1987 (10) TMI 256 - AT - Central Excise

Summary

Issues:
Interpretation of Notification 71/78-C.E. regarding exemption eligibility for motor vehicle parts under Tariff Item 34A based on aggregate clearances of specified goods and excisable goods during the financial year 1979-80.

Analysis:
The appellants manufactured motor vehicle parts under Tariff Item 34A and claimed exemption under Notification 71/78-C.E. for the financial year 1979-80. The exemption allowed duty exemption on the first clearances of motor vehicle parts up to Rs. 5,00,000/- during the financial year. However, a show cause notice was issued alleging ineligibility due to exceeding the specified goods clearance limit of Rs. 15,00,000/- during the previous financial year. The Assistant Collector and the Collector, Central Excise rejected the appellants' claim based on this ground.

The appellants argued that the clauses of the notification should be read distinctly, emphasizing clause (iii) which pertains to manufacturers producing excisable goods under more than one item number. They relied on a Calcutta High Court decision where a similar interpretation was accepted, stating that the exemption limit for specified goods exceeding Rs. 15,00,000/- but total excisable goods clearance being less than Rs. 20,00,000/- should still qualify for exemption. The department, on the other hand, contended that clauses (ii) and (iii) should be read together, considering the total clearances of specified goods.

The Tribunal analyzed the relevant parts of Notification 71/78-C.E., which set out conditions for exemption eligibility based on the aggregate value of specified goods and all excisable goods cleared during the preceding financial year. The Tribunal agreed with the appellants' interpretation, citing the Calcutta High Court decision and subsequent decisions confirming the independence of clauses (ii) and (iii). The Tribunal held that the clauses should be read in isolation and not together, determining that the appellants were entitled to the exemption despite exceeding the limit for specified goods under clause (ii). As there were no contrary decisions to the Calcutta High Court ruling, the Tribunal set aside the impugned order and allowed the appeal.

In conclusion, the Tribunal's decision clarified the interpretation of Notification 71/78-C.E. regarding exemption eligibility for motor vehicle parts under Tariff Item 34A. The judgment emphasized the independent nature of clauses (ii) and (iii) of the notification, supporting the appellants' claim for exemption based on the total excisable goods clearance being within the prescribed limit despite exceeding the specified goods clearance limit. The decision aligned with previous judicial interpretations and set aside the department's rejection of the appellants' claim, allowing the appeal.