1985 (7) TMI 117 - HC - Central Excise

Summary

Issues:
Classification of excisable goods under different tariff items, eligibility for exemption under Notification dated 18-6-1977, clubbing of capital investment for grant of exemption, interpretation of total value of excisable goods cleared.

Analysis:
The judgment pertains to a case where a petitioner company, engaged in manufacturing aerated water and ice, sought exemption under a notification dated 18-6-1977. The company had classified aerated water under Tariff Item No. 1D and ice under Tariff Item No. 68 of the Central Excises and Salt Act, 1944. The Assistant Collector rejected the petitioner's claim, citing that the capital investment exceeded the limit specified in the notification and the total value of excisable goods cleared exceeded the threshold. The petitioner challenged this decision, arguing that the two commodities were manufactured in different units and did not fall under the same tariff item.

The court analyzed the conditions for invoking the exemption notification, emphasizing that the two commodities must fall under Tariff Item No. 68. It noted that the petitioner had separate units for manufacturing ice and aerated water, as evidenced by the balance sheet. The court held that clubbing the capital investment of both units for exemption was not permissible. It also highlighted that even if ice fell under Tariff Item No. 68, it could be exempted if the total clearance value did not exceed a specified amount in the preceding financial year.

Referring to a previous decision and a case from the Allahabad High Court, the court concluded that clubbing the capital investment of two units for exemption was not valid. Consequently, the writ petition was allowed, quashing the Assistant Collector's order. The case was remanded for further consideration in accordance with the court's observations. The judgment was a split decision, with both judges concurring on the outcome.