M/S ROLLATAINERS LIMITEDversusCOMMISSIONER OF CENTRAL EXCISE, DELHI-III

A                  MIS ROLLATAINERS LIMITED
                              v.
            COMMISSIONER OF CENTRAL EXCISE, DELHI-Ill

                                JULY 29, 2004
B             (N. SANTOSH HEGDE AND A.K. MATHUR, JJ.]

         Central Excise Act, 1944:

        Ss. 2(e) and 11A(I)-Notification No. 612000-CE dated 1.3.2000-
C Exemption claimed by two factories owned by one company-The two
  factories with separate establishments and manufacturing different finished
  products-Issued separate premises specific registrations-Held, simply
   because both the factories are in the same premises and may have common
   boundaries, does not lead to the inference that the two factories are one
D and the same-Both the factories are entitled to exemption separately-
   Central Excise Rules, 1944-r.174(3).

       Appellant-company owned two factories namely, (1) Paper Board
  Factory, engaged in manufacture of duplex Board and (ii) Speciality
  Paper Factory, manufacturing paper. The former was situated at Shed
E No. 1 and the latter at shed No. 3. Prior to 1998 Shed No. 3 was a
  godown for Paper Board Factory and Speciality Paper Factory was
  located at a different place. Accumulated stock of Speciality Paper
  Factory was transferred to Paper Board Factory and disposed of under
  the Central Excise Registration issued to Paper Board Factory. Later,
F plant and machinery of Speciality Paper Factory were shifted to Shed
  No. 3, and. a separate registration was issued to it. Both the factories
  were in separate premises and had their separate plants and machinery
  run by separate staff and different managrs. The registrations issued
  separately to the two factories were premises specific as stipulated
G under Rule 174(3) of the Central Excise Rules, 1944.
         The Central Excise Department issued Notification No. 6/2000-
    CE dated 1.3.2000 whereunder paper and paper board or articles
    made therefrom in a factory upto a certain quantity were chargeable
    to 'nil' rate of duty subject to the condition stipulated therein. This
H   exemption was availed of by the two factories of the appellant.
                                       216
                  ROLLATAINERS LTD. v. C.C.E.                     217

However, on 19.3.2001 individual show cause notices were issued to the A
factories of the appellant objecting to availing of the concession by each
of the factories, stating that both the factories were in common
premises, were owned by the same company and common balance-
sheet was maintained. Demand was raised u/s llA(l) of the Central
Excise Act, 1944. The Commissioner confirmed the demand and B
imposed a penalty. The Customs Excise and Gold (Control) Appellate
Tribunal affirmed the order of the Commissioner. Aggrieved, the
appellant filed the present appeals.

     Allowing the appeals, the Court

     HELD: From the facts it is apparent that there is no commonality
                                                                         c
of purpose between the two factories. Both are separate establishments
run by separate staff and different managers, though at the apex level
maintained by the appellant-company with a common balance-sheet.
The finished goods are different. Both the factories have a separate
entrance, there is a passage in between and they are not complimentary D
to each nor are they subsidiary to each other. They are separately
registered with the Central Excise Department. It is also not the case
of revenue that end product of one factory is raw material for the other
factory. Simply because both the factories are in the same premises and
may have common boundaries, that does not lead to the inference that E
both the factories are one and the same. Accordingly, the view taken
by the Tribunal and the Commissioner, Central Excise does not appear
to be well-founded; and the orders passed by them are set aside.
                                                    (220-F-H; 221-A-B)

     CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6581 of F
2002.

     From the Judgment and Order dated 7.6.2002 of the Customs, Excise
and Gold (Control) Appellant Tribunal, New Delhi in Appeal No. 209/
2002-D against Final Order No.144/2002-D.
                                                                         G
                                WITH

     Civil Appeal No. 6635 of 2002

     A.R. Madhav Rao, Alok Yadav, Vishwanath Shukla and V.
Balachandran for the Appellant.                            H
    218                 SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R.

A        B. Datta, Additional Solicitor General, Dilieep Tandon, P. Parrneswaran
    and B. Krishna Prasad for the Respondent.

          The Judgment of the Court was delivered by

          A.K.MATHUR, J. : Both these appeals arise out of the common
B order of the Customs Excise and Gold (Control) Appellate Tribunal
    (hereinafter referred to as the 'Tribunal') dated June 7, 2002. Therefore,
    they are disposed of by this common order.

        Brief facts which are necessary for the disposal of both appeals are
  as under. M/s.Rollatainers Limited (hereinafter referred to as the 'appellant'),
C is a limited company registered under the Companies Act, 1956. The
  appellant is engaged in manufacture of various products in seven of its
  factories situated in different premises, each of them duly and separately
  registered with the Central Excise Department. Out of the seven factories,
  two factories which are relevant for the purpose of these appeals are: (i)
D Paper Board Factory and (ii) Specialty Paper Factory. The paper board
  division is situated in Shed No. 1, Narela Road, Kundli and engaged in
  manufacture of duplex board independently with its own set of plant and
  machinery, staff and workers, raw material and utilities like electricity,
  water etc. Specialty Paper Factory is situated in Shed No. 3, Narela Road,
  Kundli and engaged in manufacture of paper independently with its own
E set of plant and machinery, staff and workers, raw material and utilities
  like electricity, water etc. Prior to May, 1998, the Specialty Paper Factory
  was situated at Dharuhera with accumulated stock of finished goods. The
  appellant decided to transfer such finished stock of specialty paper factory
  to paper board factory and dispose of the accumulated stock of finished
F goods under the Central Excise registration issued to paper board factory.
  The ~round plan of the paper board factory prior to May, 1998, showed
  shed no. 3 as a godown for storage of its raw material, namely waste paper.
  Thereafter, the ground plan was amended in May, 1998, to show the
  specialty paper factory in shed no. 3 for storing the finished goods
   manufactured at Dharuhera and clearing th.em on payment of duty.
G Accordingly, classification list was also filed for the purpose of clearing
   the stock manufactured at Dharuhera. Subsequent to erection of the plant
   and machinery of sp~cialty paper factory shifted from Dharuhera to shed
   no. 3, Narela Road, Kundli and manufacture of paper in such separate
   premises by separate staff and workers who were earlier employed at
H Dharuhera, were engaged and the appellant applied for Central Excise
         ROLLATAINERS LTD. v. C.C.E. [A.K. MATHUR, J.]                   219

