1. The above appeals involve a common issue and are hence heard together and disposed of by this common order.
2. The respondents herein are engaged in the manufacture of texturised/crimped yarn filling under Chapter heading 54.03 of the schedule to the Central Excise Tariff Act, 1985. Small Scale Notification No. 1/93 dated 28/02/93 was amended by Notification No.90/94 dated 25/04/94 incorporating the goods falling under above mentioned chapter heading as "specified goods" for the purpose of S.S.I benefit which was claimed by the respondents. Subsequently, vide Notification No. 23/94-CX (NT) dated 20/02/94, Rule 56A was deleted from the Central Excise statute and modvat benefit was extended to the product covered by chapter heading 54.03 by Notification No. 24/94 dated 20/05/94. The department was of the view that since Notification No. 1/93 was effective from 01/04/94, clearances from this date should be computed and not only from the date when the assessees/respondents opted for the benefit of the notification. On this basis, show cause notices were issued for recovery of the differential duty during the period after first clearance value of Rs. 50 lakhs was crossed. The demand was confirmed by the adjudicating authority against whose orders appeals were filed. The Commissioner (Appeals), i.e., the lower appellate authority set aside the order of adjudication relying upon his earlier orders in which he had held as under : - "The goods manufactured by the appellants had not been declared as "specified goods" from 01/04/94 to 25/04/94 under Notification No. 1/94 dated 28/02/93. Therefore in absence of retrospective provision in the amendment Notification No. 90/94 dated 25/04/94, the clearances made during 01/04/94 to 24/04/94 are not to be computed fro concessional rate of duty under the said notification. From 25/04/94 the goods manufactured by the appellants became "specified goods" with the amendment of Notification 1/93 dated 28/02/93 by Notification 90/94 dated 25/04/94. Since the appellants availed proforma credit under Rule 56A as evident from the findings of the lower authority which is reproduced above and that the said inputs and final products had not been specified in the Notification issued under Rule 57A during 25/04/94 to 19/05/94, the confessional rate of duty as envisaged under para 1 (a) (i) is not available. However, the lower authority extended full exemption upto Rs. 30 lakhs while allowing proforma credit in his findings. This interpretation of the lower authority is not correcting view of proviso to sub-rule (2) of Rule 56A which reads as follows : "Provided that no credit of duty shall be allowed in respect of any material or component parts used in the manufacture of finished excisable goods - (i) if such finished excisable goods produced by the manufacturer are exempt from the whole of the duty of excise leviable thereon or are chargeable to nil rate of duty." Since the appellants are not availing modvat credit and that the inputs and the finished goods are not recognised for availing the credit of duty under the notification issued in terms of Rule 57A, the concession envisaged under para 1 (a)(i) is not available. At the same time the appellants are also not eligible for the nil rate of duty on goods eligible for the nil rate of duty on goods cleared upto Rs. 30 lakhs in terms of para 1 (a)(ii) when they availed the Rule 56A proforma credit. Thus, during the period between 25/04/94 to 19/05/94, the concession envisaged under Notification 1/93 in terms of para 1 (a)(i) and (ii) are not available and cannot be availed. Similarly, the appellants cannot avail also the benefit, though eligible, in terms of para 1 (b) because for availing the concession under para 1 (b) the clearances after first aggregate clearances of Rs. 30 lakhs in terms of para 1 (a) should be there, which does not appear to be the case, The net effect of this situation is that during 25/04/94 to 19/05/94, the concession envisaged under Notification 1/93 remained on paper and is not actually available to the manufacturer. Concessional/exemption notification are issued to enable the manufacturers to avail it and not to make in impossible or incapable of availing. Since the concessions in terms of para 1 (a) (i) or (ii) of Notification 1/93 are legally available to the appellants only from 20/05/94 and that the earlier clearances made at full rate of duty by availing the proforma credit under Rule 56A are not eligible for computing the aggregate value for the purpose of concessional duty envisaged under para 1 (a) or (ii), the aggregate value of clearances made perior to 20/05/94 are not includible for working out the concessional rate of duty envisaged under Notification 1/93 as amended dated 28/02/93." 3. The Commissioner (Appeals) also distinguished the Larger Bench decision of the Tribunal in the case of Ramkrishna Engineering Works.
Vs. CCE, Bolpur 2002-TAXINDIAONLINE-68-CESTAT-DEL, noting that the goods under reference in that case were "specified goods" right from 01/04/94, while in the appeals before him, the goods became specified goods only w.e.f. 25/04/94, and further the respondents were convered under Rule 56A till 20/05/94, and not under Rule 57A, and the benefit under Notification I/93-CE was legally available to the respondents only from 20/05/94, which was not the situation in Ramkrishna Engineering Work's case. Hence these appeals by the Revenue, which contends that the relevant date for computation should be 01/04/94, the date of commencement of the financial year.
