1990 (12) TMI 91 - HC - Central Excise

Summary

Issues Involved:
1. Interpretation of the exemption notification dated 19-6-1980.
2. Authority to review the approved classification list.
3. Clubbing of clearances of different manufacturers for exemption purposes.

Detailed Analysis:

1. Interpretation of the Exemption Notification
The appellant contended that the interpretation of the notification dated 19-6-1980 by the Assistant Collector and the learned single Judge was erroneous. The notification exempts specified goods cleared for home consumption up to an aggregate value of Rs. 7.5 lakhs from the whole of the duty of excise and provides partial exemption for the next Rs. 7.5 lakhs. The proviso states that the aggregate value of clearances from any factory by or on behalf of one or more manufacturers shall not exceed Rs. 15 lakhs in any financial year. The court held that the notification extends the benefit of exemption only if the conditions specified therein are fulfilled. The total clearances from any factory, whether by one or more manufacturers, eligible for total or partial exemption, shall not exceed Rs. 15 lakhs. The notification aims to benefit small manufacturers in small factories, and both the manufacturer and the factory must meet the specified conditions to claim exemption.

2. Authority to Review the Approved Classification List
The appellant argued that once the classification list had been approved, the order should not be reviewed by the same authority as there was no power of review vested in such authority. The court referred to the Supreme Court's decisions in N.B. Sanjana v. Elphinstone Mills and D.R. Kohli v. Atul Products Ltd., which clarified that even a nil assessment where duty is payable amounts to a short levy. The court held that the provisions of Sec. 11A of the Act were applicable for recovering excise duty short levied due to an erroneous approval of the classification list. The withdrawal of the classification list was to correct the endorsement of nil duty, not to review the classification of goods.

3. Clubbing of Clearances of Different Manufacturers
The appellant claimed to be an independent manufacturer and argued against clubbing the clearances of M/s. Regal Rubbers with its own. The court held that the notification considers the aggregate value of clearances from any factory, regardless of whether the goods are manufactured by one or more manufacturers. The entitlement to exemption must be worked out by considering the clearances already made by M/s. Regal Rubbers from the same factory in the same financial year. The appellant had taken on sub-lease the rights to the factory, equipment, and machinery from M/s. Regal Rubbers, and the factory's total clearances must be considered for exemption purposes.

Conclusion:
The court dismissed the appeal, upholding the legality of the Assistant Collector's order and the learned single Judge's judgment. The interpretation of the exemption notification was found to be correct, the authority to review the classification list under Sec. 11A was affirmed, and the clubbing of clearances from the same factory was justified. The appeal was dismissed with no order as to costs.