Full Judgment
2. The Ld. Consultant for the appellants submitted that the appellants for the period in question, for the previous year had not exceeded a total clearance of Rs. 15,000 and for the current year in question the clearances were only for Rs. 1.74 lakhs and, therefore, the total clearances for the preceding year and for the current year put together would be far below Rs. 7.50 lakhs and, therefore, the appellants would be squarely covered by the proviso to para 4 of the Notification No.175/86, dated 1-3-1986. In such a situation it was contended that proper registration with Director of Industries is a condition precedent for a manufacturer to avail the benefit of Notification in question. The Ld. Consultant for the appellants in this context placed reliance also on the ruling of the Tribunal in the case of Tufail Ahmed v. Collector of Central Excise reported in 1992 (62) E.L.T. 745. It was, therefore, prayed that waiver may be granted on the stay application and the appeal may be disposed of.
3. Shri M.K. Jain, Ld. SDR submitted that he had no objection on the disposal of the appeal as the whole issue is with reference to interpretation of para 4 of the Notification No. 175/86.
4. In the above factual background we grant a waiver of pre-deposit of duty and penalty and take up the appeal itself with the consent of parties. The issue for consideration is whether the appellants are eligible to the benefit of Notification No. 175/86, dated 1-3-1986 when the unit was not registered with Director of Industries of the State in terms of para 4 of the Notification in question. Para 4 of the Notification, which is relevant for all purposes reads as under: (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 has been availing of the exemption under this notification or any of the notifications specified below, during the preceding financial year : The plea of the appellants was that the unit clearance for the preceding year was only Rs.56,000 and for the current year in question was only Rs. 1.74 lakhs and, therefore, the total clearances for the preceding financial year and the current financial year did not exceed Rs. 7.50 lakhs. In the light of above, it would be seen that the proviso extracted above clearly carves out an exception to para 4 of the Notification making it otherwise obligatory for a unit to have it registered with the Director of Industries of the State. In the present case taking note of the fact that the clearance of the preceding year was only Rs. 54000 and also keeping in mind that the clearances for the current financial year was only Rs.1.77 lakhs, we hold that the appellants would become eligible to the benefit of Notification in question even if the same was not registered with the Director of Industries of the State. We also refer to the ratio of the ruling of the Bench of this Tribunal in the case of Tufail Ahmed v. Collector of Central Excise, 1992 (62) E.L.T. 745, the operative part of which reads as under : "5.1 Reason for denying the benefit of exemption Notification 175/86 is that the appellant was not entitled for exemption from licensing control in view of the declaration under Notification 1/88-C.E. (N.T.), having not been filed by him. This reason is also based on erroneous understanding of law by the adjudicating authority.
Exemption from licensing control is different from exemption from payment of duty. In the case of Healthways Dairy Products Co. v. UOI 1978 (2) E.L.T. (J 457) a question was raised before the Supreme Court that since the Healthways Dairy Products had obtained a licence for manufacture of condensed milk only and it did not obtain a licence for manufacture of condensed skimmed milk, therefore, for the purposes of the levy of the excise duty, both condensed milk and condensed skimmed milk should be placed on the same footing.
Healthways Dairy Products Co. submitted that if excise duty was not leviable on condensed milk then no licence was required for its manufacture. On the aforesaid point, the Supreme Court observed as follows: "The position of law seems to be that under Section 6 of the Excise Act no person can engage in the production or manufacture of any specified goods included in the 1st Schedule of the Act except under the authority and in accordance with the terms and conditions of a licence granted under the Act. It would have been seen, therefore, that since skimmed milk or condensed skimmed milk will be a milk preparation within the meaning of Item IB of the 1st Schedule, a licence to manufacture such milk would be required. If any goods specified in the 1st Schedule are exempted from the levy of excise duty by the Central Government in exercise of their power under Rule 8(1) of the Central Excise Rules, that cannot affect the manufacture of the said goods" 5.2 This question also came to be examined by the Tribunal in Structural and Machineries (BOKARO) Pvt. Ltd. v. Collector, Patna 1984 (17) E.L.T. 127. The Tribunal observed as follows in para 13 of the said Report:- "We have carefully considered this part of the arguments of the parties. The concession in Notification No. 89/79-C.E.., dated 1-3-1979 is not dependent on taking out a licence. The demand of duty from the appellants is to be examined on the basis of effective rates of duty provided under the notification and on other conditions of notification being fulfilled which are not disputed in the case. Considering the entire facts and circumstances of the case, the notification and the precedents relied on by the parties, the Bench is of the view that it would not be proper to deny the appellants the benefit of Notification No. 89/79-C.E.., dated 1-3-1979 on the ground that the appellants had not taken out a licence. The Bench finds accordingly." Accordingly, we are of the view that even if the appellant was required to take out a Central Excise licence for not filing a declaration as enjoined under Notification No. 11/88-C.E. (N.T.), dated 15-4-1988, the benefit of Notification 175/86, dated 1-3-1986 cannot be denied. Therefore, the demand of duty made in the impugned order is not called for and is set aside. Since the seized goods namely 45 electric fans fell within aggregate exemption limit for the relevant financial year no demand of duty can be raised on the seized goods as well." 5. Therefore, in the facts and circumstances of the case, we hold that the appellant is eligible to the benefit of Notification No.175/86-C.E., dated 1-3-1986 and in this view we set aside the impugned order and allow the appeal.