Full Judgment
2. The appellants were engaged in the manufacture of mechanism tape recorders, stereo cassette players, cassette amplifier and speakers system. During the financial year 1985-86, they were availing exemption under Notification No. 83/83 and their value of clearances in the financial year 1985-86 had exceeded Rs. 7.5 lakhs. They filed classification list claiming exemption from 1-4-1986 onwards, which were approved by the Asstt. Collector denying the small scale exemption and subsequently, a show cause notice was issued in the approved classification list, normal rate of duty had been approved. Taking into account the meaning of the relevant date in Section 11 A of the Central Excises and Salt Act, 1944 and taking note of the fact that the value of clearances had exceeded Rs. 7.5 lakhs during the financial year 1985-86, the demand of Rs. 59,329.50 for the period April, 1986 to November, 1986 was confirmed by the Asstt. Collector under his order dated 6-7-1988. The appellants had obtained small scale registration from 15-1-1987. The order of the Asstt. Collector of Central Excise was confirmed by the Collector of Central Excise (Appeals), New Delhi.
3. We have heard Shri J.S. Agarwal, Advocate for the appellants and Shri M. Jayaraman, JDR for respondent/Revenue.
4. The ld. Advocate stated that the appellants during the relevant time had no SSI registration and it is also not disputed that during the financial year 1985-86 their value of clearances had exceeded Rs. 7.5 lakhs. It was his submission that as during the year 1986-87 their value of clearances did not exceed Rs. 7.5 lakhs, they were eligible for the small scale exemption even when during the year 1986-87 they had no SSI Registration. He stated that the expression used in the Proviso (a) to para-4 of the Notification No. 175/86 C.E., dated 1-3-1986 was "or" and should be read as "and". He referred in support of his proposition to the following decisions:-Jodhpur P.N. Industries Pvt. Ltd. v. CCE, Shillong -1988 (35) E.L.T. 230 (Tribunal).Consolidated Petrotech Industries Ltd. v. Collector of Customs -1992 (57) E.L.T. 81 (Tribunal) andShibani Engg. Systems v. Collector of Customs, Bombay - 1992 (62) E.L.T. 463 (Tribunal).
5. In reply, Shri M. Jayaraman, JDR stated that once the value of clearances from a factory had exceeded Rs. 7.5 lakhs during the preceding financial year, then there was no question of extending the benefit of small scale exemption to a unit which was not a undertaking registered with the Director of Industries. In case a unit have any value of clearances during the preceding financial year then the benefit of small scale exemption would be extended only when the value of clearances during the current financial year was not likely to exceed Rs. 7.5 lakhs. In his view Proviso was very clear and there was no dispute that the appellants were not a small scale unit and their value of clearances during the preceding financial year had exceeded Rs. 7.5 lakhs and the Department had not interpreted the expression "or" as "and" there were two different situation covered by the Proviso and thus, the case law cited by the appellants' Counsel is not applicable to the facts. He further mentioned that once the first condition was not fulfilled then it was not required to go through the clearances from the current financial year.
6. We have carefully considered the matter. Para-4 in so far it is relevant to the present proceedings is extracted below : "The exemption contained in this notification shall be applicable only to a factory which is an undertaking registered with the Director of Industries in any State or the Development Commissioner (Small Scale Industries) as a small scale industry under the provisions of the Industries (Development and Regulation) Act, 1951 (65 of 1951). Provided that nothing contained in this paragraph shall be applicable : (a) in a case where the value of clearances from a factory during the preceding financial year or in the current financial year did not exceed or is not likely to exceed rupees seven and a half lakhs; or 7. There is no dispute in these proceedings that the appellants were not a small scale unit and were not registered with the Director of Industries or the Development Commissioner during the period April, 1986 to November, 1986, the period of which the present proceedings relate. It is also an admitted position that during the preceding financial year 1985, their value of clearances had exceeded Rs. 7.5 lakhs in terms of Proviso (a) under para-4 of the Notification No.175/86 C.E., dated 1-3-1986 as amended. In a case where the value of clearances from a factory during the preceding financial year did not exceed Rs. 7.5 lakhs then it was not necessary that their should be registration with the Director of Industries or the Development Commissioner. Once the value of clearances had exceeded Rs. 7.5 lakhs then the benefit of Notification No. 175/86-C.E. could only be extended when the factory was undertaking registered with the Director of Industries.
8. The appellants have claimed that although in the preceding financial year their value of clearances exceeded Rs. 7.5 lakhs during the year 1986-87 to which the demand relates, their value of clearances did not exceeded Rs. 7.5 lakhs and therefore, they were eligible for small scale exemption even when they were not an undertaking registered with the Director of Industries or the Development Commissioner. The relevant provisions have already been extracted above.
9. The ld. JDR had submitted that once the first condition about the value of clearances during the preceding financial year was not satisfied, it was not current financial year and that the exemption notification has to be interpreted and applied for the clearances during the current financial year on the basis of the performance during the preceding financial year . We find that if the interpretation as convassed by the appellants is accepted then irrespective of the value of clearances during the preceding financial year, a unit could avail the benefit of small scale exemption without SSI Certificate in the current financial year on the ground that their value of clearances was not likely to exceed Rs. 7.5 lakhs. The value of clearance during the current financial year will be applicable only when there were no clearances during the preceding financial year or the clearances did not exceed Rs. 7.5 lakhs during the such preceding financial year.
10. The Collector of Central Excise (Appeals) in para-5 of her order had observed as under:- "5. I have considered the submissions made by the appellants along with the relevant case records. A plain reading of Clause (4) of Notification No. 175/86 indicates that for availing exemption during the current year a SSI registration certificate is necessary if the value of clearances during the preceding year exceeds Rs. 7.5 lakhs.
Proviso (a) to para (4) makes it abundantely clear that a SSI Certificate is necessary if any of the three conditions mentioned therein is not fulfilled. Fact remains that in the appellants' case their clearances during 1985-86 exceeded Rs. 7.5 lakhs and hence in the absence of a SSI Certificate they are not eligible for exemption during 1986-87 and their classification list was also approved accordingly. Thus the pleas of the appellant is not acceptable. In fact, their value of clearances during the current year i.e. 1986-87 being less than Rs. 7.5 lakhs will have bearing on their entitlement to exemption during the subsequent year i.e. 1987-88 as far as their SSI registration certificate is concerned. The impugned order is correct in law as also on facts. I find no merits in the appeal. In the result, the appeal is rejected." 11. The appellate authority had taken a view that as the appellants' clearances during 1985-86 had exceeded Rs. 7.5 lakhs in the absence of a SSI Certificate they were not eligible for exemption during 1986-87.
The present proceedings are for the period April, 1986 to November, 1986 and the appellants had obtained SSI Certificate from 15-1-1987.
12. The ld. Advocate had submitted that the Department had interpreted the expression in the provisions "or" as "and" that both the conditions with regard to preceding financial year and the current financial year were independent and as they satisfied the value limit in the current financial year, irrespective of their value in the preceding financial year, they should be eligible for the exemption under this Notification. We do not find that such an interpretation reading "or" as "and" had been placed by the adjudicating authority or the appellate authority, the matter had been decided only on the basis that once the value of clearances during the preceding financial year had exceeded Rs. 7.5 lakhs, it was not necessary and it was not required to look into the likely value of clearances in the current financial year.
13. In view of the above discussion, we do not find any infirmity in the view taken by the adjudicating authority and appellate authority.
14. As a result, there is no merit in this appeal and the same is rejected. Ordered accordingly.