1989 (2) TMI 124 - HC - Central Excise

Summary

Issues:
1. Exemption from excise duty for a partnership firm manufacturing fire alarms.
2. Determination of duty and penalty by the Assistant Collector.
3. Interpretation of notifications regarding exemption limits.
4. Validity of the show cause notice for not obtaining a license.

Analysis:
1. The petitioner, a partnership firm engaged in assembling fire alarms, contested the duty levied by the Assistant Collector under the Central Excises and Salt Act, 1944. The firm, registered as a small-scale industry, claimed exemption from excise duty and licensing requirements under relevant notifications.

2. The Assistant Collector found the fire alarms manufactured by the petitioner as dutiable goods falling under the Central Excise Tariff Act. However, the Court held that the goods were exempt from duty during the relevant period based on notifications issued by the authorities. The petitioner's clearance did not exceed the exemption limit of Rs. 20 lakhs under Notification No. 77 of 85.

3. The Court examined the conflicting notifications regarding exemption limits. Despite Notification No. 175/86 reducing the exemption limit to Rs. 7.5 lakhs, it was restored to Rs. 20 lakhs by Notification No. 213/86. The Court ruled that the exemption applied retrospectively, allowing the petitioner to claim exemption for clearances up to Rs. 20 lakhs between 1st March, 1986, and 24th March, 1986.

4. The show cause notice issued for not obtaining a license was also challenged. The Court did not delve into the validity of this notice, as the primary issue of duty exemption was erroneously decided. The Court set aside the Assistant Collector's order and directed a fresh decision, allowing the petitioner to raise any other disputes before the authorities.

In conclusion, the Court granted relief to the petitioner, quashing the Assistant Collector's order and instructing a fresh determination in light of the exemption notifications. The petitioner was allowed to present any additional disputes, and no costs were awarded in the matter.