Judgment:
1. The impugned Order has been passed pursuant to the Order of remand of the Tribunal [Final Order Nos. 154-155/2001-D, dated 11-7-2001 in appeal Nos. E/2850/91-D and E/994/2001-D. The issue in dispute was the claim of the appellant for small scale exemption in respect of goods cleared during the period 21-3-90 to July 1991. Although the dispute raised in the show cause notices was that the assessee had not produced permanent Small Scale Industries registration certificate issued by the Directorate of Industries, Delhi (which certificate is a requirement under Notification No. 175/86 for the purposes of small scale exemption), this Tribunal noted that the requirement for the said certificate would not arise in a case "where a manufacturer has been availing of the exemption under this notification during the preceding financial year" and therefore remanded the case with the following direction :- "We, therefore, allow both the appeals and remand the matter to the jurisdictional Adjudicating Authority with the direction to determine whether the appellants have availed of the benefit of exemption under Notification No. 175/86 and then proceed to decide whether the benefit of Notification will be available to them during the impugned period. The appeals are, thus, allowed by way of remand".
These appeals have been filed because the lower authorities confirmed the duty demand in the remand proceedings also.
2. The submission of the appellant is that the impugned Order has been passed contrary to the facts of the case relating to availing of exemption by the appellant during the preceding financial year. It is being pointed out that the appellant had started its production in October 1988 and had been availing of small scale exemption from the beginning and it had obtained Central Excise license. The fact of its availing of exemption remains settled by adjudication Order No. 73/1990 dated 28th March 1990 of the jurisdictional Assistant Collector. It is being pointed out that, though under that Order a penalty of Rs. 1,000/- was imposed on the appellant, no duty demand was made in regard to the clearances made without payment of duty. During the hearing it has been submitted that these facts were pointed out to the lower authorities also and those authorities have also accepted these facts.
The submission of the learned Counsel is that since the appellant had been availing of the exemption during the preceding financial year, it was not open, in the present proceedings, to go into the correctness or otherwise of the exemption already availed of during a period prior to the period of the notices under consideration.
3. As against the above contention on behalf of the appellant learned SDR has submitted that the lower authorities were right in denying the exemption inasmuch as the appellant had not obtained any Central Excise license before availing of the exemption and it is settled law that in the absence of Central Excise license exemption is not available.
Learned SDR has relied on the judgment of the Apex Court in the case Eagle Flask Industries Ltd. v. C.C.E., Pune [2004 (171) E.L.T. 296 (S.C.) = 2004 (96) ECC 118 (SC)] in support of this contention.
4. As already noted, the scope of the remand Order was "to determine whether the appellants have availed of the benefit of exemption under Notification No. 175/86 and then proceed to decide whether the benefit of Notification will be available to them during the impugned period".
On the question of availing of the exemption, the appellant assessee's contention was that it had been availing of the exemption and the exemption so availed had not been disturbed even under the Order of adjudication dated 28th May 1990 when a penalty of Rs. 1000/- was imposed on the appellant without making any duty demand. This position remains noted by the lower authorities also. The impugned Order has noted as under on this issue.
"I have gone through the facts of the case, grounds of appeal, final Order of the Hon'ble CEGAT and order-in-original of the jurisdictional adjudicating authority appealed against. The only question to be determined in this office in accordance with the directions of the Hon'ble Tribunal is whether the party had availed the benefit of Notification No. 175/86 during the year 1988-89. The party has claimed availment of exemption under the said notification during the relevant period on the grounds that in the Order dated 28th May 1990 it was specifically held that they were eligible for exemption during the period 1988-89 and 1989-90 and this Order was never challenged by the department. Further, in support of their case the appellants relied upon various judgements which deals with the issue of provisional registration certificate, non following of the procedure in a case where eligibility is established. They also contended that there is no justification in demanding interest for the period prior to July, 2002." All the same, the exemption has been denied on the ground that "the party would have been considered having availed small scale exemptions only if they had obtained Central Excise license which they did not." 5. The above finding was not within the scope of the show cause notices or the remand order. The factual position was that the appellant had availed of the exemption in respect of clearances made by it. No demand was also raised for denying the exemption. Instead, the adjudication Order only imposed a penalty of Rs. 1000/- without disturbing the exemption availed of. That Order has also attained finality. At this belated stage in a proceeding relating to duty demand for a subsequent period, that too on a different ground relating to obtaining of registration from the Directorate of Industries, it is not open to the lower authorities to hold that the exemption already availed of had been incorrectly availed of and for that reason the assessee has not availed of small scale exemption. Such a finding can not be sustained since it is beyond the scope of the proceedings as well as the remand order.
6. In the result, the appeal succeeds and is allowed after setting aside the impugned order. The appellant shall be entitled to consequential relief, if any.
7. The Miscellaneous application which points out that impugned Order has committed an error in confirming a duty amount in excess of the amount proposed in the Show Cause Notice does not survive as the appeal is being allowed in full.