2003 (3) TMI 107 - SC - Central Excise

Whether the respondent is entitled to the benefit of exemption under the notification dated March 1, 1986, with effect from March 31, 1988, the date on which registration was granted? Held that - Remit the matter to the Tribunal to hear the parties and record a clear finding as to whether the first application made on 3rd December, 1986 was an application for registration whether provisional or permanent, and whether the second application made sometime in February/March, 1988 was an application which was supplemental in nature or in continuation of the first application made on 3rd December, 1986. If the Tribunal comes to the conclusion that the application made on the 3rd of December, 1986 was rejected, then the benefit, of exemption should be extended to the respondent only with effect from the date of the second application made sometime in February, 1988. However, if the Tribunal comes to the finding that the first application made on 3rd December, 1986 remained pending and the second application made sometime in February/March, 1988 was merely a continuation of the first application, being supplemental in nature, then the respondent would be entitled to the benefit of exemption with effect, from the date of the first application i.e. from 3rd December, 1986. The Tribunal will dispose of the appeal accordingly.

Issues Involved:
1. Date from which the benefit of exemption under the notification dated March 1, 1986, should be extended.
2. Interpretation of the notification and its applicability based on the date of application for registration versus the date of issuance of the registration certificate.
3. Examination of relevant precedents and their applicability.
4. Determination of the factual scenario regarding the applications for registration.

Detailed Analysis:

1. Date from which the benefit of exemption under the notification dated March 1, 1986, should be extended:

The core issue revolves around whether the benefit of exemption under the notification dated March 1, 1986, should be granted from the date of the application for registration or from the date of issuance of the registration certificate. The appellant argued that the exemption should commence from the date of issuance of the registration certificate, while the respondent contended that it should be effective from the date of the application for registration.

2. Interpretation of the notification and its applicability based on the date of application for registration versus the date of issuance of the registration certificate:

The notification in question, particularly paragraph 4, does not explicitly specify the date from which the certificate becomes effective. The notification states: "The exemption contained in this notification shall be applicable only to a factory which is an undertaking registered with the Director of Industries in any State or the Developmental Commissioner (Small Scale Industries) as a small scale industry under the provisions of the Industries (Development and Regulations) Act, 1951 (65 of 1951)." The respondent argued that the certificate merely recognizes the status of an industry as a small scale industry, and the right to claim exemption flows from such status. The court agreed that it would be unreasonable to deprive a small scale industry of the benefit due to administrative delays in issuing the certificate.

3. Examination of relevant precedents and their applicability:

The court referred to several precedents to support the respondent's argument:

- State of U.P. and Anr. v. Haji Ismail Noor Mohammad and Co.: The court held that the requirements of holding a recognition certificate are substantially complied with if the certificate is available at the time of assessment, even if issued later.

- The Assessing Authority and Ors. v. Patiala Biscuits Manufacturers Pvt. Ltd.: The court interpreted that the benefit of registration should be extended from the date of application, emphasizing a liberal approach to avoid unreasonable and oppressive outcomes.

- Collector of Central Excise v. Parle Exports (Pvt.) Ltd. and U.O.I. v. Wood Papers Ltd.: The court noted that while eligibility criteria should be strictly construed, a liberal approach is permissible in the matter of granting exemptions if it does not violate the language of the notification.

4. Determination of the factual scenario regarding the applications for registration:

The factual scenario concerning the applications for registration was unclear. The respondent initially applied for registration on December 3, 1986, but no action was taken on this application. A second application was made in February/March 1988, leading to the issuance of a permanent registration certificate on March 31, 1988. The court remitted the matter to the Tribunal to determine whether the first application was for provisional or permanent registration and whether the second application was supplemental to the first. The Tribunal was directed to decide if the first application was rejected or merely pending, which would determine the effective date for the exemption.

Conclusion:

The court concluded that the benefit of exemption should be extended from the date of the application for registration if the application was pending and not rejected. The matter was remitted to the Tribunal to ascertain the factual details regarding the applications. The appeal was disposed of with no order as to costs.

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