1988 (4) TMI 197 - AT - Central Excise

Issues Involved:
1. Eligibility for exemption under Notification No. 80/80 and 106/80.
2. Interpretation of Explanation V to Notification No. 80/80.
3. Retrospective application of Notification No. 106/80.
4. Discrimination between new and old manufacturers.

Issue-wise Detailed Analysis:

1. Eligibility for exemption under Notification No. 80/80 and 106/80:
The appellants manufactured P.P. Medicines, including life-saving drugs, and argued that for the year 1979-80, the aggregate value of their clearances should be considered as Rs. 10,68,631.62 by excluding the value of life-saving drugs, which were exempted under Notification No. 106/80, for the purpose of claiming exemption under Notification No. 80/80. The relevant Notifications No. 80/80 and 106/80 provided specific exemptions and conditions for excisable goods, and the appellants contended that the life-saving drugs should be excluded from the aggregate value of clearances for the year 1979-80 to qualify for the exemption.

2. Interpretation of Explanation V to Notification No. 80/80:
The appellants argued that Explanation V to Notification No. 80/80 stipulates that the clearances of specified goods exempted by any other notification should not be taken into account for computing the aggregate value of clearances. They contended that even though life-saving drugs were not exempt during 1979-80, the exemption granted by Notification No. 106/80 in 1980 should be considered, thereby excluding the value of life-saving drugs from the aggregate clearances for 1979-80. The appellants emphasized that the wording of Explanation V does not suggest that the exemption must have been in place during the previous year.

3. Retrospective application of Notification No. 106/80:
The learned JDR opposed the appellants' plea, arguing that the benefit of Notification No. 106/80 could not be applied retrospectively to the year 1979-80. The JDR maintained that only the value of goods exempt during 1979-80 should be excluded for calculating the aggregate value of clearances. The JDR emphasized that applying the 1980 exemption to the previous year would be contrary to legal principles, as retrospective application of laws is generally not permissible.

4. Discrimination between new and old manufacturers:
The Tribunal examined whether the interpretation of Explanation V would create an unfair distinction between manufacturers who started production in 1980-81 and those who were already manufacturing in 1979-80. The Tribunal observed that applying the revenue's interpretation would disadvantage manufacturers like the appellants, who were already producing goods in 1979-80, compared to new manufacturers in 1980-81. The Tribunal noted that the notification did not explicitly call for such a distinction and that the eligibility criteria for exemption should be applied uniformly to avoid discrimination.

Separate Judgments:

Majority Judgment:
The majority held that the value of life-saving drugs should be excluded from the aggregate value of clearances for 1979-80 for the purpose of Notification No. 80/80. They reasoned that Explanation V intended to exclude the value of exempted goods, and there was no basis for treating manufacturers differently based on when they started production. The majority concluded that the appellants were eligible for the exemption and allowed the appeal with consequential relief.

Dissenting Opinion:
The dissenting opinion argued that Notification No. 106/80 could not be applied retrospectively to 1979-80. The dissent emphasized that the value of clearances for 1979-80 should include life-saving drugs, as they were not exempt during that year. The dissenting judge highlighted that applying the 1980 exemption to the previous year would be legally impermissible and suggested that any perceived inequity should be addressed by legislative amendments, not judicial interpretation. Consequently, the dissenting judge would have dismissed the appeals.

Conclusion:
The majority judgment favored the appellants, allowing the exclusion of life-saving drugs' value from the aggregate clearances for 1979-80 to qualify for the exemption under Notification No. 80/80, while the dissenting opinion opposed this retrospective application and would have dismissed the appeals.

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