Page 194 - ELT_1st July 2020_Vol 373_Part 1

104 EXCISE LAW TIMES [ Vol. 373

Rs. 7,51,833/- which has been confirmed by the Learned adjudicating authority,
an amount of Rs. 2,05,601/- pertains to demand on CCC which the department
itself has classified under Chapter Heading 3403 as well as under 2710. Products
under both these headings are eligible for exemption under notification
287/1986. Therefore, the demand to that extent does not sustain. As far as the
balance demand of Rs. 5,46,232/- is concerned, it is on CFC on account of club-
bing together the turnover of VIPPL with the turnover of VIPI, Newton and AEI.
Learned Counsel would submit that VIPI had a separate SSI registration and
they are also registered under Andhra Pradesh Sales Tax during the period. Simi-
larly both Newton and AEI had separate AP Sales Tax registration. Therefore, the
clubbing of turnover by these organisations with that of VIPI is incorrect and
therefore, demand on this count needs to be set aside. Countering these argu-
ments, Learned Departmental Representative submits that as far as the demand
with respect to CCC is concerned, the adjudicating authority has clearly
discussed as to why the exemption under Notification No. 287/86-C.E., dated
5-5-1986 is not applicable to the product. He would draw the attention of the
bench to this notification which reads as follows :
“In exercise of the powers conferred by sub-rule (1) of Rule 8 of Central
Excise Rules, 1944, the Central Government hereby exempts speciality oils
falling under sub-heading No. 2710 or 3403 of the Schedule to the Central
Excise Tariff Act, 1985....”
8. There is an explanation at the bottom of the notification which says,
“for the purposes of this notification, ‘speciality oil’ means any preparation made
by blending or compounding of mineral oils (falling under Chapter 27 of the
Schedule to the Central Excise Tariff Act) with other oils or any other substance
and is intended for industrial uses (other than for use as lubricant) and of which
lubrication function, if any is only secondary in nature.” He would submit that
neither the CFC nor the CCC confirm to this description of speciality oils in the
notification. Unless the product is speciality oil, the same will not be entitled to
the exemption. The exemption being an exception to the general rule should be
construed strictly with any benefit of doubt being given to the revenue. He
would submit that the CCC goes out of the definition of speciality oil as envis-
aged in the notification.
9. Regarding the balance demand of Rs. 5,46,232/-, he would submit
that VIPPL was a private limited company and VIPI is an individual firm operat-
ed by one of the Directors of VIPPL. Both Newton and AEI are dealers of VIPPL.
As dealers, they have obtained their own sales tax registration. None of these
agencies except VIPPL had any manufacturing facility. The entire manufacturing
was taken place in the premises of VIPPL only. Mere book entries were made
and invoices were being raised to show some of the goods as having been manu-
factured by the other three entities. Therefore, they are merely sham entities and
their turnover must be clubbed with the turnover of VIPPL and duty must be
demanded accordingly. Merely because they got themselves registered as SSI
units and have raised separate invoices, their turnover cannot be different. What
is important is who the actual manufacturer was, which in this case, is VIPPL.
10. Countering these arguments Learned Counsel for the appellants
submit that the department themselves have admitted that VIPI is separate entity
and had issued second Show Cause Notice No. 184/94 to VIPI. He draws the
attention of the Bench to Para 8 of this show cause notice which reads as follows :

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