1990 (11) TMI 271 - AT - Central Excise

Summary

Issues: Availment of exemption under Notification No. 175/86-C.E. for a manufacturing unit based on the issuance date of the SSI Certificate.

In this judgment by the Appellate Tribunal CEGAT, New Delhi, the appellants, manufacturers of "LPG Cylinders," sought exemption under Notification No. 175/86-C.E. dated 01-03-1986 for their unit, as their Small Scale Industry (SSI) Certificate was issued on 12-09-1986, leading to a dispute with the Department denying the exemption before that date. The appellants argued that they were registered as a medium-scale unit with a capital investment exceeding Rs. 20 lakhs, later raised to Rs. 35 lakhs, and applied for the SSI Certificate on 01-03-1986. The Department issued the certificate on 12-09-1986, stating that the unit obtained SSI status from 01-03-1986 by opting for SSI status from that date.

The Assistant Collector of Central Excise initially allowed a refund, which was reviewed by the Collector of Central Excise, Guntur, under Section 35-E of the Central Excises Act. The Collector upheld the appeal, ruling that the SSI exemption was inadmissible before the issuance of the SSI Certificate on 12-09-1986. The appellants contended before the Tribunal that the delay in issuing the SSI Certificate should not affect their eligibility for exemption from 01-03-1986, emphasizing that the registration specified the SSI status effective from that date. They argued that the Collector's review only challenged the refund approval but did not seek to recover the refund, invoking the limitation under Section 11A of the Central Excise Act.

During arguments, the appellants' advocate cited a Supreme Court decision and contended that the application date should determine eligibility for SSI exemption, supported by the Assistant Collector's approval of the classification list and the refund payment. The Department's representative referred to legal precedents regarding Section 35E applications and time limits under Section 11A, highlighting the importance of registration with the Director of Industries under Notification No. 175/86-C.E.

The Tribunal considered the submissions and noted the appellants' early registration as a medium-scale unit in 1983, meeting the capital investment criteria. They applied for the SSI Certificate on 01-03-1986 and received it on 12-09-1986, with an endorsement indicating SSI status from 01-03-1986. Citing a previous case, the Tribunal emphasized that once a certificate declares SSI status effective from a specific date, the unit should be entitled to SSI benefits. The Tribunal highlighted that the government intended to grant concessions to small-scale industries without specifying effective dates in notifications, concluding that the appellants fulfilled the conditions to avail the exemption.

Therefore, the Tribunal allowed the appeal, ruling in favor of the appellants based on the effective date of SSI status and the fulfillment of registration conditions under Notification No. 175/86-C.E.