1985 (9) TMI 202 - AT - Central Excise

Summary

Issues:
Interpretation of exemption notification for cess under Section 9 of Industries (Development and Regulation) Act, 1951 based on investment in fixed assets. Calculation of value of plant and machinery for determining eligibility for exemption. Application of guidelines for determining value of plant and machinery.

Analysis:
The Central Government imposed a cess on paper and paperboard under Section 9 of the Industries (Development and Regulation) Act, 1951, exempting industrial undertakings with investments not exceeding Rs. 20 lakhs through a retrospective notification issued on 3-2-1981. The dispute centered around whether the respondents qualified for this exemption.

The Assistant Collector calculated the value of plant and machinery in the respondent's factory to be Rs. 20.51 lakhs, exceeding the exemption limit. The Appellate Collector ruled in favor of the respondents, leading to the department's appeal. The department contended that all costs related to machinery installation should be included in the calculation, emphasizing the significance of the notification's wording and the industry-specific nature of the cess.

The respondents argued that guidelines from 1975 excluded certain costs like transport and erection charges from the value calculation, citing relevant orders from the Tribunal. They maintained that the value of accessories and certain materials should not be included in determining eligibility for exemption, focusing on the original value of machinery.

The Tribunal considered the historical context of small scale unit concessions and the uniformity of approach in value calculation norms set by the Central Government in 1975. The Tribunal noted that the State Government of Tamil Nadu followed these norms, registering the respondents as a small scale unit. By excluding specific elements from the value calculation, the original value fell below the exemption limit, entitling the respondents to the exemption.

In conclusion, the Tribunal rejected the department's appeal, upholding the Appellate Collector's decision in favor of the respondents. The Tribunal emphasized the adherence to established norms and the exclusion of certain costs in determining the eligibility for exemption, providing consequential relief to the respondents.