Full Judgment
2. Shri S. Madhavan, learned Chartered Accountant, submitted that M/s.
Nirula Corner House Ltd. a SSI unit, used to manufacture ice-cream in the factory premises now occupied by the Appellants; that M/s. Nirula Corner House Ltd. (NCHL in short) were discharging duty liability during 1998-99 without availing the benefit of Notification No. 8/98 as their aggregate value of clearances in the preceding financial year had exceeded Rs. 3 crores; that with effect from 22-8-1998, they commenced manufacture of ice-creams after taking over the premises under a lease agreement with M/s. NCHL and started availing of the benefit of exemption under Notification No. 8/98-CE.; that four show cause notices had been issued to them for denying the benefit of the notification as condition Nos. (iv) and (vi) of Para 2 of the notification were not satisfied by them; that the Deputy Commissioner, under Order-in-Original Nos. 65-68/2000, dated 31-3-2000, denied the benefit of the notification since the clearances of NCHL effected during the period 1-4-98 to 21-8-98 had exceeded the exemption slab of Rs. 100 lakhs; that the Commissioner (Appeals) also, under the impugned Order, has rejected their appeal.
3. The learned Chartered Accountant, further, submitted that condition (vi) of Para 2 of the Notification No. 8/98 reads as under :- "2. The exemption contained in this Notification shall apply only subject to the following conditions, namely :- (vi) Where the specified goods are cleared by one or more manufacturer from a factory, the exemption shall apply for the total value of clearances mentioned against each of the serial numbers in the said table and not separately for each manufacturer." He contended that this condition is relevant in a situation where several manufacturers produce and clear specified goods from the same factory and desire to avail benefit under the Notification; that the condition states that the concessional excise duty rates shall apply to the total value of clearances effected from a factory of all excisable goods of all the manufacturers taken together and the benefit is not independently available to each such manufacturer; that in the present matter, M/s. NCHL had effected their clearances upon payment of duty at Tariff rate without availing the benefit of exemption under the notification and, therefore, the clearances effected by them (NCHL) cannot be taken into account for computing the clearances eligible for concessional rate of duty under the Notification. He emphasized that it is settled law that while computing the value of first clearances under SSI Exemption Notification/clearances effected on payment of duty at the Tariff rate are not to be taken into account. He relied upon the decision of the Tribunal in the case of Khalsa Pulp and Paper Industries v. CCE, Chandigarh, Final Order No. 313/90-C, dated 4-4-1990 which has been affirmed by the Supreme Court as reported in 1997 (92) E.L.T. A76. Reliance has also been placed on the decision in the case of Solar Packaging Pvt. Ltd. v. CCE, Rajkot, 4. He finally submitted that in any case the demand of duty has been erroneously calculated; that the value has to be treated as aim-duty value and the duty has to be determined in terms of Section 4 of the Central Excise Act. He also mentioned that if it is held that the Appellants are liable to pay duty, they will be eligible to avail Modvat credit of the duty paid on inputs as held by the Tribunal in Kesha Sales (P) Ltd. v. CCE, 5. Countering the arguments, Shri. Vikas Kumar, learned SDR, submitted that the words used in condition No. (vi) are "where the specified goods are cleared by one or more manufacturers from a factory"; that it has not been disputed by the Appellants that M/s. NCHL were also manufacturing ice-cream in the same factory which is a "specified goods"; that as M/s. NCHL has manufactured and cleared specified goods from the said factory the exemption has to be applied after taking into consideration the value of clearances effected by M/s. NCHL. He, further, submitted that Para 4 of the Notification No. 8/98-CE.provides that for the purpose of determining the aggregate value of clearances for home consumption, the following clearance shall not be taken into account - (c) Clearances of specified goods used captively as inputs for the manufacture of specified goods; (d) Clearances of strips of plastics used within the factory of production for weaving of fabrics or for manufacture of sacks/bags made of polymer of ethylene or propylene.
The learned SDR submitted that the Para 4 of the notification excludes only these clearances for the purpose of determining the aggregate value of clearances and the clearances of specified goods effected by M/s. NCHL during April, 1998 to 21-8-98 does not fall in any of the categories mentioned in Para 4 of the notification; that thus such value of clearances cannot be excluded for the purpose of determining the aggregate value of clearances for home consumption. He also mentioned that this issue stands settled by the decision of the Larger Bench of the Tribunal in the case of CCE, Coimbatore v. Maruthan Textiles (P) Ltd., [2003 (153). E.L.T. 219 (T) = 2003 (55) RLT 382 (CEGAT - L.B.)]. The Larger Bench has held that "whether any part of such clearances was made on payment of duty cannot alter the position inasmuch as the Notification in its terms did not provide for excluding any such duty paid clearances from computation of the aggregate value.
