Basant Ispat Udyog Pvt. Ltd. Vs. Collector of Central Excise - Court Judgment

Excerpt:
1. penalty of rs. 40,000/- has been imposed on the appellants for alleged failure to apply for central excise licence after crossing the 80% of the exemption limit.2. on behalf of the appellants it is contended that they had actually applied for the licence on 9-10-1990 as they were likely to cross the 80% of the exemption limit and as required vide notification no.175/86-c.e., dated 1-3-1986. it was added that the same was also granted on 16-10-1990. meanwhile, they crossed 80%, of the exemption limit. as they had applied for central excise licence before crossing 80% of the exemption limit, no penalty was leviable it is contended.3. learned sdr reiterated the order-in-original. he argued that once the appellants crossed 80% of the exemption limit they could not work without a central excise licence.4. considered. the provisions of section 6 of central excises and salt act read with rule 174 of central excise rules, 1944 no doubt require a manufacturer of excisable goods to obtain a central excise manufacturing licence. but these provisions are subject to the relaxations under rule 174a which empowers the govt. to relax the licensing requirement inter alia, in respect of goods which are, for the time being, exempted from central excise duty either conditionally or unconditionally. govt. issued notification 111/78-c.e., dated 9-5-1978 in exercise of the said power. this notification required the manufacturer exempted from the licensing control to undertake to apply for the licence when he reached 80% of the exemption limit. once he has done so, he was not required to suspend his manufacturing operation till actual receipt of the licence.5. it is not in dispute that the appellant did apply for central excise licence before he crossed 80% of the exemption limit.6. on this view of the matter, there is no contravention of the provisions of law and the appeal is allowed with consequential relief in accordance with law.

Judgment:
1. Penalty of Rs. 40,000/- has been imposed on the appellants for alleged failure to apply for Central Excise Licence after crossing the 80% of the exemption limit.

2. On behalf of the appellants it is contended that they had actually applied for the licence on 9-10-1990 as they were likely to cross the 80% of the exemption limit and as required vide Notification No.175/86-C.E., dated 1-3-1986. It was added that the same was also granted on 16-10-1990. Meanwhile, they crossed 80%, of the exemption limit. As they had applied for Central Excise licence before crossing 80% of the exemption limit, no penalty was leviable it is contended.

3. Learned SDR reiterated the Order-in-Original. He argued that once the appellants crossed 80% of the exemption limit they could not work without a Central Excise licence.

4. Considered. The provisions of Section 6 of Central Excises and Salt Act read with Rule 174 of Central Excise Rules, 1944 no doubt require a manufacturer of excisable goods to obtain a Central Excise manufacturing licence. But these provisions are subject to the relaxations under Rule 174A which empowers the Govt. to relax the licensing requirement inter alia, in respect of goods which are, for the time being, exempted from Central Excise duty either conditionally or unconditionally. Govt. issued Notification 111/78-C.E., dated 9-5-1978 in exercise of the said power. This notification required the manufacturer exempted from the licensing control to undertake to apply for the licence when he reached 80% of the exemption limit. Once he has done so, he was not required to suspend his manufacturing operation till actual receipt of the licence.

5. It is not in dispute that the appellant did apply for Central Excise licence before he crossed 80% of the exemption limit.

6. On this view of the matter, there is no contravention of the provisions of law and the appeal is allowed with consequential relief in accordance with law.