Customs, Excise and Gold Tribunal - Delhi
Rollatainers Ltd. vs Cce on 7 June, 2002
Equivalent citations: 2002(105)ECR122(TRI.-DELHI), 2002(150)ELT383(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The issue involved in these two appeals, filed by M/s. Rollatainers Ltd., is whether the benefit of exemption under Notification No. 6/2000-CE, dated 1.3.2002 is available separately to the paper and paper board manufactured by them in their Paper Board Division and Speciality Paper Mills.
2. Notification No. 6/2000-CE exempts Paper and Paper-board or articles made therefrom manufactured starting from the stage of pulp, in a factory and such pulp contain less than 75% by weight of pulp made from materials other than bamboo, hardwoods, soft woods, reeds (other than sarkanda) or rags, subject to the condition that the exemption shall apply only to the paper and paper-board cleared for home consumption from a factory-
a) during the period from 1st March, 2000 to 31st March, 2000 up to first clearances of an aggregate quantity not exceeding 210 Metric Tonnes; and
(b) on or after the 1st day of April, 2000, in any subsequent financial year, up to first clearances of an aggregate quantity not exceeding 2500 Metric Tonnes.
2.2. The Commissioner, under the impugned Order, confirmed the demand of duty and imposed penalty on the Appellants on the ground that paper-board unit and paper unit are parts of a single premises belonging to same company, relying upon the decisions in the case of Grauer 81 Weil (India) Ltd. v. CCE. and Bongaigaon Refinery and Petroleum Ltd. v. CCE and that it is one factory and as such separate exemption to clearances made from Paper Division situated in Shed No. 3 in addition to clearances made from the other parts of the factory was not admissible.
3. Shri A.R. Madhav Rao, learned Advocate, submitted that the Appellants are a company registered under the Companies Act, having number of units engaged in manufacture of excisable goods; that out of these units, two are as under:
(i) Paper Board Division, Shed No. 1, Kundli
(ii) Speciality Paper Mill, Shed No. 3, Kundli.
He, further, mentioned that in Paper Board Division, they manufacture uncoated Duplex/Triplex Board since 1982; that in the ground plan of the Paper Board Division submitted in 1991, shed No. 3 was shown as waste paper godown; that in their another factory at Dharuhera, prior to 1998, they were manufacturing paper; that in 1998, they shifted the entire plant and machinery, stock, raw material and staff to Shed No. 3, Kundli; that they filed a revised ground plan which was approved by the jurisdictional Central Excise Officer; that in or around 1999, erection of the plant and machinery shifted from Dharuhera was commenced and in January, 2000, the Board of Directors passed a resolution resolving that Shed No. 3 be made as a separate and independent factory viz. the Speciality Paper Factory; that the Paper factory manufactured specialty paper out of its own pulp making machine; there was no commonality of machinery with Paper Board Division; there was never any commonality of raw materials, storage or use between the Paper Board and Paper manufacturing; that for using the steam boiler by Paper Division, the Paper Board Division raised debit notes; that both Divisions have their separate labour force, separate attendence registers, separate payment sheets, separate machineries, separate pulping section; separate finishing section, office, workshop, laboratory and bonded warehouse; that even the requirement of Wrapping paper by Paper Board Division is met by in house manufacture and as such there was never inter-factory transfer of any wrapping paper. The learned Advocate emphasized that both Paper Board and Paper Divisions have their own entrances and exits, that there is a road from the main gate of the Paper Mill Complex leading to the separate entrance of both the Divisions; that there is a clear passage separating the premises of Paper Board factory from the premises of Paper Factory; that a separate Registration Certificate has been issued for paper factory by the Central Excise Authorities under Rule 174 of the Central Excise Rules; that such registered premises is a factory under Central Excise since the unit undertakes manufacture in such premises. Reliance has been placed upon the decision in Assistant Collector, Central Excise v. Nizam Sugar Factory Ltd. 1978 ELT (J489), wherein it was held that in the case of manufactured products, such place of business though situated in the same town or in the close vicinity whether having the same compound or different compounds a person is entitled to apply for separate licences in respect of each place of business. He also contended that no appeal has been filed against the separate Registration given by the Department; that since the expression "premises" itself is considered as factory" under Section 2(e) of the Central Excise Act, the premises where manufacture is undertaken and registration is obtained is a "factory"; that Section 2(e) does not define two separate premises of two units as a single factory, it is incorrect to club two separate registered premises as one premise for the purpose of Section 2(e). He relied upon the decision in the case of Gujarat Aluminium Extrusions (P) Ltd. v. CCE, Vadodara 2001 (13) ELT 464 (T) : 2001 (96) ECR 556 (T) wherein it has been held that merely because entire premises was shown in the ground plan and approved by the Department, will not take away the fact that the unit was independent manufacturer. Reliance has also been placed on the decision in Vardhman Spg. &. Gen. Mills Ltd. v. CCE, Chandigarh wherein the composite unit was bifurcated, and registration deemed to have been accorded to dyeing unit after expiry of thirty days from the date of application for registration, the Tribunal held that Dyeing unit is to be treated as factory eligible for duty exemption. He also relied upon the decision in Agrawal Rolling Mills v. CCE, Allahabad .
