1996 (5) TMI 149 - AT - Central Excise

Summary

Issues:
1. Calculation of the period of existence for the purpose of Clause 3(i) of Notification 257/76
2. Qualification of the appellants under Clause 4 of the notification regarding production averages

Analysis:

The appeal challenged the Collector (Appeals)'s finding that the appellants were not eligible for the benefit of Clause 3(i) of Notification No. 257/76 as the factory did not exist for the preceding five years. The appellant's counsel argued that as per the judgment of the Bombay High Court, it was not required for the factory to be in existence for all five years. They relied on precedents like Collector of Central Excise v. Marathwada Sahakari Sakhar Karkhana Ltd. The counsel contended that the average production should be determined based on the years the factory actually operated.

The production figures provided in the Order-in-Original showed that the production in 1976-77 exceeded the average production in 1974-75 and 1975-76. The appellants contended that their case aligned with the Bombay High Court's decision. The Respondent reiterated the Collector (Appeals)'s findings.

Upon hearing both parties, the Tribunal identified two key issues. Firstly, how to calculate the period of existence for Clause 3(i) of Notification 257/76, and secondly, whether the appellants met the criteria of Clause 4 regarding production averages. The Tribunal noted that the production in 1976-77 surpassed the average production in 1974-75 and 1975-76, thus qualifying the appellants under Clause 4.

Regarding the calculation of the average when a factory existed for less than five years or was not operational throughout, the Tribunal referred to the Bombay High Court's ruling. The High Court had determined that a factory did not need to be operational for all five years for calculating the average. Based on this precedent, the Tribunal ruled in favor of the appellants, allowing the appeal and setting aside the impugned order.