1985 (4) TMI 282 - AT - Central Excise

Summary

Issues: Interpretation of Notification No. 89/79-C.E. regarding the inclusion of the value of dismantled machinery in the total capital investment for availing exemption.

Analysis:
The case involved a dispute regarding the entitlement of the appellants, M/s. Vidharbha Ceramics Pvt. Ltd., to the exemption under Notification No. 89/79-C.E. The Collector, Central Excise, Nagpur, had held that the appellants were not entitled to the benefit under the said notification, a decision confirmed by the Central Board of Excise and Customs. The issue before the Appellate Tribunal was whether the value of dismantled machinery should be included in the total capital investment for the purpose of applying the said notification.

The crux of the matter revolved around the interpretation of the proviso in Notification No. 89/79, which stated that the total value of the capital investment on plant and machinery should not exceed a specified amount. The appellants argued that the value of dismantled machinery should be excluded from this calculation, while the department contended otherwise, a position upheld by the lower authorities.

The Tribunal analyzed the provisions of Notification No. 89/79 and the subsequent Notification No. 105/80, which included an explanation stating that the value of machinery permanently removed should be excluded from the determination of capital investment. The appellants argued that this explanation was clarificatory and should apply retroactively to the earlier notification. However, the department argued that the explanation was only applicable to the period covered by Notification No. 105/80.

After considering the submissions, the Tribunal held that the purpose of the notifications was to provide relief to small-scale industries based on the total capital investment and clearances. It concluded that the value of dismantled machinery should be excluded from the calculation of capital investment under Notification No. 89/79-C.E. The Tribunal emphasized that including the value of dismantled machinery along with new machinery would not be appropriate. Therefore, the appeal was allowed in favor of the appellants, with the directive to exclude the value of dismantled machinery for the purpose of availing the exemption under Notification No. 89/79-C.E.