1. This is an appeal filed by the Department against the order of Collector of Central Excise (Appeals), Chandigarh dated 30-4-1991.
2. Learned DR stated that the respondents are engaged in the manufacture of Moped Tubes. In this case, the respondents had claimed benefit of Notification No. 231/85, dated 11-11-1985 in respect of the tyres and tubes. However, this was a conditional notification and one of the conditions related to the value of clearance. According to the Department, they had not satisfied this condition. The aforesaid notification had been amended by an amending Notification No. 42/89, dated 1-3-1989. The explanation added by this amending notification changed the basis of calculation of value for purpose of clearance. The learned Collector (Appeals) has granted benefit of this amendment even for the period prior to 1-3-1989. Whereas according to the department the benefit could be extended only with effect from the date of issue of notification and onwards.
3. Learned Counsel drew attention to the discussion and finding of the Collector (Appeals) and stated that even without this amendment notification and prior to it the benefit could be extended on the same basis namely by way of exclusion of the value of the tyres and tubes on which they were enjoying the exemption.
4. Since according to them these goods are non-excisable, therefore, they could even otherwise not been taken into account for the purpose of this notification.
5. It was also their contention that the Notification No. 48/89 was a separate notification which applies only to small scale industries and was not relevant and was redundant.
6. Learned DR, in response to a question from the Bench, stated that Notification No. 42/89 was an amending notification which amended the previous Notification 231/85 and came in force with effect from 1-3-1989.
7. Learned Counsel stated that Notification No. 231/85-C.E., dated 11-11-1985, even before its amendment vide Notification No. 42/89-C.E., dated 1-3-1989 whereunder Explanation No. 1 was added, was intended to grant concessional rate of duty to Tyres, Tubes and Flaps of motor vehicles falling under Chapter 40 of the Schedule to the CETA, 1985 and value of clearance of cycle tyres and tubes which are fully exempted from duty was not to be taken into consideration while computing the aggregate value of clearances either under the first proviso or the 2nd proviso of the said notification as will be borne out from the following submissions.
8. Before issuance of the above said Notification No. 231 /85 the superseded Notification No. 65/81-C.E., dated 25-3-1981 (as amended) granted concessional rate of duty for tyres of motor vehicles falling under Item 16(1)(I) only. The tyres and tubes for cycle were classifiable under Item 16(1)(II). No exemption was, however, available under the said notification to tyres of two wheeled motor vehicles.
(Tyre including inner tube and flap). The Notification No. 231/85 was issued to extend the concessional rate of duty to tyres for two wheeled motor vehicles. Instead of superseding the Notification No. 65/81 the purpose would have been served by the deleting the exclusion clause from the opening para of the notification as except for this change, Notification No. 231/85 is the reproduction of Notification 65/81.
Notification No. 231/85 exempts tyres, tubes and flaps falling under Chapter 40 of the Schedule from so much of the duty of excise leviable thereon as is in excess of 50% of the rate of duty leviable on the said goods. It presupposes that some duty is leviable on the tyres, tubes and flaps on which rate of that duty upto 50% has been exempted vide said Notification No. 231 /85. Thus, cycle tyres and tubes which were wholly exempted from duty leviable under Section 3 of the Central Excises and Salt Act, 1944 cannot, by any stretch of imagination, be the subject-matter of the said Notification No. 231/85. As such, the value of clearance of cycle tyres and tubes is out of the purview of the said notification. The position becomes more explicit from the reading of paras 2 and 3 of the Notification No. 231/85 which deals with the computations of aggregate value of clearances of goods in the case of a manufacturer who had not cleared the said goods in the preceding financial year or has cleared the said goods for the first time on or after the first day of August. In the said paras for computing the aggregate value of clearances, the value of "the said goods" have been used which refers to the value of tyres and tubes and flaps as mentioned in the opening para of the Notification No. 231 /85 that is to say on which some duty was leviable. As such, value of cycle tyres and tubes exempted from duty is not to be taken into account while computing aggregate value in case of the said manufacturers.
Thus, there could not be different criteria under the same notification for those who had cleared the said goods during the preceding financial year and for those who had not cleared the said goods during the preceding financial year. Although there was no ambiguity and the position was clear in the Notification 231 /85 regarding non-inclusion of value of clearance of cycle tyres and tubes, for computing the aggregate value of clearances, Explanation No. 1 was added vide Notification No. 42/89-C.E., dated 1-3-1989 to remove certain unfounded doubts raised by the Departmental Officer and the audit parties.
9. Learned Counsel cited the following case law in support of his contentions :- (a) Indian Aluminium Co. Ltd. v. CCE, Cochin reported in 1995 (79) E.L.T. Ill (Tribunal).
(b) J.K. Synthetics Ltd. v. CCE reported in 1996 (17) RLT 98 (Tribunal).
