ORDER
C.N.B. Nair, Member (T)
1. The appellant M/s Mahabir Jute Mills Ltd. is a Public Limited Company registered in 1913 and was engaged since 1935, in the manufacture of jute products in its factory at Sahjanwa, Gorakhpur. In 1998 the appellant informed the jurisdictional Central Excise Superintendent that it was putting up a synthetic yarn spinning unit in the name of Mahabir Syntex (a unit of Mahabir Jute Mils Ltd.) at Sahjanwa, and ground plan for the project was also enclosed. Accordingly, on 26th Feb. 1998, a registration certificate for manufacture of synthetic yarn was issued by the Superintendent to the appellant in the name of Mahabir Syntex (a unit of Mahabir Jute Mills Ltd.) at Sahjanwa, Gorakhpur. The yarn spinning machinery was installed in the existing premises of the jute manufacturing factory.
2. Appellant received LDO, a modvatable input, between 31.3.2000 and 27.1.2001 in their factory at Sahjanwa, and took modvat credit. This LDO was used in the generation of electricity, in generators which formed part of the jute manufacturing plant. The power generated was used in both (jute & yarn) lines of production.
3. On 21.11.2001, the Superintendent of Central Excise wrote to appellant informing that since the generator is installed in the approved licence premises of Mahabir Jute Mills Ltd. which was in existence for long and not in the approved premises of M/s Mahabir Syntex, the credit is not admissible. The letter also noted that the generator did not belong to M/s Mahabir Syntex and it belonged to M/s Mahabir Jute Mills Ltd. The appellant deposited the credit taken on 24 and 26th November 2001 under protest and filed a refund application on 24th July, 2002. That refund application was rejected by the lower authorities, upon a finding that M/s Mahabir Jute Mills Ltd. and Mahabir Syntex are two separate entities and for that reason the credit is not available. The present appeal challenges that finding.
4. The contention of the learned Counsel for the appellant is that law recognizes only one entity namely, Mahabir Jute Mills Ltd. It was the only company registered and Sahjanwa facility is the only factory of Mahabir Jute Mills Ltd.. It is being pointed out that Mahabir Syntex is only a unit of M/s Mahabir Jute Mills Ltd. and it was no separate entity in law.
5. Learned Counsel has further pointed out that the finding of the Central Excise authorities is based merely on the issuance of a separate central excise registration certificate for the yarn manufacturing facility and that central excise registration is no basis for determining whether the yarn manufacturing facility is a separate factory or a separate entity. Learned Counsel has also pointed out that subsequently, Central Excise authorities themselves issued one combined licence on 21.4.2002 for the factory for the manufacture of both jute products and 100% polyester yarn. It is the contention of the learned Counsel that the earlier issuance of two central excise registrations, separately for each product, in no way, changed (sic) the legal standing of the factory and the manufacturer of the unit. In regard to the claim for modvat credit, the learned Counsel has taken us to the provisions of Rule 57AB and has contended that rule specifically recognizes a “manufacturer” taking credit of duty paid on “inputs” received “in the factory”. Learned Counsel’s submission is that since there is only one manufacturer and one factory in the present case, there is nothing in the CENVAT rules contrary to the appellant taking credit in respect of the inputs used in that factory for manufacture of excisable goods. Learned Counsel has also referred to a decision of this Tribunal in the case of Dhampur Sugar Mills Ltd. v. C.C.E., Meerut in support of its contention that several registrations under Central Excise Rules would not make one factory different factories.
6. Learned DR, however, would contend mat appellant had a unit for jute manufacturing and a separate entity for manufacture of polyester yarn was set up and both were separately licensed (excise). He has also pointed out that generators in question, having been purchased earlier in the name of Mahabir Jute Mills Ltd. cannot be claimed by a subsequent polyester manufacturing facility as its. It is the contention of the learned DR that, in the present case, as the two lines of production are different, they should be treated as two factories.
7. It is clear from the record and submissions of both sides that there is only one juridical person in the present case, i.e. Mahabir Jute Mills Ltd. There is no separate legal standing for the yarn manufacturing facility, even though it is being referred to by the appellant as Mahabir Syntx. A perusal of the ground plan makes it clear that both lines of production are situated in the same factory premises and the generators are supplying electricity to both the lines of production. In this legal and factual situation, the finding in the order that the two units are separate entities cannot be upheld.
8. Coming to the claim for modvat credit, the specific provision in the Rule is for “a manufacturer” to take credit of duty paid on any input received “in the factory”. As we have already noted, there is only one manufacturer with two lines of production and one factory. Therefore, credit originally taken by the appellant was entirely in terms of the Rule and the lower authorities were in error in directing the appellant to return the credit amount.
9. In the light of what has been held above, the appeal succeeds and is allowed after setting aside the impugned order. Credit which was returned in cash by the appellant shall be returned to the appellant in cash.
(Dictated and pronounced in open Court)
