff and management, separate entrance and end product of both is also different and end product of one factory is not material for other - mere common boundary of two factories does not make them as one factory even though the Apex level factories are maintained by one company". In view of the Hon'ble Supreme Court and above discussed facts, I hold that both the factories are separate legal identity. In the light of the above stated facts and circumstances of the case, I pass the following order."
(3.) The department, being aggrieved, filed a second appeal before the Tribunal, which was allowed and the order of the first appellate authority was set aside and the demand made by the adjudicating authority was affirmed. The assessee, being aggrieved, has filed the present appeal contending that a substantial question of law arises for consideration, namely:- "Whether the CESTAT as well as the adjudicating authority were legally justified in imposing the duty upon the appellant treating the appellant is not eligible for SSI exemption, ignoring the relevant fact that the appellant M/s Premium Suiting (P) Ltd. (Chemical Division) are a unit independent from their Textile Division and are independently eligible for SSI exemption?" We have heard Sri Praveen Kumar, the learned counsel for the appellant and Sri Vinod Kant, the learned counsel for the department.;