ORDER
Lajja Ram, Member (T)
1. In this appeal filed by M/s. East India Cotton Mfg. Co. Ltd. (hereinafter referred to as the ‘appellants’), the issue for our consideration is, whether the appellants were eligible for the benefit of exemption from payment of Central Excise duty under Notification No. 201/87-C.E., dated 3-9-1987 in respect of the printing frames (classifiable under Heading No. 84.42 of the Central Excise Tariff) used in another unit M/s. East India Exclusive Fabrics Ltd. Under Notification No. 201/87-C.E. printing frames classifiable under Heading No. 84.42 of the Central Excise Tariff when used within the factory of production or in any other factory of the same manufacturer in the printing of textile fabrics were exempt from duty. The plea of the appellants had been that they had entered into a lease agreement with M/s. East India Exclusive Fabrics Ltd. and that the latter had agreed to grant the lease of the printing tables and other equipment for their exclusive use. They had thus argued that M/s. East India Exclusive Fabrics Ltd. should be treated as their own factory.
2. We have heard Shri J.P. Kaushik, Advocate, and Shri M.P. Singh, JDR on 9-6-1999 and had perused the records.
3. The Notification No. 201/87-C.E., dated 3-9-1987 (as amended) is extracted below:
“In exercise of the powers conferred by Sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts printing frames falling under heading No. 84.42 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), when used within the factory of production or in any other factory of the same manufacturer in the printing of textile fabrics, from the whole of the duty of excise leviable thereon which is specified in the said Schedule.
Provided that where the said goods are used in a factory of a manufacturer different from his factory where the said goods have been manufactured, the exemption contained in this notification shall be allowable subject to the observance of the procedure set out in Chapter X of the said rules.
[Notification No. 201/87-C.E., dated 3-9-1987 as amended by Notification No. 190/89-C.E., dated 1-11-1989]”
The issue for consideration is, whether the factory of M/s. East India Exclusive Fabrics Ltd. was the factory of the appellants.
4. We find that M/s. East India Exclusive Fabrics Ltd. were a company incorporated under the Companies Act, 1956. They had their own balance sheet and profit & loss account. They had claimed depreciation for plant & machinery. They had made payment to and had provisions for their employees. The appellants were also a separate company incorporated under the Companies Act, 1956. There is nothing on record to show that M/s. East India Exclusive Fabrics Ltd. were their own unit.
5. The authorised signatory of the appellants’ unit in his statements dated 30-8-1990 and 22-8-1990 had stated that non-duty paid printing frames were being sent by the appellants unit to M/s. East India Exclusive Fabrics Ltd. and that the appellants’ company were getting their fabrics printed on job charges basis.
6. From the lease agreement dated 18-2-1988 it is seen that the lease was only of the specified machines which were described in the schedule annexed to the agreement. The ownership of the machines remained with M/s. East India Exclusive Fabrics Ltd.
7. By taking certain specified machines on lease for a given period, it could not be said that the factory whose machines had been taken on lease will become the factory of the one who had taken them on lease. Lease is the right to use property for a certain length of time by paying rent. In the present case, only certain specified machines were taken on lease. The whole of the factory was not taken on lease.
8. In the facts and circumstances of the case, we do not consider that M/s. East India Exclusive Fabrics Ltd. were the other factory of the appellants’ company. The appellants were not eligible for exemption under Notification No. 201/87-C.E., dated 3-8-1987 (as amended) in respect of the printing frames manufactured by them but used in M/s. East India Exclusive Fabrics Ltd.
9. Taking all the relevant considerations into account, we confirm the Order-in-Original dated 10-1-1991 passed by the Additional Collector of Central Excise, Faridabad. In the facts and circumstances of the case, no modification is called for with regard to the amount of redemption fine and penalty.
10. As a result, the appeal is rejected.