1984 (1) TMI 315 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification Nos. 89/79 and 105/80 regarding exemptions from licensing control and payment of duty.
2. Determination of the value of capital investment on plant and machinery for the purpose of central excise duty.
3. Inclusion of various expenses in the total value of investment on plant and machinery.
4. Consideration of guidelines and instructions issued by relevant authorities for computing the value of capital investment.

Analysis:
1. The appeal revolved around the correct interpretation of Notification Nos. 89/79 and 105/80 concerning exemptions from licensing control and duty payment. The Collector of Central Excise, Baroda, alleged that the appellants did not qualify for the exemptions due to the value of plant and machinery exceeding the prescribed limit of Rs. 10 lakhs. The appellants argued that the expenses incurred should be deducted from the total balance sheet amount to determine the actual value of investment on plant and machinery.

2. The central issue was whether the value of capital investment on plant and machinery exceeded Rs. 10 lakhs. The appellants presented a certificate from their Chartered Accountants stating that the total value in the balance sheet, including expenses, was higher than the limit. The Chief Executive clarified that the fixed assets' total included expenses like technical know-how fees and incidental expenses capitalized.

3. The Collector contended that all expenses related to plant and machinery, including installation and erection charges, should be considered part of the total investment. However, the Bench disagreed, stating that certain expenses might not qualify as part of the capital investment. Even after considering the Department's calculations, the excess investment was minimal, and excluding certain expenses would bring the total value below the prescribed limit.

4. The Bench considered various guidelines, trade notices, and instructions issued by different departments for computing the value of capital investment on plant and machinery. They emphasized that the appellants could reasonably assume that certain expenses would not form part of the capital investment. The Collector's conclusions were deemed incorrect, and the Bench set aside the order, allowing the appeal with consequential relief.