Judgment:
1. M/s. Himachal Oxygen Pvt. Ltd. has preferred this appeal being aggrieved with the Order-in-Original No. 13/C.E./93, dated 30-7-93 passed by the Collector of Central Excise, confirming the demand of Central Excise duty amounting to Rs. 12,88,971.18 and imposing a penalty of Rs. 6 lakhs on the appellants.
2. Shri K.K. Anand, learned Advocate, submitted that the appellants manufacture Oxygen and Nitrogen gases filled in cylinders falling under sub-heading Nos. 2804-11 and 2804.90 of the Schedule to the Central Excise Tariff Act respectively; that the appellants were initially registered as a medium scale industry with the Directorate General Technical Development (DGTD) under registration dated 16-7-85; that since the installed plant and machinery was less than Rs. 35 lakhs they got their registration as medium scale industry cancelled and obtained SSI registration certificate dated 7-12-90 from the General Manager, District Industrial Centre in Himachal Pradesh; that this registration certificate was valid from the date of commencement of production i.e.
6-4-87; that their SSI registration certificate was cancelled by the Director of Industries, Himachal Pradesh, under letter dated 24-2-92; that however, the High Court of Himachal Pradesh under Order dated 1-9-92 in C.W.P. No. 206/92 set aside the said fetter of cancellation with liberty to the Director of Industries to pass another Order after giving them an opportunity of hearing; that the Director of Industries under letter dated 19-10-92 intimated to the General Manager, District Industries Centre, Nahan, and a copy endorsed to the Collector of Central Excise, Chandigarh that the registration earlier granted to the appellants' unit under Small-Scale Sector has been held to be valid and they would be entitled to all the incentives and facilities admissible to Small-Scale Industries for the entire period. The learned Advocate, therefore, contended that once the competent authority issued the registration certificate as SSI unit the registration issued to them is valid w.e.f. April, 1987 and the Revenue cannot deny them the benefit of exemption under Notification No. 175/86-CE., dated 1-3-86. He relied upon the decision in the case of CCE, Kanpur v. Agra Leather Goods Pvt.
Ltd., 2000 (39) RLT 674 (CEGAT) wherein it was held that once the appellant's unit was registered with the Director of Industries, the benefit of notification cannot be denied unless the registration is set aside by the Director of Industries. The benefit cannot be denied on the ground that the Department suspected about the value of plant and machinery. Finally, he relied upon the decision in the case of CCE, Indore v. Dhar Cement Ltd., 2000 (121) E.L.T. 720, wherein it was held that once the assessee produced proof of licensed capacity it was not open to the Revenue to deny the benefit of the notification by substituting his own concepts for the expression licensed capacity in the notification. The learned Advocate also mentioned that as far as the charge of suppression of production is concerned he is not challenging the same.
3. Countering the arguments, Shri Jagdish Singh, learned DR, submitted that it is not in dispute that the appellants' unit was registered with the DGTD since July, 1985; they had applied for SSI registration only in 1990 and the certificate of registration as SSI unit was granted to them only on 7-12-90. The mere fact that the Industries Department has clarified that the SSI registration is deemed to be valid from 6-4-87 i.e. date of commencement of commercial production will not make them eligible for the benefit of Notification No. 175/86 as neither they were registered with the Director of Industries during the relevant period nor they have even applied for the registration with the Director of Industries as a SSI unit; that on the other hand their request for the cancellation of their registration with the DGTD was turned down under letter dated 20-6-91 on the ground that the investment on plant and machinery was over the limit for the Small-Scale Units; that during the relevant period the only registration that they had was the one granted to them by the DGTD which does not make them eligible for exemption under Notification No.175/86; that they are, therefore, liable to central excise duty till the day their factory was registered as SSI under the provisions of the Industries (Development and Regulations) Act, 1951. The learned DR finally submitted that in all the decisions relied upon by the learned Advocate for the appellants the SSI registration had been duly issued by the competent authority and the Department wanted to deny the exemption on the ground that they have exceeded the limit of capital investment on plant and machinery whereas in the present matter they were admittedly registered with the DGTD during the relevant time and not with the Director of Industries.
4. We have considered the submissions of both the sides. The period involved in the present matter for which the demand has been confirmed is from 1987-88 to 1989-90. The demand has been confirmed on the ground that the appellants had deliberately suppressed the production which has not been challenged in the present proceedings. It has also not disputed by the appellants that they were registered with DGTD as a Medium Scale Industry during the relevant period. Paragraph 4 of the Notification No. 175/86 provides as under :- "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 Regulations) 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 (b) in a case where a manufacturer who is manufacturing specified goods in a factory, other than a factory which is registered under the Industries (Development and Regulations) Act, 1951 (65 of 1951), with the Directorate General of Technical Development in the Ministry of Industry, has been availing of the exemption under this notification or any of the notifications specified below during the preceding financial year:" 5. It is clear from this Paragraph 4 of the notification that for the purpose of availing the benefit of notification the factory should be registered with the Director of Industry or the Development Commissioner (Small-Scale Industry) as a Small-Scale Industry. Proviso to Paragraph 4 contains two exceptions to the effect that registration as SSI is not necessary in a case where the value of clearance is less than Rs. 7.5 lakhs or in a case where a manufacturer was availing exemption under the specified notification subject to the condition it was not registered with the Director General of Technical Development.
The case of the appellants is not covered by the proviso since it has not been claimed by them that their clearances during the preceding financial year or financial year for which demand has been confirmed did not exceed Rs. 7.5 lakhs. They have also not claimed that they were availing the benefit of this notification or any of the specified notification during the preceding financial year. On the other hand they fall within the exception mentioned in clause 'B' of proviso to paragraph 4 inasmuch as they were registered with the DGTD. The learned Advocate for the appellants have not controverted the submissions made by the learned OR that they had not even applied for registration as SS1 unit during the relevant period. In fact, on a query from the Bench, the learned Advocate mentioned that they had applied for registration as SSI in 1990 only and the certificate was issued to them on 7-12-90. In view of these facts the mere fact that General Manager, District Industries Centre clarified that the certificate is recognized from 6-4-87 the date of commencement of production is not sufficient for the purpose of availing the benefit under the Notification No.175/86. During the material period the appellants have not satisfied any of the conditions mentioned in Paragraph 4 of the notification. The Tribunal has taken the view that the benefit of SSI exemption will be available to a unit only from the date of making an application to the Director of Industries during the relevant period. The learned DR has rightly distinguished all the decisions relied upon by the learned Advocate. For instance in the case of Union Quality Plastics Pvt. Ltd. the appellants had a valid certificate and in view of this the Tribunal observed that the proper course for the Department could have been to place all the facts that had given rise to the notice of the Department before the concerned authority who had issued a certificate. As in the present matter there was no certificate issued during the relevant period the question of referring the matter to the concerned authority does not arise. We, therefore, find no reason to interfere with the impugned Order, We accordingly reject the appeal filed by the appellants.