Full Judgment
He has set aside the order of demand of Rs. 2,85,544.,39 covered by one of the impugned orders before him holding it as time barred and against this order the Revenue have filed an appeal before us. In the other case before him, Collector (Appeals) upheld the demand confirmed by the lower authority. The facts giving rise to the demands in both the cases are the same. The two appeals are therefore dealt with together.
2. Brief facts of the case are that M/s. Dhampur Sugar Mills Limited, in their mill premises, have installed one straw board unit with an installed capacity of 5400 metric tonnes and a paper unit with an installed capacity of 1500 metric tonnes per year. The Paper Unit was set up later in point of time. M/s. Dhampur Sugar Mills Limited, (appellants in one of the two appeals before us), filed classification list in respect Of paper manufactured by them claiming the benefit of Notification No. 128/77 as available for the installed capacity upto 2000 metric tonnes. They did not club the installed capacity of the straw board unit with that' of the paper unit for reckoning the installed capacity for the purpose of availing the benefit under Notification No. 128/77 and which, if done, would have meant lower benefit in terms of the notification. The lower authorities charged that the appellants should have declared combined installed capacity for the two units and alleged that the appellants had deliberately misdeclared installed capacity for the purpose of availing higher concessional benefit. For convenience of reference Notification No.128/77 is reproduced as under : "In exercise of the powers conferred by Sub-rule
(1) of Rule 8 of the Central Excise Rules, 1944, and in supersession of the notification of the Government of India, in the Ministry of Finance (Department of Revenue and Insurance) No. 45/73:-Central Excises, dated the 1st March, 1973, the Central Government hereby exempts paper other than paper boards, cigarette tissue, glassine paper grease proof paper, coated paper (including waxed paper) and paper of a substance not exceeding 25 grammes per square metre, and containing not less than fifty per cent by weight of pulp made from bagasse, jute stalks, cereal straw or waste paper manufactured and cleared from a paper mill of the type described in the Table below, from so much of the duty of excise leviable thereon as is specified in the corresponding entry in Column
(3) of the said Table : ---------------------------------------------------------- Sl. Description of Extentof No. paper mill exemption ----------------------------------------------------------
1. Paper mill whose annual installed Seventy five capacity in respect of all varieties of per cent of paper and paper boards does not exceed the duty
2. Paper mill whose annual installed Sixty per capacity in respect of all varieties of cent of the paper boards exceeds 2000 tonnes duty leviable but does not exceed 5000 tonnes.
3. Paper mill whose annual installed Fifty per capacity in respect of all varieties of cent of the paper and paper boards exceeds duty leviable 5000 tonnes but does not exceed Provided that the paper mill (i) does not have a plant attached thereto for making bamboo or wood pulp, and (ii) manufactures paper out of pulp brought by it or made by it from any raw material other than bamboo or wood." Assistant Collector demanded duty of Rs. 2,85,544 .59 for the period 18-6-1977 to 30-4-1979 invoking longer time limit and by another order for the period May, 1979 to October, 1979 and November 1979 to 3une 1980 duty demanded was Rs. 56,069.53 and Rs. 46,230.69. These demands were, however, issued within six months period.
3. The learned consultant for the appellants, i.e. assessee, pleaded that the Paper Plant and the Straw Board Plant of the appellants were separate units having separate machinery without any connection between the two and therefore for the purpose of notification these should be treated separately and the benefit of exemption Notification 128/77 should be allowed in respect of paper based on the installed capacity of the paper plant only. He stated that the installed capacity . of the paper unit and of the straw board unit was within the knowledge of the authorities and appellants had declared and filed the classification lists both for paper and the straw board with the jurisdictional Central Excise authorities and the same were approved from time to time. He pleaded that it was within the knowledge of the authorities that the appellants were manufacturing both straw board and paper and it cannot therefore be alleged that they had held back any information regarding the manufacture of paper and straw board by them. He stated that the classification lists filed by them covered both paper and board and the claim for lower assessment in terms of the notification was made in the said classification lists and they were under the bona fide belief that they were entitled to the benefit of concessional assessment on paper based on the installed capacity of the paper plant alone. He stated the competent Central Excise authorities could have asked for further information about installed capacity of straw board plant in case they felt that the installed capacity of straw board plant for the purpose of concessional assessment under the said notification should have been clubbed with that of paper plant. He stated that whatever information was asked for by the authorities in regard to the installed capacity of the paper plant was given and forwarded in respect of straw board unit also, the same would have been supplied. He drew our attention to the correspondence in this regard and also to the classification list filed by them.
4. The learned SDR for the department pleaded that the appellants did not furnish full information regarding the installed capacity of both the paper plant, and straw board plant in their classification lists and claimed concession in respect of paper showing the installed capacity as 1500 metric tonne which was that of the paper plant only.
