ORDER
P.K. Kapoor, Member (T)
1. In the show cause notice dated 8-10-1984 it was alleged that during the period 1-1-1980 to 21-6-1981 the respondents manufactured goods falling under T.I. 68 without obtaining a Central Excise licence and removed such goods without observing the required procedures during the period 6-12-1977 to 21-6-1981. In the show cause notice it was further alleged that the respondents were issued licence No. 7/68/75 for the manufacture of T.I. 68 goods which was renewed upto 31-12-1979 but they discontinued payment of duty which was payable on the goods manufactured by them in terms of Notification No. 176/77 dated 18-6-1977 superseded by Notification No. 89/79 dated 1-3-1979 and Notification No. 105/80 dated 19-6-1980 by suppressing the fact that the factory was one of the units owned by SIDECO. On the grounds that the total clearances of excisable goods in the preceding year from all the different units of SIDECO had exceeded the limit of Rs. 30 lakhs it was alleged that exemption under these notifications was not admissible to the unit. They were therefore, asked to show cause as to why duty amounting to Rs. 4,45,648/- should not be recovered under Rule 9(2) read with Section 11A on goods valued at Rs. 59,44,667.80 unauthorisedly manufactured and illicitly removed from the factory during the period 1-1-1980 to 21-6-1981 and why penalty should not be imposed on them. Thereafter, in his order dated 10-1-1985 the Collector dropped the proceedings on the grounds that individual units of State Public Sector Corporation like SIDECO were to be treated as different manufacturers of goods covered by Tariff Item 68 since each such unit had a distinct identity as a manufacturer.
2. Under the provisions of Section 35E of the Central Excises and Salt Act, 1944 the Central Board of Excise and Customs after examining the records of the proceedings directed the Collector to apply to the Tribunal for the determination of the following points arising out of the order passed by the Collector :
“(a) Whether the said order of the Collector can be held to be a legally correct and proper order.
(b) Whether by an order passed under Section 35C of the Act, the Appellate Tribunal should set aside the above order of the Collector and order requiring the assessee to pay duty correctly payable by them in respect of the clearances of goods effected by the assessee unauthorisedly and for imposing adequate penalty on the assessee or pass any other order as deemed fit.”
3. In view of the order passed by the Board, the Collector has filed this appeal and the respondents have filed cross-objection.
4. On behalf of the appellant, learned SDR Smt. J.M.S. Sundaram stated that the Collector had erred in holding that SIDECOs role was that of a holding company and each individual unit of the Public Sector Undertaking SIDECO was to be treated as different manufacturer in respect of exemption applicable to T.I. 68 goods. She contended that SIDECO being an independent undertaking, the value of clearances of all excisable goods cleared by all units owned by or controlled by SIDECO were required to be clubbed together for the purposes of charging Central Excise duty. She argued that the respondent was not entitled for the benefit of exemption in respect of T.I. 68 goods under the relevant notifications and duty was recoverable on clearances of such goods during the period 6-12-1977 to 21-6-1981 since the fact that the assessee was only one of the units of SIDECO was suppressed. She also contended that the impugned order being entirely in favour of the respondents the cross-objection was not maintainable.
5. On behalf of the respondent learned Consultant Shri N.I. Ramanathan appeared before us. He stated that there was no infirmity in the Collector’s finding that the status of SIDECO was essentially that of a holding company and each unit working under it was to be treated as separate and distinct for the purpose of the exemption under Notification Nos. 176/77, 89/79 and 105/80 as the case may be. He added that the show cause notice issued on 8-10-1984 seeking to recover the duty for the period 6-12-1977 to 21-6-1981 was time barred since the show cause notice did not invoke the proviso to Sub-section (1) of Section 11A and in any case there was no mis-statement or suppression of facts or contravention of any of the provisions of the Central Excises and Salt Act, 1944 with the intent to evade Central Excise duty, since the department was all along aware that the respondents were a unit working under the Control of SIDECO. On these grounds he pleaded for the rejection of the appeal.
6. We have examined the records of the case and considered the submissions made on behalf of both sides. It is seen that the following questions arise for consideration in this case:-
(i) Whether each unit of the State Public Sector Corporation like SIDECO could be treated as an independent manufacturer of goods falling under T.I. 68, for the purpose of Notification Nos. 176/77, 89/79 and 105/80.
(ii) Whether the demand issued to the respondents as per notice dated 8-10-1984 for the period 6-12-1977 to 21-6-1981 was time barred.
