1993 (4) TMI 165 - AT - Central Excise

Summary

Issues:
Interpretation of Notification 175/86 regarding the computation of aggregate value of clearances of specified goods when availing benefit during the financial year.

Analysis:
The appeal challenged the order of the Collector of Central Excise (Appeals), Cochin, focusing on how the aggregate value of clearances of specified goods should be calculated when a unit starts benefiting from Notification 175/86 during the financial year. The dispute arose because the appellants began availing the notification's benefits from 5-8-1991 after initially clearing goods at full duty rates from 1-4-1991 to 4-8-1991. The key contention was whether the initial clearances made at full duty should be included in calculating the total value of exempted clearances under the notification. The lower appellate authority held that the benefit was only applicable to the first clearances in a financial year, necessitating the inclusion of all clearances, even those at full duty rates, for calculating the total value of exempted clearances.

The appellants argued that denying them the benefit of clearing goods at exempted rates after opting for Notification 175/86 would defeat the notification's purpose. They contended that the lower authority's interpretation, restricting the benefit to only the first clearances, was erroneous. The Department supported the lower authority's reasoning.

The Tribunal analyzed Notification 175/86 as a legislation aimed at supporting the small-scale sector by providing exemptions within specified limits. The notification outlined conditions for total or partial exemptions based on the aggregate value of clearances of specified goods. The dispute centered on whether the appellants, after opting for the notification during the financial year, were entitled to the full concessions under the notification up to Rs. 75 lakhs of cleared goods. The Tribunal observed that the notification did not impose restrictions on availing benefits mid-year or limit eligibility to only the first clearances. It emphasized that once the benefit was granted, it should apply to the full value of goods within the specified limits. The Tribunal clarified that clearances made at full duty rates before opting for the notification should not be considered when calculating the value of exempted goods up to Rs. 75 lakhs. The Tribunal concluded that the lower appellate authority's interpretation was legally flawed, set aside their order, and allowed the appeal in favor of the appellants.