4. The learned Advocate, further, submitted that Notification No. 6/2000 is factory specific and not a manufacturer specific and, therefore, clubbing of clearance of Paper Board Factory and Paper Factory is not warranted. Reliance is placed on the decision in CCE v. Birla Jute & Industries Ltd. wherein the benefit of Notification No. 37/87-CE was extended to New Unit which was equipped to manufacture cement without any dependence on old unit. He finally mentioned that Notification No. 6/2000-CE does not stipulate clubbing of clearances of two or more factories of a manufacturer for the purpose of extending the concession; that it is settled law that the terms of Notification are to be interpreted strictly and there is no room for any intendment.
5. Countering the arguments Shri Atul Dixit, learned SDR, submitted that the resolution said to have been passed by the Board of Directors in its meeting held on 31.1.2000 was given the effect only on 9.3.2000 after the issue of the notification No. 6/2000-CE dated 1.3.2000; that when Paper Division was shifted to Kundli the intimation about the addition of the machinery was given only by Paper Board Division and also the declaration for manufacturing Speciality Paper in 1999; that only after the issue of Notification in question Speciality Paper Division applied for registration on 7.3.2000 that Shed No. 3 wherein Specialty Paper is being manufactured was existing in old ground plan, submitted by the Appellants; that Paper Board Division and Speciality Division are two divisions of the Appellants' manufacturing paper and paper board in the same factory; that the appellants are registered as single company with the Registrar of Companies under Companies Act and two separate divisions manufacturing products in same premises cannot be treated as two different factories; that mere issue of registration certificate will not make them a separate factory; that both the units are part of a single premises and closed by a boundary wall and have a single gate and as per definition of factory under Section 2(e) of the Central Excise Act whole premises and not the different parts thereof is a factory. He relied upon the decision in the case of CCE, Meerut v. Dhampur Sugar Mills Ltd. , wherein it was held that in the context of "paper, cloth, textile, mill refers to a building or a group of buildings in which machinery is installed for manufacture of products which are generally manufactured in a unit of that type". A mill may contain more than one plant producing different category of goods answering to the general description of the goods manufactured in that category of mill. In the case of Paper Mill, Paper and Board are manufactured therein. In case there is one establishment in which there is paper plant and also a different plant for making board then the whole set-up has to be taken as one mill. He also placed reliance on the decision in the second case of Dhampur Sugar Mills Ltd. v. CCE, Meerut wherein it was held that "the number of registrations, in our view, will not decide the number of factories unless and until they are situated in different premises. It is very clear from the definition of the term "Factory" that all the three units will be regarded as one factory as all the excisable goods are manufactured in the same premises." The learned SDR also mentioned that Paper Board Division and Speciality Paper Division are manufacturing different type of papers in the same factory and that just because road divides the two sheds they do not become the separate factory.
6. We have considered the submissions of both the sides. The availability of Notification No. 6/2000-CE separately for Paper Board and Paper raises the question whether paper board division and speciality paper mill are two different factories or are only one factory having two divisions. The facts which are not in dispute are that both the Paper Board Division and Speciality Paper Mill are two divisions of Rollatainers Ltd. and both are situated in one premises and shed No. 3 where the plant and machinery transferred from Dharuhera were installed was included in the ground plan submitted by the appellants initially. Section 2(e) of the Central Excise Act defines factory as under:
Factory, means any premises, including the precints thereof, wherein or in any part of which excisable goods other than salt are manufactured, or wherein or in any part of which any manufacturing process connected with the production of these goods is being carried on or is ordinarily carried on.
