whether the clearances of previous occupier of factory premises be clubbed with the clearances of present occupier occupying the factory premises

PJ/Case Laws/2011-12/1188

Case: Appalo Threads versus Commissioner of C. Ex., Coimbatore

Citation: 2011 (267) E.L.T. 371 (Tri. – Chennai)

Issue:- SSI Exemption – whether the clearances of previous occupier of factory premises be clubbed with the clearances of present occupier occupying the factory premises?

Brief Facts:- The Lower Authorities clubbed the value of clearances of M/s Agni Textiles who were manufacturing polyester sewing threads in the same factory premises up to the first week of the January, 2002 with the value of clearances of the appellants who started manufacturing polyester sewing thread at the very same factory premises after M/s Agni Textiles shifted to another new premises. The clubbing has been done in view of the provisions in the small scale exemption notification that clearances by one or more manufacturers from the same factor are required to be aggregated.

Appellant-assessee is challenging the impugned order.

Appellant’s Contentions:- Appellant contended that they have have occupied the factory premises and started manufacturing only after the previous occupants namely M/s Agni Textiles moved from the said factory premises to a new place where they took new registration. It was contended that the cases relied upon by the Lower Authorities were not applicable to them.

Respondent’s Contentions:- Revenue relied upon the following cases:

CCE, Baroda versus Comed Chemicals Pvt. Ltd. [2002 (141) E.L.T. 369 (Tri. – Mumbai)]
Dukes Pharma versus Government of India [1994 (69) E.L.T. 433 (Mad)]
Shyam Sundar U Nichani versus C. Ex. & Customs [1991 (56) E.L.T. 5 (Kar.)]

Respondent stated that the expression ‘factory’ is not defined in the small scale exemption notification but the same is defined in the CEA, 1944 to mean any premises wherein excisable goods are manufactured.

Respondent further stated that in view of clear cut provisions in the small scale exemption notification, the clearances of different manufacturers; operating in the same factor even though during different periods of the same financial year are required to be clubbed.

Reasoning of Judgment:- The Tribunal perused the Comed Chemical case wherein it was concluded that the clearances of the goods from one factory during the financial year by both the manufacturers require to be clubbed and the clearances in excess of the limits will not be entitled to exemption under Notification.

It was noted that in the case of Dukes Pharma, the Madras High Court has also taken a view that value of clearances by different manufacturers has to be taken into consideration. Similar view has been taken by the Karnataka High Court in the case of Shyam Sundar.

Accordingly, it was held that there is no reason to distinguish the ratio of these decisions. In the present case, the appellant has not presented any evidence to support that the previous occupant of the factory moved out of the factory along with all machinery and that they have moved into the factory along with their own machinery.

The requirement of the impugned Notification is clear that the value of clearances of the specified goods from any one factory premises are required to be aggregated even if the clearances are made by or on behalf of more than one manufacturers. Hence, the Tribunal held that the impugned order requires no interference.

Decision:- Appeal dismissed.

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PJ/Case Laws/2011-12/1188

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