2003 (2) TMI 86 - AT - Central Excise

Summary

Issues Involved:
1. Inclusion of duty-paid clearances in the aggregate value of first clearances for SSI exemption.
2. Effective date for the applicability of the exemption notification to cotton yarn.
3. Treatment of amounts paid as duty on clearances made before availing exemption.

Summary:

1. Inclusion of Duty-Paid Clearances in Aggregate Value:
The central issue was whether the value of cotton yarn cleared on payment of duty by a small-scale manufacturer from 25-4-1994 should be included in the aggregate value of Rs. 30 lacs of first clearances for the purpose of exemption under the SSI Exemption Scheme. The Tribunal examined conflicting decisions from co-ordinate Benches. Decisions in Watts Electronics (P) Ltd. v. CCE, Kochi, CCE, Coimbatore v. Sri Kumaran Spinners (P) Ltd., and CCE, Coimbatore v. S.M. Textiles (P) Ltd. held that only clearances made from the date the manufacturer started availing the exemption should be included. Conversely, cases like CCE v. Global Remedies Pvt. Ltd., Garlon Polyfab Industries Ltd. v. CCE, and Central Pulp Mills Ltd. v. CCE, Baroda took a contrary view.

2. Effective Date for Applicability of Exemption:
The Tribunal held that the exemption under Notification No. 1/93-C.E. became operative for cotton yarn from 25-4-1994, the date on which the product was specified under Notification No. 90/94-C.E. The Tribunal rejected the argument that the exemption should apply only from the date the manufacturer opted to avail it. The Tribunal emphasized that the exemption notification became enforceable from the date of its publication in the Official Gazette, as supported by the Supreme Court's ruling in Pankaj Jain Agencies v. Union of India.

3. Treatment of Amounts Paid as Duty:
The Tribunal concluded that amounts paid as duty on clearances made from 25-4-1994 until the manufacturers started availing the exemption should not be recognized as duty of excise but as deposits. These amounts are liable to be adjusted against the duty payable under the adjudication orders. The Tribunal directed the adjudicating authorities to make such adjustments and modify their orders accordingly.

Conclusion:
The Tribunal ruled in favor of the Revenue, holding that the duty-paid clearances from 25-4-1994 should be included in the aggregate value of first clearances for the purpose of exemption under Notification No. 1/93-C.E. The amounts paid as duty during this period should be treated as deposits and adjusted against the duty payable. The order of the lower appellate authority allowing the respondents to operate under the exemption only from the dates they started availing it was set aside.