1982 (3) TMI 73 - HC - Central Excise

Excisable goods do not become non-excisable after exemption Value of clearances under exemption Notification

Summary

Issues:
1. Interpretation of exemption provisions under the Central Excises Act for a manufacturer of aluminium and stainless steel products.
2. Whether goods exempted from excise duty should be excluded while calculating the total value of excisable goods cleared by a manufacturer.
3. Effect of exemption notifications on the classification of goods as excisable under the Central Excises Act.

Detailed Analysis:
1. The judgment addressed the interpretation of exemption provisions under the Central Excises Act for a manufacturer of aluminium and stainless steel products. The petitioner claimed exemption based on the value of capital investment being below Rs. 10 lakhs, but the exemption was subject to the condition that total value of excisable goods cleared in the preceding year should not exceed Rs. 30 lakhs. The Court held that the exemption provisions did not exclude the value of goods exempted from excise duty, and the petitioner failed to meet the threshold due to the value of aluminium utensils, which were considered excisable goods under Item No. 68 of the Schedule.

2. The Court deliberated on whether goods exempted from excise duty should be excluded while calculating the total value of excisable goods cleared by a manufacturer. The petitioner argued that the value of exempted goods should be excluded to bring the total value below the threshold of Rs. 30 lakhs. However, the Court rejected this argument, emphasizing that the exemption notification did not change the classification of goods as excisable. The Court clarified that even though certain goods were exempted from duty, they remained excisable goods under the Act, and their value had to be considered for calculating the total clearance value.

3. The judgment also discussed the effect of exemption notifications on the classification of goods as excisable under the Central Excises Act. Referring to a previous case, the Court highlighted that goods exempted from excise duty did not cease to be excisable goods. The Court emphasized that exemption notifications under Rule 8 were issued precisely because the goods were covered by the First Schedule and continued to be classified as excisable goods. The Court rejected the argument that goods ceased to be excisable once exempted from duty, stating that the exemption did not alter the fundamental classification of goods as excisable under the Act. The Court concluded that the exemption notification did not change the excisable nature of the goods and upheld the impugned orders, dismissing the petitioner's claim.