Rajkot Fine Chemicals Vs. Collector of Central Excise - Court Judgment

Excerpt:
1. the above appeal arises out of the order passed by the collector of central excise (appeals), bombay upholding the order of the assistant collector, denying the benefit of notification no. 178/85-c.e., dated 1-8-1985 on the ground that the appellants had already cleared goods of a value exceeding rs. 20 lakhs during the period prior to 1-8-1985 and consequently exceeded the clearance ceiling stipulated in notification no. 178/85-c.e.2. the brief facts of the case are that the appellants who are manufacturers of plasticisers falling under tariff item 68 of the schedule to the erstwhile central excise tariff and availing of the benefit of total exemption in terms of notification no. 46/81 which granted exemption to tariff item 68 goods manufactured elsewhere than in a factory as defined in section 2(m) of the factories act, 1948.3. this notification was superseded by notification no. 178/85, dated 1-8-1985 according to which first clearances of tariff item 68 goods (other than sandal wood oil), upto an aggregate value not exceeding rs. 20 lakhs cleared for home consumption on or after first april in any financial year by or on behalf of a manufacturer from one or more factories, were wholly exempt from duty. the notification further provided that nothing contained therein would apply to a manufacturer if the aggregate value of clearances of all excisable goods by him or on his behalf for home consumption, from one or more factories, during the preceding financial year, had exceeded rs. 75 lakhs. the second proviso to the notification stipulated that nothing contained therein would apply to the said goods cleared from a factory as defined in section 2(m) of the factories act, 1948. after the issue of notification no. 178/85, the appellants duly applied for l-4 licence and filed classification lists claiming the benefit of notification in respect of first clearances of rs. 20 lakhs subsequent to 1-8-1985 and the classification list was duly approved. a show cause notice was issued to them on 24-1-1986 proposing recovery of duty of rs. 1,73,424/- in respect of goods cleared during august to december 1985 on the ' ground that the appellants had already cleared goods valued at over rs. 20 lakhs prior to 1-8-1985 i.e. during the period from 1-4-1985 to 31-7-1985 and hence were not entitled to the benefit of the notification no. 178/85 even to the extent of rs. 20 lakhs. the assistant collector confirmed the demand vide his order dated 29-9-1986 and his order was confirmed by the lower appellate authority vide order dated 20-7-1988. hence, this appeal.4. we have heard shri pratap venugopal, learned counsel and shri j.m.sharma, learned dr.5. we are not in agreement with the contention of the learned counsel that for the purpose of computing the value of clearances under notification no. 178/85, the value of goods cleared under notification no. 46/81 is to be excluded as notification no. 178/85 is applicable only to tariff item 68 goods (other than sandal wood oil) cleared for home consumption on or after 1st day of april in any financial year...in the case of first clearance of the said goods upto an aggregate value not exceeding rs. 20 lakhs. the first clearances in the financial year 1985-86 would include clearances made between april and august 1985 under the provisions of notification no. 46/81. further there is nothing in notification no. 178/85 providing for exclusion of clearances effected under any other notification. hence we hold that the appellants were not entitled to the benefit of notification no.178/85 for clearances of their goods for the period 1-8-1985 to 31-12-1985. however, the alternative benefit of notification no. 77/85 will be available to them. para l(a) of this notification exempts tariff item 68 goods (other than sandal wood oil) cleared for home consumption on or after 1st day of april in any financial year by or on behalf of a manufacturer from one or more factories in the case of 1st clearances of the last goods upto an aggregate value not exceeding rs. 20 lakhs from the whole of the duty of excise leviable thereon under section 3 of the central excises & salt act, 1944. explanation ii to the notification which is relevant for the present case, reads thus : "explanation ii: - for the purpose of computing the value of clearances under this notification, - the clearances of excisable goods, which are exempted from the whole of the duty of excise leviable [thereon] by any other notification (not being a notification where exemption from the whole of the duty of excise leviable thereon is granted based upon the value or quantity of clearances made in a financial year) issued under sub-rule (1) of rule 8 of the central excise rules, 1944 and for the time being in force shall not be taken into account." notification no. 46/81 did not bar the duty exemption conferred on the value or quantity of clearances of goods in any financial year but was only subject to the condition that the goods should have been manufactured in a premises not confirming to the definition of factory in the factories act, 1948. it is not in dispute that if the value of clearances of the appellants under notification no. 46/81 were to be excluded, the value of clearances for the period of demand falls below rs.20 lakhs. therefore, following the ratio of the tribunal's order in the case of choice laboratories state highway v. collector of central excise reported in [1991 (53) e.l.t. 149] wherein the benefit of notification no. 140/83 which contained an identical explanation, was extended to the asses-sees therein, we hold that the appellants are entitled to the benefit of notification no. 77/85, dated 17-3-1985 for the period in question and hence the duty demand cannot be sustained.accordingly, we set aside the impugned order and allow the appeal with consequential relief, if any, due to the appellants in accordance with law.

