NIRMAL SPINNERS Vs. COMMISSIONER OF C. EX., COIMBATORE

JUDGEMENT

(1.) THE appellant filed this appeal against Order -in -Appeal No. 136/2004 -C.E., dated 6 -4 -2004 passed by the Commissioner of Central Excise (Appeals). The relevant facts of the case in brief as revealed from the records are that during the period 1994 -95 and 1995 -96, the appellant had manufactured and cleared cotton yam classifiable under sub -heading 5203.00 of the CETA, 1985 without payment of duty under SSI Exemption Notification No. 1/93 -C.E., dated 28 -2 -1993.

(2.) ON 6 -3 -1996, the Central Excise officers visited the factory premises of the appellant and found two other sheds in the same premises of M/s. Sri Narayana Spinners and M/s. Kadri Mills. By a show cause notice dated 5 -4 -1999, it has been alleged that the appellant contravened the provisions of Notification No. 1/93 -C.E., dated 28 -2 -1993 as amended from time -to -time and cleared the excisable goods without payment of duty by wrongly availing the exemption notification and the value of clearance of both the units i.e. the appellant and Sree Narayana Spinners had to be clubbed for the purpose of exemption under Notification No. 1/93 -C.E., dated 28 -2 -1993. The adjudicating authority confirmed the demand of duty of Rs. 2,22,464/ - and imposed penalty of equal amount under Section 11AC of the Central Excise Act, 1944 and under Rule 173Q of the Central Excise Rules, 1944. The Commissioner (Appeals) dropped the penalty under Section 11AC as the demand pertained prior to the introduction of Section 11AC. He also reduced the penalty to Rs. 60,000/ - under Rule 173Q of the Central Excise Rules.

(3.) SHE submits that the appellant had no facility of the blow room and they were sending the raw materials cotton yarn to M/s. Sri Narayana Spinners for conversion on job work basis and got it back for further manufacturing process. She submits that these two units are separate partnership firm duly registered as per Indian Partnership Act, income tax registration, power connection, bank account, machinery, SSI registration, ESI, registration under TNGST Act etc. She submits that only one partner Shri V. Vasudevan is common in both the firms. It is submitted that they have paid the conversion charge and the rent to the other unit M/s. Sri Narayana Spinners which is shown in the balance sheet. She relied upon the following decisions of the Hon'ble Supreme Court and the Tribunal: -