Judgment:
1. The issue in the appeal relates to demand of duty in respect of solvent cement which was supplied free along with pipes by the appellants.
2. The learned Counsel has pleaded that the appellants have been given the benefit of Notification No. 89/79 dated 1.3.1979 in respect of these supplies. The factual position that these goods were manufactured on the machinery the value of which was less than Rs. 10 lacs has been accepted for the period prior to the period in question before us and also for the period subsequent to the said period. She has urged that the ratio of the decision of the Tribunal in the case would apply to the facts of this case. She has in this connection, cited the order of the Tribunal bearing No. 167/1988-D. She has pleaded that the Tribunal in that case had taken note of the scope of proviso to Notification.
Her plea is that notwithstanding the total value of the machinery installed in the industrial unit being over than Rs. 10 lacs, the limit set out in the Notification, the benefit would be available so long as they are able to establish that the machinery which was utilised for the purpose of manufacture of the goods was valued less than Rs. 10 lakhs. The Tribunal in the order has followed the ratio of the decision of the Delhi High Court in the case of M/s. Devi Dayal Electronics and Wires Ltd. v. UOI reported in 1989 (23) ECR 256 (Bom.) : 1984 (16) ELT (Bom.) (sic) and while passing the order they also took note of the decision of the Andhra Pradesh High Court and the Tribunal has tried to read the two decisions harmoniously and has laid down a basis as to how the value of the machinery for the purpose of Notification has to be arrived at. She has pleaded that the Tribunal has held that the machinery which is utilised anywhere in the unit for the manufacture of goods in the factory will have to be taken into consideration for arriving at the value for the purpose of Notification and if that basis is adopted the appellants would be eligible for the benefit of the Notification in question. She also urged that the value adopted for the purpose of levy of duty is higher and that the stray sales made could not form the basis for arriving at the assessable value. She has in this connection referred us to the terms of the contract under which the appellants are required to pay Rs. 32 per kg. for any loss or shortage of the solvent cement. This would show that the value as agreed to between the buyer and the appellants was Rs. 32 per kg. She has however pleaded that the appellants in any case would be eligible for the benefit of Notification 201/79, i.e. in respect of the raw material utilised for the manufacture of the solvent cement 4. We have considered the pleas made by both sides. We observe that for the purpose of the benefit of the Notification, the proviso to the Notification is to be considered and the same is reproduced below for convenience of reference: Provided that an officer not below the rank of an Assistant Collector of Central Excise is satisfied that the sum total of the value of the capital investment made from time to time on plant and machinery installed in the industrial unit in which the said goods under clearance, are manufactured, is not more than rupees ten lakhs.
A plain reading of the Notification shows that the sum total of the value of the capital investment made from time to time on the plant and machinery installed in the industrial unit notified goods are produced is required to be taken into reckoning for arriving at the value limit of the machinery for the purpose of the Notification. The appellants plea is that the value of the machinery in which the goods in question are produced alone should be taken into consideration. The appellants have pressed into service the decision of the Tribunal which is based on the judgement of the Bombay High Court. We have perused the judgement and we find in that case that there were a number of buildings in the industrial unit and in each of these buildings the machinery for production of different goods had been installed and the operations carried out in these buildings were independent and even the workers account of provident fund, their attendance, etc. were also taken care of separately in all the respective units. It was in this background that the Bombay High Court held that each of the buildings will have to be treated as a separate factory for the purposes of the Notification No. 74/78, the Notification in question in that case. The value of the machinery to be taken into consideration would be the machinery installed in a particular building. The appellants have not been able to say that the facts in the case of the appellants are similar to the facts so far as the set-up of the industrial unit is concerned. There is no plea that these goods were produced in a separate building and that they were functioning as a separate factory as set out in the judgement of the Bombay High Court. We are therefore of the view that the ratio of this decision is not applicable and the ratio of the decision which is applicable is that of the judgement of the Andhra Pradesh High Court which is also cited in the decision of the Tribunal in the case of Golden Press v. CCE . The Hon'ble High Court in that case has upheld the suggestion that the value of the machinery that is used for the manufacture of the particular goods alone should not be taken into consideration and has held as follows: The contention of the learned Counsel for the petitioner is that, these three machines are not used for manufacturing printed cartons and must therefore be excluded, his contention is that, while determining the value of the machinery for the purpose of exemption Notification No. 176/1977, the value of only that machinery which is used for the purpose of manufacturing that particular class or line of goods, should be taken into account. His submission is that, the goods classified under each tariff item are different goods, the manufacture whereof requires a different licence and, therefore, if in a given factory, goods dutiable under different tariff items are manufactured, the value of the machinery should be allocated as between them for the purpose of the aforesaid exemption Notification. We do not find any warrant for placing such a construction upon the exemption Notification. The language of the exemption notification is very. It says "the sum total of the value of the capital investment made from time to time on plant and machinery installed in the industrial unit in which the goods under clearance are manufactured is not more than Rs. 10 lakhs." Accordingly, the total value of the entire machinery in the industrial unit should be taken. There is no room or occasion for allocating the machinery between various goods manufactured therein.
In fact, such a course may present complicated questions of allocation. Take for example a factory manufacturing goods falling under more than one tariff item, but there is only one generator, or power plant. How is the value of the generator or power plant to be allocated between two items? Be that as it may, in the face of the clear language of the notification, there is no room for advancing such a contention. It must, therefore, follow that the Col lector of Central Excise was justified in holding that the value of the machinery during the aforesaid period exceeded Rs. 10,00,000/- and, therefore, the petitioner is not entitled to the benefit of the exemption Notification No. 176/1977, for the period 18.6.1977 to 12.12.1977. The appellants plea in regard to the benefit of notification cannot be accepted as the sum total value of the plant and machinery installed in the industrial unit was more than Rs. 10 lakhs. In regard to valuation we observe that the compensation to be paid by the appellants for any loss or shortage cannot form the basis for arriving at the assessable value. In the present case, there is a price available at the factory gate for sale of the goods and the learned lower authority has rightly adopted the value. We dismiss this plea of that appellant. In regard to benefit of Notification No. 201/79, we observe that this plea neither was taken before the learned lower authority nor the same has been taken in the grounds of appeal before us. Since the availability of the benefit is contingent upon the verification of the facts which facts are not brought on record, we are unable to accede to the plea for permission for consideration of this fresh plea of the appellants by the learned lower authority. In this view, we find no force in the pleas made before us and we dismiss the appeal.