1986 (10) TMI 246 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 80/80 regarding the levy of duty on P or P foods and soaps manufactured by the appellants.
2. Inclusion of exempted goods in the total value of clearances of excisable goods for the purpose of the notification.
3. Divergence of views among different High Courts on the concept of excisable goods and the impact of exemptions on their classification.

Analysis:

Issue 1:
The appeal challenges the order of the Collector of Central Excise (Appeals) upholding the levy of duty on P or P foods and soaps manufactured by the appellants under Notification No. 80/80. The dispute revolves around whether the aggregate value of clearances during the preceding year should include goods exempted under various notifications. The appellants argue that once goods are exempted, they cease to be excisable goods. They cite judgments from various High Courts and the Supreme Court to support their interpretation.

Issue 2:
The Respondent argues that even exempted goods, such as spice powders, should be included in the total value of clearances for the notification. The Respondent cites a reported case to support this stance, emphasizing that goods exempted from duty under Rule 8 of the Central Excise Rules are still considered excisable goods. The divergence of views among High Courts on this matter is acknowledged, with the Supreme Court's interpretation of taxable goods under a different Act also considered.

Issue 3:
The judgment delves into the interpretation of Section 7-A of the Madras General Sales Tax Act, 1959, by the Supreme Court. The Court clarifies the criteria for goods to be considered taxable under the Act, highlighting the importance of distinguishing between "taxable person," "taxable goods," and "taxable event." The Court's observations on exempted goods under the Madras Act are distinguished from the Central Excise law. The Karnataka High Court's decision is referenced, emphasizing that excisable goods do not lose their classification due to exemptions and that the character of excisable goods is defined by the Act, not the actual levy of duty.

Conclusion:
The majority opinion rejects the appeal, affirming the inclusion of the value of exempted goods in the total clearances of excisable goods for the levy of duty. The judgment aligns with the rationale of the Karnataka High Court and the prevailing view among High Courts that exemptions do not alter the classification of excisable goods. A separate concurring opinion acknowledges the differing interpretations but ultimately agrees with the main conclusion that exemptions do not render goods non-excisable.