1979 (7) TMI 240 - HC - Central Excise

Summary

Issues Involved:
1. Interpretation of the Notification dated 1st October 1960 regarding excise duty exemptions.
2. Whether the exemption applies separately to each factory or collectively to the manufacturer.

Summary:

Issue 1: Interpretation of the Notification dated 1st October 1960 regarding excise duty exemptions.
The petition raises a question about the construction of a Notification issued by the Government of India, granting certain exemptions in respect of goods subject to excise duties. The Notification exempts specified quantities of goods cleared by manufacturers for home consumption. The relevant entry for Oil Paints and Enamels specifies that the output for the year should not exceed 3000 metric tonnes for exemption eligibility.

Issue 2: Whether the exemption applies separately to each factory or collectively to the manufacturer.
The petitioners, manufacturers of Oil Paints and Enamels with factories at Panvel and Calcutta, claimed that exemptions could be availed independently for each factory. The Department issued a demand notice for differential duty, arguing that the total output from both factories exceeded the permissible limit, thus barring the petitioners from availing the concessional rates. The Assistant Collector and the Appellate Collector upheld this view, stating that the production of all factories owned by the manufacturer must be clubbed together for exemption purposes.

Mr. Bhat, counsel for the petitioners, argued that each factory should be treated separately as a separate entity, citing separate licenses and duty collections for each factory. He referred to other notifications where specific references to "factory" were made, suggesting that the absence of such a reference in the current Notification implied separate treatment for each factory.

The court held that the Notification's terminology must be interpreted as referring to the manufacturer, not the factory. The exemption applies to the total output of the manufacturer, not individual factories. The first proviso, which refers to a factory, deals with different manufacturers running the same factory at different times in a financial year, preventing multiple exemptions for the same factory. The court concluded that the benefit of the Notification is based on the consolidated output of all factories owned by the manufacturer.

The court supported its view with a decision from the Calcutta High Court in AIR 1958 Cal. 283, which held that the exemption is not per factory but consolidated for the manufacturer. Consequently, the petition was dismissed with costs, upholding the demands made by the Central Excise Authorities.