1989 (6) TMI 225 - AT - Central Excise

Summary

Issues:
Interpretation of eligibility criteria under Notification 175/86 for small scale industry exemption based on clearances in the previous and current financial years.

Analysis:
The appeal challenged the order of the Collector of Central Excise (Appeals), Madras, regarding the eligibility of the appellants for the benefit of Notification 175/86. The appellants, initially eligible under proviso 4(b) of the notification, became ineligible after an amendment (Notification 244/87) modified the eligibility criteria. The issue revolved around whether the appellants' eligibility should be based on clearances in the previous financial year or the current financial year, and if exceeding Rs. 7.5 lakhs in either year rendered them ineligible. The appellants were not registered with the Small Scale Industries authorities but with the Directorate General of Technical Development, making proviso 4(b) inapplicable to them. However, they sought consideration under proviso 4(a) of the notification.

The appellants argued that under proviso 4(a), they should be eligible for the concession if clearances did not exceed Rs. 7.5 lakhs in either the previous or current year. The Department, represented by the S.D.R., supported the Collector (Appeals) reasoning that the appellants were not eligible. The Tribunal noted that the exemption under Notification 175/86 applied to registered small scale industries, but also allowed unregistered units to benefit if clearances did not exceed Rs. 7.5 lakhs in the preceding or current financial year. The appellants claimed eligibility under proviso 4(a, which required clearances not to exceed Rs. 7.5 lakhs in either year. However, their current year's clearances had already surpassed this limit, making them ineligible under the amended Notification 244/87.

The Tribunal clarified that the conjunction "or" in proviso 4(a) should be read as "and" to give meaning to all conditions. For manufacturers registered with the Directorate General of Technical Development without Small Scale Industries registration, eligibility for the notification required clearances not exceeding Rs. 7.5 lakhs in both the previous and current financial years. The proviso aimed to encourage registration of small scale units and granted a grace period until clearances reached Rs. 7.5 lakhs. Consequently, the Tribunal upheld the lower authority's decision, rejecting the appeal based on the correct interpretation of the eligibility criteria under the notification.