Judgment
1. This appeal is directed against the impugned Order-in-Appeal passed by the Collector of Central Excise (Appeals), New Delhi.2. Shortly put the facts of the case are that the respondents M/s.
Pashwara Paper (P) Ltd. are the manufacturers of paper and paper board, that is to say, Straw Board falling under Heading 4807.92 of GET. They submitted the Classification List in respect of the subject goods effective from 1-4-1986 claiming benefit in terms of Notification No.175/86, dated 1-3-1986, as amended by Notification No. 216/86, dated 2-4-1986 read with Notification No. 138/86, dated 1-3-1986. During the period from 1-4-1986 to 23-4-1986 the respondents cleared a certain quantity of the subject goods without payment of duty by availing full exemption from payment of excise duty in terms of clause (a) of para 1 of Notification No. 175/86, dated 1-3-1986, as amended. However, on 24-4-1986, Notification No. 260/86 was issued inserting the following clause in Proviso to Notification No. 138/86, dated 1-3-1986 :- (V) "Exemption contained in this Notification shall not apply to a manufacturer of paper or paper boards who avails of the exemption under Notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 175/86-C.E., dated 1-3-1986".
The respondents discontinued to avail the exemption in terms of Notification No. 175/86, dated 1-3-1986 and started to clear the goods from 24-4-1986 by availing of exemption contained in Notification No.138/86, dated 1-3-1986. However, the Department tentatively formed a view that the respondents were not entitled for duty free clearance in terms of clause (a) of para 1 of Notification No. 175/86 during the period from 1-4-1986 to 23-4-1986 when they started availing exemption contained in Notification No. 138/86 dated 1-3-1986. A Show Cause Notice dated 11-6-1986 demanding duty on the goods cleared during 1-4-1986 to 23-4-1986 was issued to the respondents. The respondents hotly contested the Show Cause Notice inter alia on the ground that the exemption and concessions available under Notification No. 138/86 and 175/86 are independent to each other and there is nothing contained in either of the Notifications upto 23-4-1986 which would effect the separate entitlement under these Notifications. They also contended that there is no bar to avail of more than one benefit, that is to say, one under Notification No. 175/86 and the other under Notification No.138/86 upto 23-4-1986 and further that the amending Notification No.260/86 which enlarged the scope of an earlier Notification by adding a fresh clause cannot be considered to have a retrospective effect.
However, the Assistant Collector confirmed the demand. Against that order of the Assistant Collector, the respondents filed their appeal before the Collector (Appeals) who vide his impugned Order-in-Appeal allowed the same. Hence the present appeal by the Revenue.
3. Arguing on behalf of the Revenue Shri Sharad Bhansali, ld. SDR submitted that the only issue involved in the present appeal is as to whether the respondents were entitled for the benefit of exemption Notification No. 175/86-C.E. during the period 1-4-1986 to 23-4-1986.
Continuing further he submitted that the respondents cleared a quantity of 208.325 M.T. of the subject goods valued at Rs. 4,99,980/- without payment of duty by availing of full exemption from payment of excise duty in terms of clause (a) of para 1 of Notification No. 175/86, dated 1-3-1986 as amended. But from 24-4-1986 they discontinued to avail the exemption in terms of exemption Notification No. 175/86, dated 1-3-1986 and started clearing the goods from 24-4-1986 by availing of exemption contained in Notification No. 138/86, dated 1-3-1986. Since the respondents started earning the benefit of exemption Notification No.138/86 from 24-4-1986 they were not entitled for the benefit of Notification No. 175/86-C.E. in view of the Proviso (V) inserted in Notification No. 138/86 vide Notification No. 260/86, dated 24-4-1986.
Elaborating on his submissions he submitted that since the respondents availed of the benefit of Notification No. 175/86 during the period 1-4-1986 to 23-4-1986, it can be said that they were availing small scale exemption since it relates to the financial year and not to a particular period and further that the amendment affected in Notification No. 138/86 vide Notification No. 260/86, dated 24-4-1986 would have no meaning if the unit availed of entire small scale exemption right upto Rs. 75/- lakhs turn-over, the maximum permissible, during 1-4-1986 to 23-4-1986. It would render Notification No. 138/86 as amended, rendundant if the party after having availed of the maximum small scale exemption i.e. upto Rs. 75/- lakhs during the period 1-4-1986 to 23-4-1986, starts availing exemption Notification No.138/86 on the ground that from 24-4-1986 he is not availing small scale exemption, obviously because he has already exhausted latter exemption.