4. We have heard both sides. We find that this issue was the subject matter before the Tribunal in the case of Dhanlaxmi Texturisers vide Order No. C-II/1529-54/WZB/2002 dated 18/05/2002 the Tribunal held that the clearance of goods in question should be covered by the notification 1/93 with effect from 25/04/94, which is the date on which the goods were specified in the table to the notification. The assessees appealed against this order of the Tribunal to the Hon'ble High Court which vide order reported in 2003 (55) RLT 873 (Guj) set aside the Tribunal's order and held that "this court issue a writ of certiorari and quash and set aside the impugned dated 18th May 2002, passed by the CEGAT in Appeal Nos. E/506 to 522, 524 to 528/97. This Court, therefore, issue a writ of mandamus and declare that the actual effect of the benefit of Notification No. 1/93 was available tot he manufacturer only from 20th May, 1994. This Court also hold that the petitioners were entitled the benefit of Notification No. 1/93 by computing the value of clearance from the date on which the petitioners opted for this exemption in the year 1994-95. In view of the same, the Special Civil Application is allowed to that extent. rule is made absolute with no order as to costs." 5. Following the ratio of the Hon'ble Gujarat High Court's judgment cited supra, we hold that the benefit of the notification is available to the assessee from 20/05/94 and that they are entitled to the benefit of the notification by computation of the value of clearances from the date on which they opted for the exemption in 1994-95.
6. The appeal are disposed of as above. Cross objections are disposed of accordingly.
1. In have carefully gone through the decisions recorded by my learned Sister in the case of Asia Textiles and another as well as in the case of Marmo Texturisers and others. The common issue in all these appeals filed by Revenue against as many as 59 respondents involves interpretation of the expression "first clearances of the specified goods upto an aggregate value not exceeding rupees thirty lakhs" appearing in Notification No. 1/93-Ce dated 28/02/1993. This expression is proceded by the expression "cleared for home consumption on or after the 1st day of April in any financial year". The aforesaid notification provides a general scheme of exemption to the small scale sector and applies to numerous specified goods. It is possible that one assessee may manufacture and clear more than one specified goods. The entitlement to exemption is based on annual value of clearances and 'rupees thirty lakhs' refers to the first slab of exemption. Full exemption is available to this slab if no modvat credit of input duty is availed under Rule 57A, otherwise the duty is reduced by 10 percentage points.
2. The issue gets a bit complicated in the case of the impugned goods which have been added to the list of specified goods w.e.f. 25/04/1994 and to from 01/04/1994. The law-makers have not made it any easier by making the impugned goods modvatable w.e.f. 20/05/1994. Till then the respondents availed input duty credit under Rule 56A and hence could not avail exemption under Notification No. 1/93-CE. The question that has been raised centers around the date from which the slab of Rs. 30 lakhs should be counted. The choices are : - (ii) 25/04/1994 being the day the impugned goods became specified goods.
(iv) A subsequent date on which a respondent chose to avail of the small scale exemption.
3. In case the slab of Rs. 30 lakhs is counted from a date perior to a respondent opting for the exemption, the slab of exemption available to him would get reduced to the extent of duty paid clearances made by him till that date. There are a number of decisions of different Benches of the Tribunal on the issue, but is would suffice to refer to the Larger bench decisions here. In the case of Ramakrishna Engg. Works Vs. CCE, Bolpur - 1996 2002-TAXINDIAONLINE-68-CESTAT-DEL, the Larger Bench following a reasoned decision of the Honourable Madhya Pradesh High Court in the case of B.K. Rubber Industries (P) Ltd. Vs. UOI - 1993 (68) ELT 575 (MP) ruled that the slab of Rs. 30 lakhs has to be chronologically computed from the 1st day of April including clearances of duty paid goods. This decision considered and over-ruled the earlier decision of the two Member Bench in the case of Watts Electronics Pvt.
Ltd. Vs. Collector - 1994 (70) ELT 127 (Tribunal) which allowed computation of the slab from the date of availing the exemption.
4. It is, however, a fact the Ramakrishna (Supra) id not consider a case where the goods were specified after the commencement of a financial year. Such a situation has been addressed after taking into account several conflicting decisions by another Larger bench recently in the case of CCE, Coimbatore Vs. Marutham Textile (P) Ltd. - 2003-TAXINDIAONLINE-222-CESTAT-DEL-LB, The Bench has noted that Revenue has accepted the non-includibility of duty paid clearances from 01/04/1994 to 24/04/1994 in the slab of Rs. 30 lakhs. It has, thereafter, proceeded to decide that the slab of Rs. 30 lakhs should be computed w.e.f. 25/04/1994 relying on the Apex Court decision in the case of Pankaj Jain Agencies Vs. UOI - 1994 (72) ELT 805 (SC). It has also specifically ruled out computation of the Rs. 30 lakhs slab from a subsequent date of availing the exemption following the decision in Ramkrishna (supra) and B.K. Rubber Industries (supra).
