Judgment:
1. The short point for determination in this appeal is whether the benefit of Notification No. 175/86-C.E. was admissible to the appellants.
2. The facts of the case are that the appellants are engaged in the manufacture of co-extruded polyethylene film for packing milk. The product was exempt by Notification No. 231/82, dated 23-10-1982 and was classifiable under Tariff Item 15A(2) of the erstwhile Central Excise Tariff. With the introduction of the new Tariff, the appellants filed a classification list claiming classification of the product under sub-heading 3922.90 and also at the same time claiming the benefit of Notification 132/86. This classification list was approved by the Assistant Collector. The appellants applied for refund of Rs. 3,03,129.04 and the refund was sanctioned except for an amount of Rs. 55,676.76. This order of sanction of refund was reviewed by the Collector and an appeal was filed with the Collector (Appeals). The Collector (Appeals) held that the product was classifiable under sub-heading 3920.31. A show cause notice was issued to the appellants for recovery of the amount refunded erroneously. The Assistant Collector confirmed the demand. The Collector (Appeals) vacated the order of the Assistant Collector and remanded the case for de novo adjudication to decide the eligibility of Notification 175/86, dated 1-3-1986. The Assistant Collector rejected the request of the appellants claiming the benefit of Notification No. 175/86. The Collector (Appeals) upheld the order of the Assistant Collector and hence this appeal before us.
3. We have heard the submissions made by Shri J.S. Agarwal, learned Counsel for the appellants and Shri A.K. Madan, learned SDR.4. Broadly, the issue has been argued on three counts; No. 1. Whether the appellant was entitled to the benefit of Notification No. 175/86 as a SSI unit. It was argued before us that in terms of Para 4, the benefit of SSI exemption was not available to the appellants in view of the fact that the appellants during the material period was not in possession of a SSI Certificate as they got the SSI Certificate only on 27-6-1986. The appellants submitted that the proviso to Para 4 of the Notification No. 175/86, dated 1-3-1986 provides that the benefit of the Notification shall be admissible to a Unit if the total clearances of the Unit during the current financial year was not likely to exceed Rs. 7.5 lakhs or did not exceed Rs. 7.5 lakhs during the preceding financial year. The appellants represented that the admitted position was that the appellants were availing the benefit of Notification No.231/82, dated 23-10-1982 upto 28-2-1986 and since these clearances upto 28-2-1986 were not to be counted for the purpose of calculating the aggregate value of clearances for the financial year 1985-86, the only period for which clearances were to be calculated was the month of March, 1986. He submitted that the admitted position was that during the month of March, 1986, the aggregate cum-duty value of clearances amounted to Rs. 8,76,703.28. It was also argued that the appellant was sanctioned a refund of Rs. 1,71,197.22 by cheque and Rs. 76,254.56 in Modvat. Learned Counsel for the appellants, therefore, pleaded that for the purpose of determining value the relevant Section was Section 4(4)(d)(ii) that in terms of this Section, excise duty paid was deductable. Learned Counsel also referred to the judgment of the Apex Court in the case of Union of India v. MRF reported in 1995 (77) E.L.T.433 and submitted that if the amount of duty actually paid during the month of March, 1986 is deducted from the aggregate value of' clearances, the amount comes much below to Rs. 7.5 lakhs. He, therefore submitted that in terms of this proviso to para 4 of Notification No.175/86, the appellants were entitled to the benefit of this Notification.
5. We find that there is force in the arguments of the learned Counsel for the appellants. We also find that the total value of Rs. 8,76,703.28 has not been disputed. We also find that Rs. 1,71,197.22 was refunded by cheque and Rs. 76,254.56 was allowed as Modvat credit.
Thus payment of duty and the total value of clearances being inclusive of duty is not in dispute. Following the ratio of the Apex Court judgment in the case of Union of India v. MRF, we hold that the value of clearances during the financial year 1985-86 was less than Rs. 7.5 lakhs and hence we hold that the benefit of Notification No. 175/86, dated 1-3-1986 was admissible to the appellants.
6. The second point that was argued was whether duty was excludible from the aggregate value of clearances. Though this point has already been discussed in the preceding paragraph, to make the matter amply clear, we would like to record that in case the aggregate value of clearances is cum-duty price or inclusive of duty then both in terms of Section 4(4)(d)(ii) as also in terms of the law laid down by the Apex Court in the case of Union of India v. MRF, the duty paid is to be excluded for arriving at the aggregate value of clearances for the purpose of allowing the benefit of Notification No. 175/86. In the instant case, there is no dispute about the aggregate value being inclusive of duty. However, from the facts on record, we find that duty was actually paid and refunded. We hold that in the circumstances mentioned above, duty paid and its inclusion in the aggregate value is proved and in the circumstances, we hold that duty shall be deductible or excluded from the cum-duty value.
7. The third point that there was a claim for exemption of waste.
However, this point was not pressed before us. Therefore, we do not like to go into this question. In view of the above finding, the appeal is allowed and the impugned order is set aside. Consequential relief, if any, shall be admissible in accordance with law.