1989 (9) TMI 269 - AT - Central Excise

Summary

Issues: Interpretation of Notification 175/86 regarding exemption limit for specified goods and discrimination in granting benefits.

The judgment involves an appeal against the orders of the Collector of Central Excise (Appeals) Madras, upholding the rejection of the appellants' claim by the original adjudicating authority. The appellants, a Small Scale Unit, manufacture plywood, veneers, and flush doors falling under specific sub-headings. They initially availed exemption up to Rs. 15 lakhs for plywood and blockboards but later cleared other specified items, leading to a duty demand. The issue revolved around the interpretation of Notification No. 175/86, specifically whether the exemption limit of Rs. 15 lakhs applied to each specified item subject to an aggregate value of Rs. 30 lakhs. The lower authorities interpreted the notification in a way that discriminated between manufacturers based on the order of clearance of goods, denying benefits to those who cleared one specified item first and another later. The Tribunal held that as long as the other parameters of the notification were met, the exemption limit of Rs. 15 lakhs applied to each category of goods, and benefits should not be denied based on the order of clearance. The Tribunal directed the lower authority to reconsider the matter and allow the refund claim if other conditions of the notification were satisfied, even if the clearances exceeded Rs. 15 lakhs for the first category of goods. The appeals were allowed in favor of the appellants.

In the judgment, the Collector of Central Excise (Appeals) upheld the duty demand for the appellants, emphasizing that duty paid goods would be computed in the aggregate value for exemption purposes. The Collector rejected the contention that the appellants were entitled to Rs. 15 lakhs value of clearance without duty payment for each heading, disregarding the condition of the first clearance in a financial year. The appellants' consultant argued that they met the eligibility criteria for Notification 175/86 as a registered SSI Unit and had received full benefits for plywood and blockboards. The issue for consideration was whether the benefit of the notification was available up to Rs. 15 lakhs for each specified item, subject to an aggregate value of Rs. 30 lakhs. The Tribunal criticized the interpretation that discriminated between manufacturers based on the order of clearance, holding that such differentiation without rationale should be discarded. The Tribunal ruled that the exemption limit of Rs. 15 lakhs applied to each category of goods, and benefits should not be denied based on the order of clearance. The Tribunal directed the lower authority to reevaluate the matter and allow the refund claim if other notification conditions were met, irrespective of exceeding the Rs. 15 lakhs limit for the first category of goods. The appeals were allowed in favor of the appellants.