1997 (5) TMI 218 - AT - Central Excise

Summary

Issues: Interpretation of condition IV(a) of Notification 116/84 for excess production incentive rebate.

The judgment pertains to a case where the appellants manufactured Motor Vehicles classified under old Central Excise Tariff Items 34-I(2) and 34-I(3) and applied for an excess production incentive rebate under Notification 116/84. The Notification aimed to encourage higher production by granting relief for goods produced in excess of a selected base year. The dispute arose when the jurisdictional Assistant Collector found that the claim was hit by condition IV(a) of the Notification, which stated that no credit shall be allowed if clearances of specified goods were effected for the first time on or after April 1, 1981. The Asstt. Commissioner and the Collector (Appeals) upheld this decision, leading to the present appeal.

The appellants argued that the Asstt. Commissioner misconstrued the condition in clause IV(a) & (b) of the notification. They contended that the conditions are separate and independent, and while part (b) had been fulfilled by them, part (a) should not disentitle them from the rebate. They highlighted that they had cleared specified goods earlier to April 1, 1981, under Item 34-I(3) CET, which should be considered for the rebate. The appellants emphasized that the notification should be interpreted to fulfill its objective of encouraging high production.

On the other hand, the respondent argued that non-fulfillment of condition IV(a) would exclude the appellants from the incentive rebate. They asserted that the condition must be satisfied with reference to the particular goods for which the claim was made, and since the first clearance of these goods was after April 1, 1981, the claim should be rejected.

The Tribunal analyzed the interpretation of condition B IV of the notification, emphasizing that it pertains to the factories from which specified goods are cleared. The Tribunal noted two categories of factories mentioned in the condition, one being where clearances were first made after April 1, 1981, and the other where no clearances were made during specific financial years. The Tribunal concluded that since the appellants cleared motor vehicles under Item 34-I(2) CET for the first time in July 1981, they fell under the first category, rendering them ineligible for the rebate as per condition IV(a) of the Notification 116/84.

Additionally, the Tribunal rejected the argument that clearances of other specified goods before April 1, 1981, should be considered, highlighting that each specified goods category must be computed separately as per the notification's provisions. Therefore, the Tribunal upheld the impugned order, dismissing the appeal and denying the excess production incentive rebate to the appellants.