7. Taking up the first point we find that subject to the satisfaction of the condition laid down in the exemption in respect of T.I. 68 goods under Notification No. 176/77 was applicable only to the first clearance for home consumption by or on behalf of the manufacturer from one or more factories upto a value not exceeding rupees thirty lakhs during financial year subsequent to 1977-78 and upto a value not exceeding Rs. 24 lakhs during the period commencing on 18th day of June, 1977 and ending on 31st day of March, 1978. It is an admitted fact that the respondents viz. the Government Instrument Workshop was one of the units of the Kerala State Small Industries Development and Employment Corporation Ltd. Evidently the said Corporation was the manufacturer for the purposes of the Notification Nos. 176/77, 89/79, and 105/80 and the goods produced by the various units were manufactured for and on behalf of the Corporation. This view finds support from the fact that in certain notifications such as Notification No. 175/86, in order to give effect to the Government’s intention to treat each factory belonging to the Central Govt., State Govt., or to a State Industries Corporation etc., as separate and distinct for the purpose of the exemption under the notification, as specific provision has been made in this regard in Explanation V. Under these circumstances, we do not find any force in the Collector’s finding that each of the units of the Public Sector Corporation like SIDECO had to be treated as an independent manufacturer of goods falling under T.I. 68 for the purposes of Notification Nos. 176/77, 89/79 and 105/80, as legally sustainable.
8. In order to decide the question whether the demand issued to the appellants was time barred, we consider it desirable to refer to the following extract from the impugned order in regard to the submissions made by the appellants during the proceedings before the Collector :
“M/s. Government Instrument Workshop, Pappanamcodo, in their letter No. GIW/S-O/371/80 dated 6-11-1984 have stated that from 1977 onwards the unit was functioning as a unit of “SIDCO”; that their application for exemption, based on the Notification No. 176/77 dated 18-6-1977 which was superseded by 89/79 dated 1-3-1979 and Notification No. 105/80 dated 19-6-1980 for the goods manufactured in the Unit was submitted to the Central Excise authorities and permission was granted with effect from 18-6-1977 to 31-3-1978; that they had not suppressed any fact, that their organisation was a unit of SIDCO, further they stated that the declaration issued by the Manager, Government Instrument Workshop, to the effect that the total value of the products and the machinery installed in the workshop for the year 1977-78 has not exceeded Rs. 30 lakhs and Rs. 10 lakhs respectively and which was submitted to the Central Excise Department clearly indicated that the unit was run by SIDCO. They also submitted that for the year 1978-79 they submitted an application for exemption and the same was granted.
M/s. Government Instrument Workshop further stated that for the year 1979-80 also they had submitted an application on 30-4-1980 and that the matter was subsequently under correspondence between the parties. They indicated that the Central Excise Department was informed that Government Instrument Workshop was a unit run by SIDECO which was an undertaking of the Government of Kerala and that they were having a separate SSI registration and maintaining separate accounts and that a separate balance sheet was also prepared in respect of this unit. They also contended that the unit had no interest directly or indirectly with any other units of SIDECO. Further they pointed out that the exemption limit had to be arrived at only after taking into account the goods manufactured in the above unit, and that as such there is no justification for clubbing the value of the products manufactured by other units.
They added that a show cause notice No. OC330/83 dated 1-12-1983 was issued by the Superintendent of Central Excise, Range-II, Trivandrum in the same matter which was subsequently withdrawn. They added that they have been issued with another show cause notice on the same issue.”
9. On a plain reading of the extracts from the impugned order reproduced above, it is evident that the appellants had at all stages kept the department informed that they were a unit of the Kerala State Small Industries Development and Employment Corporation Ltd. It is also noteworthy that a show cause notice dated 1-12-1983 issued to the appellants by the Superintendent of Central Excise, Trivandrum on the same grounds was later withdrawn. In fact, even the findings of the Collector in the proceedings, which have been challenged before us are in favour of the appellants. Under these circumstances we hold that there could be no charge of wilful mis-statement or suppression with the intent to evade duty against the appellants and the demand issued on 8-10-1984 for the period 6-12-1977 to 21-6-1981 by invoking the extended period of limitation was time barred.
10. The impugned order being entirely in favour of the respondents the cross-objection filed by them is not maintainable.
11. In view of the above discussion both the appeals are rejected. The cross-objection being not maintainable is also dismissed.