He pleaded that it was the duty of the assessee to furnish all information required for the purpose of approval of the classification lists as in terms of the said notification the total installed capacity of paper and board was to be taken together. During the course of the arguments it became necessary to find out the facts regarding location of the paper and straw board plants and as to whether these were interconnected in any way. A direction was given to the jurisdictional Assistant Collector to clarify the position in this regard by making an on the spot study. The report was received from the Assistant Collector but it does not appear that the report was prepared after making an on.
the spot study. The report has been given after issuing a questionnaire to the appellants. This report does not throw much' light as-to whether the two plants in any way were sharing any common machinery. The appellants maintained in their reply to the Assistant Collector that the two units are functioning independently while the Assistant Collector indicated that there was some connection between the two. One thing however is clear from this that the two units are located in the compound of M/s. Dhampur Sugar Mills Limited and are a part of a common complex and a private road in the same compound separates the compounds of the two plants.
5. Shri Gopal Prasad after receipt of the report maintained that the two plants were independent. He stated that there was no suppression of facts and all the information required for approval of the classification lists was with the Central Excise authorities and they would have furnished the authorities any information that was required in regard to straw board plant in case the authorities felt the same was necessary. He also pleaded that when they set up the paper plant, the appellants got the fact of the manufacture of paper endorsed in the same licence as was issued for the straw board as desired by the Central Excise authorities.
6. We observe that the appellants have been issued a common licence for straw board as also for paper. In fact, the name of the paper unit has been entered later in point of time. The appellants have filed a common classification list for both straw board and paper and have also furnished necessary information regarding the capacity of the paper unit as asked for by departmental authorities. The appellants it is seen did claim benefit of Notification 128/77 based on the installed capacity of paper plant, which was higher in quantum than that would have been available to them in case capacity of the straw board and the paper units had been taken compendiously. The fact however, remains that the departmental authorities were in possession of the information furnished by the appellants that they were manufacturing both straw board and paper in two separate plants and also that the two plants had been set up at different points of time. At the time of approval if authorities entertained any doubt as to whether installed capacity of both had been taken together or not or that it was required to be taken together they should have made necessary enquiries with them. The classification lists had been approved without raising any queries in this regard. It is incumbent on the authorities that once they are in possession of the basic information, to make necessary enquiries before approving the classification lists in case there was any doubt about the applicability of .the slab of exemption available. At the time of issue of the licence the appellants would have normally furnished estimated quantity of the goods to be produced. In fact, from the papers filed, it is seen that this fact was brought on record. In this background therefore, we hold that the Collector (Appeals) order holding that the longer time limit was not available to the Revenue for raising the demand and holding the demand of Rs. 2,85,544.59 as time barred is maintainable in law.
7. Adverting to the next question as to whether in terms of the notification the installed capacity of the two plants is required to be clubbed for the purpose of the concessional assessment under the said notification, we observe that in terms of the notification, the benefit of the notification is available to paper, other than the excluded categories set out in the notification, manufactured and cleared from paper mill based on annual installed capacity of the paper mill for the varieties of paper and paper boards. Depending upon the installed capacity the benefit available at varying rates. We observe that in the notification the concession is available with reference to paper produced in paper mill and not with reference to the paper produced in a paper plant and for the purpose 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 considerations though some of the varieties may not be eligible for the benefit of notification.
We observe the word 'mill' as defined in the Great Illustrated Readers Digest Dictionary is as under : "mill - A building or establishment equipped with machinery for grinding grain into flour or meal. 2. A device or mechanism such as rotating millstones, the grinds grain. 3. A mechanical appliance or machine that reduces a solid or course substance into a pulp or minute grains by crushing, grinding or pressing a pepper mill. 4. A machine that releases the juice of fruits and vegetables by pressing or grinding a cider mill. 5. a. Any machine that produces something by repetition of a simple process such a machine for stamping coins.
6. Any of various machines for shaping, cutting, polishing or dressing metal surfaces. 6. a. A building or group of buildings equipped with machinery for processing materials such as wood, hay, textile fibres and iron ore into finished products such as paper, fodder, cloth and steel; a textile mill b. any building or collection of buildings that has machinery for manufacture a factory. 7. An agency, institution or process that operates in a routine way of turns out products in the manner of a factory. Don't treat university like a degree mill. 8. A slow or laborious process.
It took three years for the bill to get through the legislative mill b. A steel roller bearing a raised design, such as one used for making a die or a banknote printing plate by pressure. 10. Shang A fist fight. -go through the mill. 1. To go through some process such as training that is routine and monotonous but necessary. 2. To go through a difficult experience usually having a definite effect on personality or character.
It is seen 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 each 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 a paper plant and also a different plant for making board than the whole setup has to be taken as one mill. It is significant to note that in the present case both the plants function under the same management and are in the same campus.
In view of this we hold that the two plants are part of the same mill and therefore for the purpose of the notification the installed capacity of the two has to be clubbed. In this view of the matter, therefore, we uphold order of the Collector of Central Excise (Appeals) so far as it relates to the rate at which the benefit of the notification is available to the appellants. In view of what we have stated above, the appeal of the Revenue is rejected and so also of the appellants and the orders of the Collector (Appeals) are upheld.