1985 (6) TMI 174 - AT - Central Excise

Summary

Issues:
1. Entitlement to duty exemption under Notification No. 80/80-C.E., dated 19-6-1980 for soap clearance.
2. Correct classification of soap under sub-item (1) or sub-item (2) of item No. 15 of the Central Excise Tariff.

Analysis:

Entitlement to Duty Exemption:
The appeal involved the question of whether M/s. Sunrise Soaps & Chemicals (P) Ltd. were entitled to exemption of duty under Notification No. 80/80-C.E., dated 19-6-1980 for the soap they cleared without payment of duty. The Collector of Customs and Central Excise, Ahmedabad had held that the appellants were not eligible for the exemption as they had manufactured and cleared machinery valued at Rs. 52,27,622/- in the previous financial year, exceeding the limit of Rs. 20 lakhs for exemption. The Notification exempted excisable goods subject to conditions, and it was not applicable to manufacturers exceeding the clearance value threshold.

Correct Classification of Soap:
Another issue was the correct classification of the soap manufactured by the appellants under the Central Excise Tariff. The Collector had determined that the soap was incorrectly classified under sub-item (1) of item 15, while it should have been classified under sub-item (2) of the same item. This classification discrepancy was a secondary issue to be resolved, depending on the decision regarding duty exemption eligibility.

Legal Arguments:
During the hearing, the appellant's Advocate argued that the machinery fabricated by the appellants did not fall under the purview of the exemption notification, and their total clearance value did not exceed Rs. 20 lakhs in the previous financial year. The Advocate referenced a previous Tribunal order related to machinery clearance, where it was determined that certain items were not considered machinery, impacting the duty liability. The appellant contended that since the Tribunal had assessed the value of complete machinery differently, the duty exemption should apply based on the revised machinery value.

Decision and Remand:
After considering the arguments and a previous Tribunal decision, the Appellate Tribunal concluded that the matter required re-examination by the Collector of Customs and Central Excise in light of the Tribunal's decision. The impugned order of the Collector was set aside, and the case was remanded for re-decision. The Collector was directed to provide the appellants with a personal hearing opportunity before issuing a fresh order. The appeal was disposed of with these directions for further proceedings.