Full Judgment
The said appeal was received in the registry on 22-11-1994. A stay application duly supported with an affidavit was also presented simultaneously. Shri B.B. Gujral, ld. Advocate appeared. He pleaded that the appellant is manufacturer of tractor parts and is an ancillary to Hindustan Machine Tools, Panchkula. The appellant is claiming the benefit of Notification No. 175/86-C.E., dated 1-3-1986 and the period in dispute is November 1986 to 31-3-1990. The show cause notice is dated 3-12-1991. The Collector has invoked proviso to Section 11A. He pleaded that the extended period of limitation cannot be invoked as the appellant did not conceal anything from the department. He pleaded that earlier adjudicating order was passed by the Collector and the appellant had come in appeal before the Tribunal. A stay application was filed and the Tribunal had accordingly stayed the matter unconditionally. He further stated that the Tribunal had remanded the matter and after remand, the matter was re-adjudicated by the Collector. He has just confirmed the same findings, which were in his earlier order and being not satisfied with the latter adjudication order, the appellant came in appeal before the Tribunal. He pleaded that the appellant had been claiming the benefit of Notification No.175/86-C.E., dated 1-3-1986 and had been filing classification list starting from page No. 95 onwards in the paper book. He pleaded that in the classification list itself the appellant had mentioned the benefit of Notification No. 175/86-C.E. and also there was a mention that the value of plant and machinery is less than Rs. 45 lakhs. He pleaded that the mere fact that the appellant is ancillary to Hindustan Machine Tools in Pinjore cannot take away the benefit of notification. He further pleaded that SSI unit is SSI unit and there is no definition of ancillary to SSI unit. He drew the attention of the Bench to the certificate, dated 19-2-1980 issued by the Director of Industries and thereafter re-validation was done on 6-6-1985 and the perusal of the certificate shows that it is a small scale industry unit. He pleaded that since the value of the plant and machinery has been mentioned in the classification list and as such the extended period of limitation cannot be invoked. He drew the attention of the Bench to the letter written by Development Commissioner of Small Scale Industries dated 21-1-1992 which appears on page 139 and was filed before the lower authority and the letter dated 19-3-1979 issued by Government of India, Ministry of Industry, Department of Industrial Development. He argued that there is no distinction between ancillary small scale industry unit and small scale industry unit and since the appellant had already declared in the price list and as such extended period of limitation cannot be invoked. He pleaded that in case the appellant is desired to deposit duty amount of Rs. 23,47,624.97 and penalty amount of Rs. 1,00,000/-, it would amount to undue hardship. He again referred to the earlier stay order passed by the Tribunal which appears on page No. 44 of the paper book where a clear stay was granted. Shri Somesh Arora, learned JDR in reply pleaded that the small scale industry unit cannot be clubbed with ancillary small scale industry unit. In the small scale industry unit exemption is available upto a value of the plant and machinery upto Rs. 35 lakhs whereas in the ancillary small scale industry unit, the exemption is upto the value upto Rs. 45 lakhs. Shri Arora stated that in this case the value exceeds Rs. 35 lakhs and as such the appellant is not entitled to the benefit of Notification No.175/86-C.E., dated 1-3-1986. On the limitation, he pleaded that there is no clear declaration by the appellant as the appellant mentioned as small scale industry and actually it is ancillary and they have also mentioned the value of plant and machinery as less than Rs. 45 lakhs whereas it should be less than Rs. 35 lakhs. He pleaded for the rejection of the stay application.
2. We have heard both sides and have gone through the facts and circumstances of the case. We have perused the SSI certificate which appears on page No. 118 of the paper book and the unit is registered as a small scale industry unit with effect from 19-2-1980 and it was revalidated on 6-6-1985 vide Certificate No. 069166. We have duly looked into the letters dated 21-1-1992 and 19-3-1979 issued by the Development Commissioner, Small Scale Industries and the Ministry of Industry, Department of Industrial Development. The contents of the certificate dated 21-1-1992 are reproduced below :- "Reference your letter No. SAS : 147/91-92/0388, dated 30-12-1991 on the above subject.
In this connection I may inform you that the present scheme of excise duty concessions to small scale units are not dependent on any ceiling of investment in plant and machinery. Only requirement is that the units in question should hold a valid registration from the appropriate authority as being registered as a small scale unit.
Therefore, as long as ancillary units are in a position to produce an evidence of having a valid SSI registration, excise duty concession will be available even to ancillary units. For further clarification you are advised to contact the concerned Excise and Customs Collector of your area." 3. Para 4 of the Notification No. 175/86-C.E., dated 1-3-1986 is reproduced below: - 4. Perusal of the notification shows that there is no mention of any ground in that notification as to the investment of plant and machinery. The only requirement is that it should be registered with the Director of Industries as a small scale industry unit. We have also duly looked into the classification list filed by the appellant from time to time. Note given in the classification list at page No. 95 in column No. 9 and 10 is reproduced below : -------------------------------------------------------------------------------"No.& date of relevant notification (s) if any issued Remarks having bearing on the rate of duty.------------------------------------------------------------------------------ 9 10------------------------------------------------------------------------------Under Notification No. 175/86, dated 1-3-1986 as amended by 216/86, dated2-4-1986 exemption for tractor parts used in series 2511 under Notification No.239/86, dated 3-4-1986 under Chapter 10 procedure of CE Act 1944.
5. Perusal of the same shows that in the classification list, the appellant had duly mentioned the Notification No. 175/86-C.E., dated 1-3-1986 and had also mentioned as "plant and Machinery cost is less than Rs. 45 lacs." Hon'ble Supreme Court in the case of Collector of Central Excise v. Chemphar Drugs & Liniments reported in 1989 (40) E.L.T. 276 (SC) (Paras 8,9) had held as under : - 6. The earlier order passed by the Tribunal appears on page No. 44 of the paper book. Para No. 4 from the said Stay Order is reproduced below :- "We have carefully considered the pleas advanced on both sides. On a prima facie reading of the notification and of the material available on record as set out above, we are of the view that the unit has been registered as a small scale industrial unit.
Therefore, there is no reason prima facie as to why the benefit of the Notification 175/86 cannot be extended to them. The alleged distinction that is sought to be made in the impugned order between the small scale ancillary unit and the small scale industry for the purpose of said notification cannot be appreciated at this stage. We shall get into it at the time of final hearing. In the facts and circumstances, we are of the view that the applicants have a good prima facie case. Accordingly, we allow the stay petition unconditionally."Uptron Powertronics v. Collector of Central Excise, Meerut reported in 1987 (28) E.L.T. 61 (Delhi) had held as under :-Tamil Nadu Housing Board v. Collector of Central Excise, Madras reported in 1994 (74) E.L.T. 9 (S.C.) had held (Paras 3 and 4) as under :- * * * * * * * 9. In view of the above discussions and earlier order passed by the Tribunal, we do not find any reason to deviate from the same. The appellant has, prima facie, good case on merits as well as on limitation. Accordingly, we are of the view that if the appellants are desired to deposit duty amount of Rs. 23,47,624.97 and penalty amount of Rs. 1,00,000/-, it would amount to undue hardship. We dispense with the pre-deposit of the same and further order that during the pendency of the appeal, the revenue authorities shall not pursue any recovery proceedings. In the result, the stay application is allowed.