Customs, Excise and Gold Tribunal - Tamil Nadu
Collector Of C. Excise vs Kanara Fire Works Industries on 7 April, 1995
Equivalent citations: 1995(78)ELT477(TRI-CHENNAI)
ORDER V.P. Gulati, Member (T)
1. This appeal is filed by the Revenue against the order of the Collector of Central Excise, Madurai. The facts leading to the proceedings as set in the order of the learned lower authority are reproduced below:
"M/s. Guna Fireworks Industries, Kongalapuram are manufacturers of fireworks falling under chapter sub-heading 3604.10. They were taken on lease by M/s. The Kanara Fireworks Industries, Mananeri (hereinafter known as main unit) renamed as M/s. The Kanara Fireworks Industries, Kangalapuram (hereinafter known as the leased unit). The fireworks manufactured in the leased unit were cleared under GP 2 without payment of duty to the main unit and subsequently cleared on payment of duty. The leased unit claimed SSI exemption based on the SSI certificate issued to the leased unit prior to the lease agreement. A show cause notice of even no. dated 11-1-1990 was issued to the leased unit denying SSI exemption on the score that the constitution of the leased unit had changed consequent on leased deed and the SSI certificate issued to them prior to lease agreement was not a valid one to claim exemption."
The learned lower authority has held that the goods manufactured in the appellants' unit taken on lease by M/s. Kanara Fireworks Industries, Mananeri was not eligible for the benefit of Small Scale exemption as the SSI certificate issued prior to the lease could not be valid for clearance by the lessee firm. The learned original authority has given the following reasons :
"I have gone through the records of the case and found that this is leased to M/s. The Kanara Fireworks Industries, Nathikudi. The Kanara Fireworks Industries at Mananeri is not having a valid SSI certificate even though it is possessing a L 4 licence, and also observed that M/s. Kanara Fireworks Industries at Nathikudi has got an SSI certificate but their SSI certificate does not cover their L 4 licence at Mananeri. By getting M/s. Guna Fireworks Industries, Kongalapuram (now called as M/s. The Kanara Fireworks Indus-tires) leased to M/s. The Kanara Fireworks Industries, Nathikudi the validity of SSI certificate has ceased by way of the very footnote in the SSI certificate possessed by the leased unit. The footnote given in the SSI certificate is reproduced below for ready reference.
"N.B.: (i) This Registration is valid for the factory location, products and the constitution of the unit at the time of allotment of this certificate.
(ii) This registration is liable to revocation or cancellation in the event of any misuse or unauthorised diversion as determined by the Director of Industries.
(iii) This Registration certificate should be prominently exhibited at the factory premises of the Industrial unit.
(iv) Date of commencement of production (wherever applicable)."
The learned lower appellate authority has however in his order stated that by the absence of a fresh SSI certificate in the hands of M/s. Kanara Fireworks Industries, Mananeri, would not render the clearance made from the appellants' unit ineligible for the benefit of Notification 175/86 as no fresh SSI certificate would be required for the purpose and in any case M/s. Kanara Fireworks Industries could not get a SSI certificate as they in their unit are not manufacturing any goods and are merely storing non-duty payable goods received from other units in their magazine. The learned DR has urged that the SSI certificate in view of the endorsement made on that would be valid only for the factory, location, products and the constitution of the unit at the time of issue of the certificate and in case the unit is leased out, the SSI certificate in respect of the unit would not be valid inasmuch as the constitution of the unit can be said to have changed consequent on the unit having been taken on lease.
2. The Respondents in this case has cited the judgment of the Tribunal reported in 1993 (66) E.L.T. 438 (Tribunal), the order passed on 2-12-1983 by the Special Bench of the Tribunal in the case of Gaurav Equipments (Pvt.) Ltd. v. Collector of Central Excise wherein it has been held that even though the ownership of the factory changed the small scale exemption would continue to be available.
3. We have considered the pleas made by both the sides. It is observed that the short point that falls for consideration is whether in the case of the unit holding SSI certificate on its being leased to another person would continue to be eligible for the benefit of the Modvat Credit based on the SSI certificate earlier issued for the purpose of the benefit of Notification No. 175/86. We observe that similar issue has come before us earlier and in those cases we have taken note of the endorsement made in the SSI certificate, as reproduced in the earlier paragraph in the extracts of the order of the original authority, and we have considered that necessarily same meaning has to be given to this endorsement and the authority which issued the SSI certificate would be in the best position to clarify the position that in a case where the unit has been given on lease whether the SSI certificate earlier issued would continue to be valid for availing the benefit of small scale exemption under Notification No. 175/86. We have set aside the orders of the learned appellate authority in those cases and referred the cases for reconsideration after getting clarification from the concerned authorities of the State Government. Following the ratio of the earlier decisions we therefore set aside this order also with the direction that the learned appellate authority should get a clarification from the concerned State authorities who have issued the certificate in regard to the status of the SSI certificate issued in the event of a unit being taken on lease by another person. The appeal is therefore allowed by remand on the above terms.