6. The learned SDR contended that the decision in the case of Khalsa Pulp and Paper Industries is not applicable as the facts are different.
The said decision relied upon the decision in the case of EL. P. EM.Industries v. CCE, 1989 (43) E.L.T. 599 (T) wherein it was held that Notification No. 175/86-CE. granted exemption to the specified goods up to Rs. 30 lakhs subject to the condition that the value of clearance of the specified goods in respect of any one heading number of the Tariff would not exceed Rs. 15 lakhs and "within the overall value of the first clearances up to Rs. 30 lakhs the manufacturer of the specified goods falling under more than one heading can, in terms of the notification, have any combination of the value of the clearances of the different goods for enjoying the full exemption up to Rs. 30 lakhs." The learned SDR emphasized that no such issue is involved in the present matter.
7. We have considered the submissions of both the sides. Notification No. 8/98-CE., dated 2-6-98 exempts clearances, specified in Column (2) of the Table for home consumption, of excisable goods of the description specified in the Annexure appended to the notification. As per the Table (1) "first clearance up to an aggregate value not exceeding Rs. 50 lakhs" made on or after 2-6-98 in the financial year 1998-99 are exempted from the payment of whole of the duty and (2) "clearances up to an aggregate value not exceeding fifty lakh rupees immediately following the clearances specified against serial No. 1 during the financial year 1998-99 subject to the conditions specified in Para 2 of the notification. Condition No. 2(vi) provides that where the specified goods are cleared by one or more manufacturers from a factory, the exemption shall apply for the total value of clearances mentioned against each of the serial numbers in the Table and not separately for each manufacturers. We do not find any substance in the contention of the Appellants that this clause will be applicable only if all the manufacturers (in the present matter two manufacturers - M/s. NCHL and the Appellants) have availed of the exemption under the Notification. This inference does not flow from the wording of the clause (vi). Serial Nos. 1 and 2 of the Table speaks of aggregate value of clearances and clause (vi) of Para 2 of the Notification provides in clear terms that the exemption shall apply for the total value of clearances mentioned against each of the serial Numbers and not separately for each manufacturer. Para 3 of the Notification mentions the clearances which shall not be taken into account for the purpose of determining the aggregate value of clearances for home consumption. The learned SDR has rightly pointed out that the clearances effected by M/s. NCHL do not fall in any of the categories of clearances mentioned in Para 4 of the Notification. Accordingly the clearances effected by them of the specified goods have to be taken into account for the purpose of determining the aggregate value of clearance for home consumption mentioned in each of the serial numbers in the Table below the Notification No. 8/98-C.E. The Larger Bench of this Tribunal also in the case of Maruthan Textiles (P) Ltd., supra, has expressed the view that any clearance made on payment of duty cannot alter the position in computing the aggregate value of clearances. The learned SDR has distinguished the decision in the case of EL. P. EM Industries which was followed in the case of Khalsa Pulp. However, the clearances effected by M/s. Nirula Corner House Ltd. from 1-4-1998 cannot be taken into consideration for determining the aggregate value of clearances in view of the fact that the first clearance has to be considered on or after 2-6-1998 as per Serial Number 1 of the Table. The value of clearances effected by M/s. NCHL with effect from 2-6-98 to 21-8-98 is to be taken into account for the purpose of determining the aggregate value of clearances for home consumption.
8. We agree with the learned Chartered Accountant that the price charged by the Appellants has to be treated as cum-duty-price and the assessable value has to be re-determined after deducting the duty from the price charged. It has been held by the Supreme Court in CCE, Delhi v. Maruti Udyog Ltd., 2002 (141) E.L.T. 3 (S.C.) that "the amount realised by the respondent from the sale :of scrap has to be regarded as a normal wholesale price and in determining the value on which excise duty is payable the element of excise duty which must be regarded as having been incorporated in the sale value, must be excluded." The Appellants will also be eligible to avail of Modvat credit of duty paid on inputs subject to production of duty paying documents to the satisfaction of the Adjudicating Authority. The matter is thus remanded to the Adjudicating Authority for re-computing the amount of duty and allowing the Modvat credit.