Therefore, logical construction that should be placed on the expression avails of "under the Notification No. 138/86 would be to interpret the expression availed of as avail of". He also cited the case of B.K.Rubber Industries (P) Ltd. v. Union of India, 1993 (68) E.L.T. 575 (M.P.) wherein it was held that slab exemption under exemption Notification No. 65/81-C.E. to be allowed on first clearances in chronological order upto aggregate value of Rs. 75 lakhs in a financial year.
4. In reply Shri S.K. Gadhok, ld. Consultant drawing our attention to the cross objection filed by the respondents and supporting the impugned order submitted that under the law benefit of two Notifications simultaneously is permissible if assessee is otherwise entitled and cited the case of Collector of Central Excise v. Balraj Paper & Straw Board Mills (P) Ltd., 1990 (47) E.L.T. 139. He also cited the case of German Remedies Limited, Bombay v. Collector of Central Excise, Bombay, 5. He also submitted that the amendment affected in Notification No.138/86 dated 1-3-1986 by inserting Proviso (V) vide Notification No.260/86 dated 24-4-1986 could not be retrospective and cited the case of Gangapur S.S.K. Ltd. v. Collector of Central Excise, 1988 (33) E.L.T.505 (Tri.) and Indye Chemicals, Ahmedabad v. Collector of Central Excise, Ahmedabad, 1986 (25) E.L.T. 318 (Tri.). As regards the case of B.K Rubber Industries (P) Ltd. v. Union of India, supra, cited by the ld. SDR he submitted that it is not appropriate to the controversy in hand. As in that case the question was what is the meaning of "first" preceding the word "clearances" appearing in exemption Notification No.65/81-C.E. dated 25-3-1981.Collector of Central Excise v. Balraj Paper & Straw Board Mills (P) Ltd., supra, we find that the interpretation of Notification No. 175/86-C.E. as well as Notification No. 138/86 as amended by Notification No. 216/86-C.E. and amended Notification No. 260/86 dated 24-4-1986 (which are subject matter in the present appeal also) was involved in that case also in somewhat opposite circumstances. In that case the assessee filed their classification list claiming benefit of Notification No. 175/86-C.E.along with the benefit of Notification No. 138/86. Since by amending Notification No. 260/86 dated 24-4-1986 benefit of Notification No.138/86 could not be availed of by an assessee who availed the benefit of Notification No. 175/86, the Assistant Collector held that with the issue of the amending Notification No. 260/86 dated 24-4-1986 assessee could not avail of exemption Notification No. 175/86 they were required to pay duty in terms of Notification No. 138/86. Against this order of the Assistant Collector an appeal was filed before the Collector (Appeals), who held as under :- "The relevant provisions under Notification No. 138/86-Central Excise as amended by Notification No. 216/86-Central Excise read as follows : "The exemption contained in this Notification shall not apply to a manufacturer of paper and paper boards who avails of the exemption under Notification of the Government of India, in the Ministry of Finance No. 175/86-Central Excise dated 1-3-1986".
Therefore, it is abundantly clear that an assessee who avails of the provisions of Notification No. 175/86-Central Excise cannot avail benefit of Notification No. 138/86-Central Excise by virtue of the exemption introduced in the said notification by Notification No. 216/86-Central Excise, dated 24-4-1986. Even if the assessee have filed the classification claiming the benefit under Notification No. 138/86-Central Excise-because of the above provisions in that Notification, the Assistant Collector should have rejected the classification. He has not done so. But applied the Notification 138/86-Central Excise where it is not applicable. There is no provision in Notification 175/86-Central Excise regarding Notification No. 138/86-Central Excise. Therefore in the present case the appellants are entitled to avail of Notification No. 175/86-Central Excise and not Notification No. 138/86-Central Excise as amended. The order of the Assistant Collector is therefore set aside and appellants are liable to pay duty for the financial year as per Notification No. 175/86-Central Excise." 7. Against that order of the Collector (Appeals) the Revenue had filed the appeal before the Tribunal urging the following grounds of appeal :- "2(i) It is entirely wrong presumption on the part of the Collector (Appeals) to hold that an assessee could not opt for Notification 138/86, if he had been availing exemption under Notification 175/86 prior to 24-4-1986. He has failed to note that prior to 24-4-1986, the assessee was eligible to avail both the notifications simultaneously, whereas, with effect from 24-4-1986 with the amendment of Notification No. 138/86 vide introduction of Clause-V, exemption only under either Notification 138/86 or 175/86 was available to a manufacturer. Those manufacturers who were availing exemption under Notifications 138/86 and 175/86 simultaneously prior to 24-4-1986, as such had an option, either to claim exemption under Notification 138/86 or 175/86.