Judgment:
1. The above appeal arises out of the order passed by the Collector of Central Excise (Appeals), Bombay upholding the order of the Assistant Collector, denying the benefit of Notification No. 178/85-C.E., dated 1-8-1985 on the ground that the appellants had already cleared goods of a value exceeding Rs. 20 lakhs during the period prior to 1-8-1985 and consequently exceeded the clearance ceiling stipulated in Notification No. 178/85-C.E.2. The brief facts of the case are that the appellants who are manufacturers of plasticisers falling under Tariff Item 68 of the Schedule to the erstwhile Central Excise Tariff and availing of the benefit of total exemption in terms of Notification No. 46/81 which granted exemption to Tariff Item 68 goods manufactured elsewhere than in a factory as defined in Section 2(m) of the Factories Act, 1948.

3. This Notification was superseded by Notification No. 178/85, dated 1-8-1985 according to which first clearances of Tariff Item 68 goods (other than sandal wood oil), upto an aggregate value not exceeding Rs. 20 lakhs cleared for home consumption on or after first April in any financial year by or on behalf of a manufacturer from one or more factories, were wholly exempt from duty. The Notification further provided that nothing contained therein would apply to a manufacturer if the aggregate value of clearances of all excisable goods by him or on his behalf for home consumption, from one or more factories, during the preceding financial year, had exceeded Rs. 75 lakhs. The second proviso to the Notification stipulated that nothing contained therein would apply to the said goods cleared from a factory as defined in Section 2(m) of the Factories Act, 1948. After the issue of Notification No. 178/85, the appellants duly applied for L-4 Licence and filed classification lists claiming the benefit of Notification in respect of first clearances of Rs. 20 lakhs subsequent to 1-8-1985 and the classification list was duly approved. A show cause notice was issued to them on 24-1-1986 proposing recovery of duty of Rs. 1,73,424/- in respect of goods cleared during August to December 1985 on the ' ground that the appellants had already cleared goods valued at over Rs. 20 lakhs prior to 1-8-1985 i.e. during the period from 1-4-1985 to 31-7-1985 and hence were not entitled to the benefit of the Notification No. 178/85 even to the extent of Rs. 20 lakhs. The Assistant Collector confirmed the demand vide his order dated 29-9-1986 and his order was confirmed by the lower appellate authority vide order dated 20-7-1988. Hence, this appeal.

4. We have heard Shri Pratap Venugopal, learned Counsel and Shri J.M.Sharma, learned DR.5. We are not in agreement with the contention of the Learned Counsel that for the purpose of computing the value of clearances under Notification No. 178/85, the value of goods cleared under Notification No. 46/81 is to be excluded as Notification No. 178/85 is applicable only to Tariff Item 68 goods (other than Sandal wood oil) cleared for home consumption on or after 1st day of April in any financial year...in the case of first clearance of the said goods upto an aggregate value not exceeding Rs. 20 lakhs. The first clearances in the financial year 1985-86 would include clearances made between April and August 1985 under the provisions of Notification No. 46/81. Further there is nothing in Notification No. 178/85 providing for exclusion of clearances effected under any other Notification. Hence we hold that the appellants were not entitled to the benefit of Notification No.178/85 for clearances of their goods for the period 1-8-1985 to 31-12-1985. However, the alternative benefit of Notification No. 77/85 will be available to them. Para l(a) of this Notification exempts Tariff Item 68 goods (other than Sandal wood oil) cleared for home consumption on or after 1st day of April in any financial year by or on behalf of a manufacturer from one or more factories in the case of 1st clearances of the last goods upto an aggregate value not exceeding Rs. 20 lakhs from the whole of the duty of excise leviable thereon under Section 3 of the Central Excises & Salt Act, 1944. Explanation II to the Notification which is relevant for the present case, reads thus : "Explanation II: - For the purpose of computing the value of clearances under this notification, - the clearances of excisable goods, which are exempted from the whole of the duty of excise leviable [thereon] by any other notification (not being a notification where exemption from the whole of the duty of excise leviable thereon is granted based upon the value or quantity of clearances made in a financial year) issued under Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 and for the time being in force shall not be taken into account." Notification No. 46/81 did not bar the duty exemption conferred on the value or quantity of clearances of goods in any financial year but was only subject to the condition that the goods should have been manufactured in a premises not confirming to the definition of factory in the Factories Act, 1948. It is not in dispute that if the value of clearances of the appellants under Notification No. 46/81 were to be excluded, the value of clearances for the period of demand falls below Rs.20 lakhs. Therefore, following the ratio of the Tribunal's order in the case of Choice Laboratories State Highway v. Collector of Central Excise reported in [1991 (53) E.L.T. 149] wherein the benefit of Notification No. 140/83 which contained an identical explanation, was extended to the asses-sees therein, we hold that the appellants are entitled to the benefit of Notification No. 77/85, dated 17-3-1985 for the period in question and hence the duty demand cannot be sustained.

Accordingly, we set aside the impugned order and allow the appeal with consequential relief, if any, due to the appellants in accordance with law.