1985 (9) TMI 93 - HC - Central Excise

Summary

Issues Involved:
1. Clubbing of clearances for excise duty exemption.
2. Jurisdiction of the Assistant Collector under Section 11A.
3. Interpretation of Notification No. 80/80.

Issue-Wise Detailed Analysis:

1. Clubbing of Clearances for Excise Duty Exemption:
The primary issue in this case is whether the clearances made by the petitioner from 1-12-1981 to 31-3-1982 should be clubbed with the clearances made by M/s. Regal Rubbers up to 30-11-1981 for the purpose of determining eligibility for excise duty exemption under Notification No. 80/80. The petitioner argued that M/s. Sun Rubbers and M/s. Regal Rubbers are distinct legal entities and should not be clubbed. The court, however, emphasized the importance of the term "any factory" in the notification, indicating that the aggregate value of clearances from the same factory during the financial year is crucial for exemption purposes. The court upheld the Assistant Collector's decision to club the clearances, as the factory's total production exceeded the exemption limit of Rs. 7.5 lakhs.

2. Jurisdiction of the Assistant Collector under Section 11A:
The petitioner contended that the Assistant Collector's order was without jurisdiction, arguing that it amounted to an impermissible review of his own order. The court rejected this argument, noting that the Assistant Collector's action was based on new facts that came to light after the initial assessment. The court referred to the Supreme Court's decision in D.R. Kohli and Others v. Atul Products Ltd., which clarified that Section 11A allows for reopening assessments based on new information. Therefore, the Assistant Collector's order was within jurisdiction and valid under Section 11A of the Central Excises Act.

3. Interpretation of Notification No. 80/80:
The court analyzed the relevant clauses and provisos of Notification No. 80/80, which grants excise duty exemption subject to certain conditions. The key condition is that the aggregate value of clearances from any factory should not exceed Rs. 7.5 lakhs in any financial year. The court emphasized that the notification's language focuses on the factory as the unit for exemption, rather than the individual manufacturer. This interpretation aligns with the proviso to Clause (1) and Clause 4 of the notification, which stress the importance of the aggregate value of clearances from the factory, regardless of whether multiple manufacturers operated it during the financial year.

Conclusion:
The court dismissed the writ petition, upholding the Assistant Collector's order. The clearances made by the petitioner were rightly clubbed with those of M/s. Regal Rubbers, and the exemption under Notification No. 80/80 was correctly withdrawn. The Assistant Collector acted within his jurisdiction under Section 11A, and the interpretation of the notification was consistent with its language and intent.