1996 (9) TMI 139 - SC - Central Excise

Summary

Issues:
- Interpretation of exemption notification under Rule 8 of the Central Excise Rules.
- Whether the cutting of circles from steel sheets amounts to manufacture.
- Correct calculation of the total value of excisable goods for exemption eligibility.

Analysis:

The judgment by the Supreme Court involved an appeal challenging the correctness of an order by the Customs, Excise and Gold (Control) Appellate Tribunal. The case revolved around the appellants' claim for exemption under a notification issued under Rule 8 of the Central Excise Rules. The exemption was subject to conditions, including a threshold value of clearances in the preceding financial year not exceeding rupees thirty lakhs. The appellants' value of clearances in 1977-78 exceeded this threshold, leading to a demand for duty and penalty by the Collector of Central Excise.

The appellants contended that the cutting of circles from steel sheets in the godown did not constitute manufacture and should be excluded from the total value of clearances for exemption purposes. However, the Tribunal upheld the Collector's order, stating that even after excluding the value of circles, the total clearances exceeded the threshold. The appellants argued that the value of clearances of utensils was below thirty lakhs due to the exclusion of certain taxes, which the Tribunal did not address.

The Court referred to Section 4(4)(d)(ii) of the Central Excises & Salt Act, which specifies that the value of excisable goods should not include excise duty, sales tax, and other payable taxes. The Collector erred in including these taxes while calculating the assessable value. The correct calculation of the total value of excisable goods for exemption eligibility must align with Section 4.

Consequently, the Court allowed the appeal, setting aside the Tribunal's order. The Excise authorities were directed to reassess the value of goods cleared by the appellants for exemption eligibility. If the appellants qualify for the exemption, the duty paid should be refunded. Any penalty or fine paid by the appellants should be refunded regardless. No costs were awarded in this matter.