11. We have considered the above submissions. We observe that the language of the notification is important and there are several conditions which are required to be satisfied. For better appreciation, the Notification 231/85-C.E., dated 11-11-1985 is reproduced below :- "In exercise of the powers conferred by Sub-rule (1) of rule 8 of the Central Excise Rules, 1944, and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 65/81-Central Excise, dated the 25th March, 1981, the Central Government hereby exempts tyres, tubes and flaps, falling under Chapter 40 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), (hereinafter referred to as "the said goods"), from so much of the duty of excise leviable thereon under Section 3 of the Central Excises and Salt Act, 1944 (1 of 1944), as is in excess of the amount calculated at the rate of 50% of the rate of duty leviable on the said goods under the said schedule, read with any other notification issued under Sub-rule (1) of rule 8 of the said rules and in force for the time being: Provided that the aggregate value of first clearances of the said goods, for home consumption at the concessional rate of duty in terms of notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 65/81-Central Excises, dated the 25th March, 1981, and at the reduced rate of duty as specified in this notification - (i) by or on behalf of a manufacturer, from one or more factories; or (ii) from any factory, by or on behalf of one or more manufacturers, shall not exceed, in either case, rupees fifty lakhs in any financial year: Provided further that the exemption contained in this notification shall be applicable, - (i) to a manufacturer if the aggregate value of clearances of tyres, tubes and flaps, falling under the said Chapter 40, for home consumption, by him or on his behalf, from one or more factories, during the preceding financial year, had exceeded rupees two crores; (ii) if the aggregate value of clearances of the tyres, tubes and flaps, falling under the said Chapter 40, from any factory, for home consumption, by or on behalf of one or more manufacturers during the preceding financial year, had exceeded rupees two crores: 2. Where a manufacturer has not cleared the said goods in the preceding financial year or has cleared the said goods for the first time on or after the first day of August in the preceding financial year, the exemption contained in this notification shall be applicable to such manufacturer if he makes a declaration with the Assistant Collector of Central Excise that the aggregate value of clearances of the said goods by him or on his behalf, for home consumption, from one or more factories, during the financial year, is not likely to exceed rupees two crores and the aggregate value of clearances of the said goods cleared during the financial year does not exceed rupees two crores.
3. Where the said goods have not been cleared from any factory in the preceding financial year or have been cleared for the first time on or after the first date of August in the preceding financial year, the exemption contained in this notification shall not be applicable, if the aggregate value of clearances of the said goods from such factory, for home consumption, by or on behalf of one or more manufacturer exceeds rupees two crores during the financial year." 12. It would be seen from the above that the first para itself requires this notification to be read with any other exemption notification; And, the first proviso specifically refers to the need for calculating the aggregate value with reference to Notification No. 65/81 as well as this notification (taken together). Therefore, monitory limits prescribed in the second proviso are required to be seen in the above context and calculated accordingly.
13. (The same is true of paras 2 & 3 but, we are not concerned with the same here). It is clear from a plain reading of the above provision that insofar as this particular notification is concerned, the value of all excisable goods, whether dutiable or exempted, are required to be taken into account particularly in view of a specific mention of other exemption notifications and the explicit requirement to take them into account.
14. In view of the above clear position, which is evident ex facie, the case law cited by the learned Counsel does not advance their cause and the cases are even otherwise distinguishable.
15. Learned DR's contentions have, therefore, strong force. He has rightly pointed out that Notification No. 42/89, dated 1-3-1989 being a fresh notification, was prospective in character and therefore, the benefit of the explanation was available only with prospective effect and was not available to clearances of the preceding period (November & December, 1985); The case law cited by him buttresses the Department's case and insofar as prospective character of notification is concerned, the Hon'ble Supreme Court judgment reported in 1995 (77) E.L.T. 32 (S.C.) has been rightly relied upon. Therefore, learned Collector has erred in giving retrospective effect in this regard.
16. Before parting, we may make it clear that the term 'clearance' in Central Excise refers to removal of the goods from approved premises in accordance with law and it is immaterial whether the goods were dutiable or not during a particular period There is no warrant for considering that the term 'clearance' refers to removal of only dutiable goods and not exempted goods, as inter alia, even exempted goods remain excisable goods even though by virtue of a particular notification, no duty may be payable during a particular period and in fact, excise provisions contain rules and procedures not only in respect of declaration, storage and removal of dutiable or exempted goods but even other goods. Therefore, learned Collector's order is apparently based on a mis-conception about 'clearance'. In any eventuality, in a notification which specifically covers exemption to excisable goods and thereafter prescribes the limit referring explicitly to other notifications as well, all excisable goods are required to be taken into consideration for the purpose of seeing whether the conditions prescribed therein were duly fulfilled. Similarly, clearance has nothing to do with sale or, for any consideration and refers to physical removal for whatever purpose and whatever consideration irrespective of whether sale was involved or not.
17. The impugned order is, therefore, set aside and the appeal is accepted.