5. In the case of Gandhilon Texturisers and another Vs. UOI (Special Civil Application No. 11966 of 2002), the Honourable Gujarat High Court has referred to its earlier order in the case of Dhanalaxmi Texturisers, 2003-TAXINDIAONLINE-60-HC-AHM-CX, and has stated the "the Tribunal was in error in taking a different view than the one which it had taken in the taken in the case of Watts Electronics Pvt. Ltd. Vs.
Collector of Central Excise and in the case of Shree Cables & Conductors Ltd. Vs. Commissioner". It is, however, pertinent that the learned counsels from either side do not appear to have brought to the notice of the Honourable Gujarat High Court the following : - (1) Watts Electronics (Supra) was no longer goods law as it was over-ruled by a Larger bench of 3 Members in Ramakrishna (supra) following the Honourable M.P. High Court's reasoned order in B.K. Rubber Industries (Supra).
(2) The decision in Shree Cables and Conductors Ltd. Was rendered by the learned Single Member who had no jurisdiction to decide a case involving determination of rate of duty.
(3) The said Learned Single Member was also in error in applying the ratio of Watts Electronics (Supra) which was earlier over-ruled by a 3 Member bench including him in Ramakrishna. (Supra).
(4) The decision of the Apex Court to dismiss civil appeal against Tribunal's decision in Shree Cables and Conductors Ltd. by a non-speaking order leaves open the question of correctness of the said decision. Apex Court's decision in the case of CCE Vs.
Technoweld Industries, 2002-TAXINDIAONLINE-111-SC-CX, (Paragraph 5 ) supports this view).
6. In view of the foregoing, I am unable to concur with the decision recorded by my learned Sister that computation of Rs. 30 lakhs slab should be from the date the respondent opted for the exemption. In my opinion, the decision of the Larger Bench in the case of CCE, Coimbatore Vs. Marutham Textile is squarely applicable to the present appeals, in terms of which the computation of Rs. 30 lakhs slab has to be done from 25/04/1994. I order accordingly.
7. The following difference of opinion is placed before the Hon'ble President for reference to 3rd Member : Whether the benefit of Notification No. 1/93-CE dated 28/2/93 is available to the assessee with effect from 20/05/94 and value of clearances is required to be computed for this purpose, from the date on which the assessees opted for exemption in 1994-95, as held by Member (Judicial) the value of clearances is required to be computed from 25/04/1994, as held by Member (Technical) ORDER NO. A/45 TO 101/WZB/04/02 M/19 TO 59/WZB/04/C-I in Continuation to order No. C-I/2579 to 2676/WZB/03 1. The question in this reference, to me, for decision is the computing the value of clearances under Notification No. 1/93-CE when the assessee's product manufactured was declared as specified goods only with effect from 25.05.1994 under the said notification.
2. After hearing both side, the considering the issue, and having the benefit of the order of the learned Members, it is found : (a) the Commissioner (Appeals) has observed that in the case of Ram Krishna Engineering works Vs. CCE 1996 (83) ELT 346, the goods were declared as specified goods right from 1.4.1994 unlike in this case with effect from 25.4.1994. This question was determined by the subsequent Larger Bench decision in the case of CCE, Coimbatore Vs Martuam Textiles (P) Ltd (Supra), wherein the larger bench held that amount paid by the respondents as duty of excise on cotton yarn in that case cleared from 25.4.94 till they started availing the benefit of Notification No. 1/93-CE (as amended) would not be recognized as duty of excise and were to be treated as bare deposits of money lying with the Government, after following the Board's Circular No. 2/91-CX-3 dated 4.1.1991. This being the larger bench's decision, would be applicable in the facts of this case also.
(b) In my opinion, the duty of excise paid from 1.4.1994 till 19.5.1994 cannot be reckoned for determining the first clearance of specified goods for home consumption in the financial year 1995-96.
Similarly, if any appellant has opted 20.5.1994 for the benefit of Notification No. 1/93-CE, they would be entitled to the benefit of the notification as held by the Gujarat High Court in Dhanlakshmi Texturisers Vs. CCE (Supra) as arrived at by the learned Member (judicial) in paragraph 5. Since the larger bench in the case of CCE, Coimbatore vs. Maruthan Textiles Pvt Ltd Supra has considered the duties paid, after the date of the goods being specified, up to the date of option of entry the benefit of Notification No. 1/93-CE, as deposits, I would answer the reference as held by the Hon'ble Member (judicial).
3. The matter may now be placed before the referring bench for final decision.
We hold that the benefit of Notification No. 1/93 dated 28/2/93 as amended is available to the assessees from 20/05/94, and that they are entitled to the benefit thereof by computation of the value of clearances, from the date on which they opted from the exemption in 1994-95.