registration as provided under Rule 174(3) of the Central Excise Rules, A
1944. No portion of the manufacturing process of paperboard factory was
ever carried on in shed no. 3 wherein exclusively specialty paper factory
operations were carried out. The registrations issued to the paper board
factory and the specialty paper factory were premises specific as stipulated
under Rule 174(3) which reads as under:
                                                                               B
         "Every registration certificate granted shall be in the specified
         form and shall be valid only for the premises specified in such
         certificate."

     The registration carried out certain conditions also like, that it is valid C
only for the premises and purposes specified in the schedule and for no
other purposes and premises; it is not transferable and no correction will
be admissible in the certificate unless attested by the Superintendent,
Central Excise and the certificate shall remain valid till the holder carries
on the activity for which the certificate has been issued or surrenders the
same. Therefore, both the factories were granted separate registration. It D
was also pointed out that no manufacturing processes pertaining to the
manufacture of paper board was carried on in the shed no. 3 for which
specialty paper factory was granted registration. Only manufacturing
processes for manufacture of paper were carried on in shed no. 3. It was
also stated that both the factories had their separate entrances and are E
separated by a clear passage of 10 ft.

      The Central Excise Department issued a notification being Notification
6/2000- Central Excise dated March I, 2000 and as per serial No. 77 of
the aforesaid notification, paper and paperboard or articles made therefrom
in a factory is chargeable to 'nil' rate of duty subject to condition no. 15 F
of the notification that paper and paperboard or articles made therefrom
manufactured, starting from the stage of pulp, in a factory, and such pulp
contains not less than 75% by weight of pulp made from materials other
than bamboo, hard woods, soft woods, reeds (other than sarkanda) or rags
and it was specifically mentioned that the exemption shall apply only to G
the paper and paperboard cleared for home consumption from a factory.
Therefore, the aforesaid exemption was availed of by the appellant's
factories.

     But the trouble started on March 19, 2001 when individual show
cause notice was issued to the factories of the appellant objecting to the H
    220                SUPREME COURT REPORTS [2004) SUPP. 3 S.C.R.

A availing of the aforesaid concession by each of the factories. The basis of
  issuance of the show cause notice was on the ground that both the factories
  are in the common premises and common balance-sheet is maintained and
  owned by the same company. The issue was adjudicated by the
  Commissioner, Central Excise, Delhi-III and duty was claimed in sum of
B Rs. 50,25,117.00 under Section l lA(l) of the Central Excise Act, 1944 and
  penalty of Rs. 5 lacs. Aggrieved against this order, two appeals were
  preferred before the Tribunal and the Tribunal affirmed the order. Hence,
  the present appeals by way of special leave.

        The question that arises for consideration in both these appeals is
C whether both these factories are one or they are separate. The Tribunal by
  its order dated June 7, 2002, affirmed the order of the lower authority and
  came to the conclusion that they are one and accordingly, affirmed the duty
  as well as the penalty.

D        There is no two opinion that both' the factories are near to each other
    and it is owned by the same owner and the common balance-sheet is
    maintained. But, by this can it be said that both the factories are one and
    the same? The definition of the 'factory' as defined in Section 2(e) of the
    Central Excise Act, 1944, reads as under :

E            "(e) 'factory' means any premises, including the precincts thereof,
             wherein or in any part of which excisable goods other than salt
             are manufactured, or wherein or in any part of which any
             manufacturing process connected with the production of these
             goods is being carried on or is ordinarily carried on;"
F
        Simply because both the factories are in the same premises that does
  not lead to the inference that both the factories are one and the same. In
  the present case, from the facts it is apparent that there is no commonality
  of the purpose, both the factories have a separate entrance, there is a
  passage in between and they are not complimentary to each other nor they
G are subsidiary to each other. The end product is also different, one
  manufactures duplex board and the other manufactures paper. They are
  separately registered with the Central Excise Department. The staff is
  separate, their management is separate. It is also not the case of revenue
  that end product of one factory is raw material for the other factory. From
H the above facts it is apparent that there is no commonality between the two
        ROLLATAINERS LTD. v. C.C.E. [A.K. MATHUR, J.]              221

factories, both are separate establishments run by separate managers A
though at the apex level it is maintained by the appellant company. There
are separate staff, separate finished goods. Simply because both the
factories may have common boundaries that will not make it one factory.
Accordingly, we are of the opinion that the view taken by the Tribunal does
not appear to be well-founded and likewise, the view taken by the B
Commissioner, Central Excise. Accordingly, we allow both these appeals,
set aside the order of the Tribunal passed on June 7, 2002 as well as the
order passed by the Commissioner, Central Excise, New Delhi-III on
September 28,2001 in both the appeals. No order as to costs.

R.P.                                                  Appeals allowed. C