7. It is thus apparent from the definition of the factory given in the Central Excise Act, that any premises wherein any manufacturing activity is being carried on even in any part thereof will be treated as factory. In the present matter both paper board division and paper division are situated in the same premises and, therefore, these cannot be treated as different factories. The issue involved in the present matter is squarely covered by the decision of the Tribunal in the case of J.K. Synthetics Ltd. v. CCE . In the said case the Appellants therein had a factory complex at Jay Kay Nagar, Kota which consisted of several divisions manufacturing Polyester staple fibre, Acrylic fibre, Polyester filament yarn, and Nylon filament yarn. One of the divisions of the factory complex was J.K. Staple Tow which was the part of J.K. Synthetics Ltd. Three licences were issued in the name of J.K. Synthetics Ltd. and 4 licences were issued in the name of J.K. Staple and Tow. The Appellants approached the department for issuing one licence in form L-4 in respect of products manufactured by them within the factory complex which was objected to by the Department. The Tribunal held that "the two units fall within the same premises within the one boundary wall encircling the entire area of land allotted to the Appellants in the industrial area.... The description in the application AL-4 refers to a factory and main division or sub-division or factory where goods are manufactured. Thus it is apparent that what is contemplated is one licence in respect of one factory complex having main divisions or sub-divisions." The Tribunal, therefore, held that any person manufacturing different excisable goods within one factory area is entitled to obtain one licence in respect of the goods instead of different licence for different commodities. Again in the case of CCE, Meerut v. Dhampur Sugar Mills Ltd. , the respondents claimed benefit of notification No. 128/77 in respect of paper as available for the installed capacity up to 2000 MT without taking into account the capacity of straw board unit installed in the same premises. The Tribunal held that the concession is available with reference to the paper produced in a paper mill and not with reference to the paper production in a paper plant and for the purposes of concessional assessment the total installed capacity of the paper mill in respect of all varieties of paper and paper board has to be taken into consideration though some of the varieties may not be eligible for the benefit of notification. In the present matter the benefit of nil rate of duty is available to paper and paper board up to first clearance of an aggregate quantity not exceeding 210 M.T. during the period 1.3.2000 to 31.3.2000 and 2500 in any subsequent financial year. As both paper and paper board are being manufactured by the Appellants in the same factory, they cannot claim benefit of notification separately for each product. Similar views were expressed by the Tribunal in the case of Dhampur Sugar Mills Ltd. . In that matter the Appellants were having three units for manufacture of sugar, molasses, paper and paper board and chemicals and the department had disallowed them the benefit of notification No. 67/95 on the ground that all the three divisions had been separately registered. The Tribunal held that all the three units will be regarded as one factory as all the excisable goods are manufactured in the same premises.
8. The decision relied upon by the learned Advocate are not applicable to the facts of the present matter. In Birla Jute and Inds. Case, Notification No. 36/87 provided concessional rate of duty in respect of cement manufactured in a factory which has commenced production on or after the first day of April, 1986. The issue involved in that matter was whether an industrial licence granted by the Ministry of Industry for substantial expansion of installed capacity to manufature Portland cement will include establishment of new factory. The Tribunal had also referred to the Circular No. 28/89 dated 17.7.1989 wherein the Board has opined that the benefit of notification could be extended to any factory set up as a substantial expansion or otherwise provided the same is independent of the existing factory in all respects. The facts in the present matter are entirely different from the facts in the Birla Jute Industries case. In the case of Gujarat Aluminium Extrusion there were two different entities namely, Gujarat Casting Corporation and Gujarat Aluminium Extrusion (P) Ltd. In the case of Vardhman Spg. & Gen. Mills Ltd. factual position was that the Appellants had bifurcated their units into two units and there were two independent factories separated by a boundary wall and having a separate registration under the Factories Act. Similarly in the case of Agarwal Rolling Mills two units were separated by a boundary wall. Accordingly we find no infirmity in the impugned Order and we reject the appeals filed by the Appellants.