P.C. Jain, Member (T)

1. These are two appeals transferred to the Tribunal in terms of Section 35P of the Central Excises Salt Act, 1944.

2. One appeal has been filed by the assessee M/s Prithvi Plastic Packaging and the other appeal has been filed by the department. The impugned order is that of Central Board of Excise Customs passed by it on appeal by the assessee against Collector of Central Excise, Baroda's order-in-original. Brief facts, in so far material, are as follows :

3. The assessee is manufacturing H.D.P.E. Granules either on its own or on the basis of granules supplied by another proprietary concern Prithvi Polymers on job basis. Thereafter the fabric is cut into shape and size and then stitched into HDPE sacks. In the financial year 1979-80 till around August 1979, the assessee had been manufacturing HDPE fabrics and sacks in the same premises at 42, Industrial Estate, Vatva. Later on, it transferred the stitching operation of the cut to shapes and size fabrics to another premises at C-l/19, Vatva where stitching was done by the two persons employed by the assessee as contractors. The contractors were doing the stitching of the sacks on job basis after payment of a specific amount per unit of sack stitched. Collector's order-in-original clubbed the production of all the 3 units namely that of the assessee, Prithvi Polymers and of the contractor on the ground that all these units are one and the same, working for and on behalf of the assessee, in so far as the manufacturer of HDPE sacks is concerned.

On appeal, Central Board of Excise Customs modified the order of the Collector only to an extent that the production of HDPE sacks by or on behalf of Prithvi Polymers cannot be clubbed with the production of sacks by the assessee. Since the former unit was held to be a separate entity from that of the assessee. In so far as the unit at C-l/19, Vatva was concerned, it was held by the Board that stitching of sacks at that unit is nothing but a dispersal of its manufacturing activity by the assessee and therefore, clubbing of the production of the two units i.e. of the assessee and of the unit at C-l/19, Vatva was confirmed. Effect of this order-in-appeal was reduction of duty liability of the assessee during the financial year 1979-80 from Rs. 101279/- to Rs. 66907.32p. Order-in-appeal passed by the Board was received by the Collector on 25.8.81. A review show cause notice dated 14.7.82 under Section 36 as it existed before 11.10.82 was issued by the Central Government to the assessee asking it to show cause as to why the order-in-original of the Collector be not restored; the said show cause notice was received by the assessee on 18.7.82.

4. The assessee has urged that so far as the show cause notice issued by the Central Government is concerned, it is clearly time barred in terms of third proviso to Section 36(2) inasmuch as it has been issued after six months of the date of communication of the impugned order to the Collector of Central Excise, Baroda. This position is now well settled in view of the judgment of larger Bench reported in 1986(7) ECR 461. This judgment clearly holds that the subject period prescribed in Section 11A regarding recovery of non-levy of short-levy must apply to review show cause notices issued under the third proviso to Section 36(2) even if Section 11A had not been brought into force. In this case when the impugned order was issued, Section 11A had already been brought into force. Therefore, we hold that the review show cause notice issued by the Government is time barred since it sought to enhance the short levy allowed by the impugned order. Effect of this finding, therefore, would be that Prithvi Polymers and the assessee are two separate units. Department's appeal, therefore, is rejected as time barred.

5. On its appeal, learned Consultant for the assessee submitted that the impugned order has not taken into account its specific plea that the unit is--undertaking only stitching o