1995 (5) TMI 126 - AT - Central Excise

Summary

Issues:
Applicability of exemption Notification No. 175/86 particularly with reference to para 4(b) of the said Notification.

Analysis:
The appeal was filed against the order passed by the Collector of Central Excise (Appeals), Pune, concerning the applicability of exemption Notification No. 175/86. The dispute revolved around whether the appellant, engaged in the manufacture of HDPE sacks, was eligible for exemption under the said Notification. The appellant's unit was not registered as a small scale industry, leading to a denial of exemption by the Assistant Collector. The Collector (Appeals) upheld this decision, emphasizing the lack of registration as a barrier to availing the exemption. The appellant contended that non-registered S.S.I. units could still benefit from the exemption under para 4(b) of the Notification if they had availed of the exemption in the preceding financial year. The appellant argued that since their clearances fell within the exemption limit, they should be entitled to full exemption under the Notification.

The Revenue contended that the appellant's unit was not registered as an S.S.I. Unit or obtained an excise license, making the provisions of the Excise Act applicable from the commencement date and date of the license. The Revenue highlighted the distinction between eligibility for exemption and actual availment of exemption, asserting that the appellant was entitled to exemption but had not availed it, rendering para 4(b) of the Notification inapplicable.

The Tribunal analyzed the submissions and found that the appellant had manufactured and cleared HDPE sacks within the exemption limit specified by Notification No. 175/86. The Tribunal noted that the absence of an S.S.I. registration certificate raised the question of whether the manufacturer was availing the exemption as per the conditions outlined in para 4(b) of the Notification. The Tribunal determined that filing a declaration was not mandatory to avail exemption under para 4(b) if the manufacturer had been availing the exemption in the preceding financial year. Since the appellant's clearances did not exceed the exemption limit in any preceding financial year, they were deemed eligible for the exemption. The Tribunal disagreed with the Revenue's argument that non-availment of exemption precluded its applicability, citing previous decisions that emphasized the independence of availment of exemption from licensing control or declaration filing. Consequently, the Tribunal allowed the appeal, granting the appellant the benefit of exemption under Notification No. 175/86 for the relevant years.