1990 (6) TMI 157 - AT - Central Excise

Summary

Issues:
Appeal for exemption under Notification No. 77/83 for Small Scale Industries in calculating capital investment on Plant & Machinery.

Analysis:
The appellants contested the capital investment determination by the Department, arguing arithmetical errors, inclusion of dismantled driers, civil works cost, motors cost, technical know-how payment, and unjustified extended period invocation. The appellant's consultant emphasized excluding investment on dismantled machinery per Notification No. 77/83 and cited relevant case laws supporting small-scale industry registration eligibility for exemptions. Guidelines were referenced for excluding electrical equipment costs and the technical know-how payment. The Tribunal decision in M/s. Ahmedabad Chemicals Pvt. Ltd. v. Collector of Central Excise, Baroda was highlighted regarding expenses not includible in capital investment.

The Department argued against excluding generating sets and electrical installations, questioning the payment to Shri Sankara Raju and the authenticity of the letter regarding defective driers. The Collector's final investment amount exceeded the exemption limit due to included items. The appellants' eligibility for exemption hinged on the total capital investment, considering civil works, electrical installations, and technical expenses. Guidelines and case laws were cited to support the exclusion of certain costs from capital investment, ensuring compliance with the exemption limit.

The Tribunal found in favor of the appellants, setting aside the Collector's order. Excluding certain costs like dismantled machinery, technical expenses, and arithmetical errors placed the appellants within the exemption limit. The Department's failure to prove civil works as part of plant and machinery led to their exclusion, supported by certificates and norms. The decision emphasized adhering to guidelines and ensuring accurate determination of capital investment for small-scale industry exemptions.

In conclusion, the Tribunal allowed the appeal, providing consequential relief to the appellants based on the exclusion of specific costs from the capital investment calculation, ensuring compliance with the exemption limit under Notification No. 77/83 for Small Scale Industries.