(ii) It is not correct to say that there was a restrictive option only in favour of Notification No. 175/86. An assessee could equally opt for 138/86 by opting out of Notification No. 175/86. In the case of Balraj Paper Board, the assessee opted in favour of Notification 138/86, when classification list No. 37/86-87 was filed and approved by the Assistant Collector. By filing of classification list claiming benefit of Notification No. 138/86 by virtue of Clause-V of the Notification, the assessee ipso-facto was made ineligible to avail any concession under Notification No. 175/86." 8. During the arguments the ld. DR reiterated the ground of appeal and pleaded :- "that the respondents opted for the benefit of Notification 138/86 and the authorities have dealt with them in the light of their option. On a query from the Bench, he, however, conceded that benefit under either of the two Notifications could be availed of by the respondents and the choice was with them." "for the benefit of one of the Notification viz. 175/86 and, therefore, no demand could be raised against the respondents." 10. Repelling the contention raised by the Revenue the Tribunal observed as follows :- "5. We observed that it is nobody's case that the respondents in case they had opted for availing of the benefit of Notification 175/86 only they were in any way barred from the benefit of the said Notification. It is also conceded that the appellants were at liberty to claim benefit under either of the two Notifications. The learned Collector (Appeals) has merely extended in his order the benefit of Notification 175/86 to the respondents. Legally we do not find any basis in the plea of the appellant that the respondent could be forced to avail of the benefit of Notification 138/86 when they are eligible for the benefit under Notification 175/86 also and when the benefit under either of the five notifications is available to them under law. We, therefore, find no infirmity in the order of the Collector (Appeals) and accordingly dismiss the appeals." 11. In the instant case it is interesting to note that the Revenue had not issued the Show Cause Notice proposing to deny the benefit of Notification No. 138/86 on the clearances effected from 24-4-1986 in view of the amendment in Notification No. 138/86, dated 1-3-1986 effected vide Notification No. 260/86, dated 24-4-1986 on the ground that they were not entitled for the benefit of the said Notification (Notification No. 138/86) as they availed of the exemption under Notification No. 175/86-C.E., dated 1-3-1986. On the contrary it issued the Show Cause Notice proposing to recover the amount on the clearances on the ground that they wrongly availed of the benefit of exemption Notification No. 175/86-C.E., dated 1-3-1986 on the clearances effected from 1-4-1986 to 23-4-1986. In our view the Revenue had put the wheel on the wrong track. In the instant case the appellants availed the benefit of Notification No. 175/86 on the clearances effected during the period 1-3-1986 to 23-4-1986 and as a consequence of amendment effected in Notification No. 138/86 vide Notification No. 260/86 dated 24-4-1986 they discontinued to avail the exemption in terms of Notification No. 175/86 dated 1-3-1986 and started clearing the goods from 20-4-1986 by availing of exemption contained in the Notification No. 138/86 dated 1-3-1986. In such a situation the issuance of Show Cause Notice demanding the payment of duty on the clearances effected during the period 1-3-1986 to 23-4-1986 on the ground that the respondents were not entitled for the benefit of Notification No.175/86 was uncalled for and the Department could have challenged the right of the respondents to avail the benefit of exemption Notification No. 138/86 from 24-4-1986 onwards in view of the amended Proviso to Notification No. 138/86, dated 1-3-1986 by issuing the appropriate Show Cause Notice according to law. However, these observations of ours are in passing and would not prejudice the right of the respondents in any way even remotely.
12. That apart on merits we do not find any substance in the contention raised by the ld. SDR in view of the ratio of the judgment rendered by this Tribunal in the case of Collector of Central Excise v. Balraj Paper & Straw Board Mills (P) Ltd., 13. In the result, the appeal is rejected being devoid of any merit.
Cross Objections also stands disposed of accordingly.