ELECTRICITY POLES MANUFACTURING Vs. COMMR. OF C. EX.

JUDGEMENT

(1.) THE appellants M/s. Electricity Poles Manufacturing, are a unit of Uttar Pradesh State Electricity Board (UPSEB in short). They manufactured PCC Poles falling under sub -heading 6807.00 and availed exemption under Notification No. 74/93 -C.E., dated 28 -2 -1993 which exempts goods specified in the Table Annexed to it from whole of the excise duty if such goods are manufactured by a factory belonging to a State Govt. and are intended for use by any department of that Govt.

(2.) THEY were issued a show cause notice dt. 2 -11 -1995 and corrigendum dt. 24 -1 -1996 calling upon them to show cause to the Commissioner of Central Excise, Allahabad why Rs. 19,35,641/ - as duty not paid should not be recovered from them under the proviso to Section 11A(1) of Central Excise Act, 1944 and why a penalty should not be imposed on them under Rules 9,173Q, 210 and 226 of the Central Excise Rules, 1944. This duty is demanded in respect of the goods (PCC Poles) cleared by the noticees during the period from 10 -6 -1992 to 31 -3 -1993 at concessional rate of duty under Notifications No. 175/86, dated 1 -3 -1986 and No. 1/93, dated 28 -2 -1993 and without payment of duty during 1 -4 -1993 to 31 -10 -1994 under Notification No. 74/93 -C.E., dt. 28 -2 -1993. It is alleged in the Show Cause Notice that Hon'ble Allahabad High Court in Civil Misc Writ Petition No. 100 of 1984 held that M/s. UPSEB cannot be deemed to be a factory belonging to any of the State Govt. and UPSEB is not a Deptt. of the State Govt. Further, it is alleged that by virtue of Notification No. SO -232(O) dated 2 -4 -1991 issued under Section 11B of the Industries Development and Regulation Act, 1951 (IDRA for short), the party being a manufacturing unit owned and controlled by UPSEB ceases to be an SSI unit. It is, therefore averred that the party is not entitled to exemption under Notification No. 74/93 and also under Notifications No. 175/86 and No. 1/93 for the respective reasons as stated above.

(3.) THE Additional Commissioner of Central Excise, Allahabad on considering the reply of the party passed Order -in -Original dt. 21 -11 -1999 affirming the reliance placed by the department on the aforesaid judgment of the Allahabad High Court in which it is held that UPSEB though a State in the meaning of Article 12 of the Constitution of India, is not a department of the State Govt. He accordingly held that there is substantial non -fulfilment of the conditions laid down under Notification No. 74/83. With regard to the second issue of the availment of exemption under Notification No. 175/86, dated 1 -3 -1986 and its successor Notification No. 1/93, dated 28 -2 -1993, the adjudicating authority held that the party was owned and controlled by UPSEB, an autonomous Board, which had other PCC Pole manufacturing units at Roor -kee, Agra, Lucknow, Gorakhpur and Allahabad. It is observed that since the party is owned and controlled by UPSEB a large -scale undertaking, it ceases to be an SSI unit by virtue of Notification No. SO 232(O), dated 2 -4 -1991 issued under Section 11B of IDRA. Thus he held that the party wrongly availed SSI benefits during the impugned period. He also held that the party intentionally suppressed material facts with an intention to evade payment of duty. Consequently he confirmed the demand of Rs. 19,35,641/Z on the party and also imposed a penalty of Rs. 50,000/ - on them.