2015 (6) TMI 77 - AT - Central Excise

Benefit of Notification No. 175/86 dated 1.3.1986 - SSI Exemption - Revenue contends that as per the wordings of Notification 175/86, once clearances of the specified goods cross the limit of ₹ 30 lakh, the benefit of Notification 175/86 cannot be extended - Held that - Decision in the case of RAMAKRISHNA ENGG. WORKS Versus COLLECTOR OF C. EX., BOLPUR 1996 (2) TMI 208 - CEGAT, NEW DELHI followed - Decided against assessee.

Issues Involved:

1. Applicability and interpretation of SSI Exemption Notification No. 175/86.
2. Calculation of exemption limits for goods under different chapters.
3. Impact of prior clearances on subsequent eligibility for exemption.
4. Relevance of case laws and Larger Bench decisions.

Detailed Analysis:

1. Applicability and Interpretation of SSI Exemption Notification No. 175/86:

The appellant, a small-scale unit, was availing the benefit of Notification No. 175/86 dated 1.3.1986, which provided an exemption limit of Rs. 30 lakhs for the first aggregate clearance. The notification stipulated that the exemption limit for items falling under one chapter would not exceed Rs. 20 lakhs. The appellant's contention was that they could clear goods free of excise duty up to Rs. 30 lakhs, with a division of Rs. 20 lakhs for goods under Chapter 84 and Rs. 10 lakhs for goods under Chapter 87, even if they had cleared goods under Chapter 84 on payment of duty in between. The Revenue argued that once the clearances of specified goods crossed the limit of Rs. 30 lakhs, the benefit of Notification 175/86 could not be extended.

2. Calculation of Exemption Limits for Goods Under Different Chapters:

During the period from 1.4.1991 to 28.6.1991, the appellant cleared goods under Chapter 84 valued at Rs. 19,97,947/- at a nil rate of duty. Subsequently, they started paying duty on goods under Chapter 84. By 7.7.1991, they had cleared goods under Chapter 84 worth Rs. 23,10,202/- (both free of excise duty and on payment of duty) and goods under Chapter 87 worth Rs. 6,65,088/-. Thus, as of 7.7.1991, they had cleared goods worth Rs. 30 lakhs. The appellant claimed that they were entitled to the exemption up to Rs. 30 lakhs, divided as Rs. 20 lakhs for Chapter 84 and Rs. 10 lakhs for Chapter 87.

3. Impact of Prior Clearances on Subsequent Eligibility for Exemption:

The Revenue's position was supported by the Larger Bench decision in the case of Ramakrishna Engg. Works vs. CCE, Bolpur, which stated that once the clearances of specified goods crossed the limit of Rs. 30 lakhs, the exemption benefit could not be extended. The Tribunal found that the appellant's cited decisions were either prior to the Larger Bench decision or did not consider the Larger Bench decision.

4. Relevance of Case Laws and Larger Bench Decisions:

The appellant cited several case laws to support their contention, including decisions from the Tribunal and the Hon'ble Supreme Court. However, the Tribunal noted that these decisions were either before the Larger Bench decision or did not discuss it. The Larger Bench decision in Ramakrishna Engg. Works held that the first clearances up to Rs. 30 lakhs should be considered in a chronological order, and any goods cleared on payment of duty within this limit could not be excluded from the reckoning.

Conclusion:

The Tribunal dismissed the appeal, finding no merit in the appellant's submissions. The decision was based on the Larger Bench ruling that clearances exceeding Rs. 30 lakhs could not benefit from the exemption under Notification No. 175/86. The operative part of the judgment was pronounced in court.

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