1997 (6) TMI 168 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 172/89 regarding the benefit eligibility based on kiln capacity versus factory capacity.

Detailed Analysis:
The appeal before the Appellate Tribunal CEGAT, Madras revolved around the interpretation of Notification No. 172/89, specifically concerning the benefit eligibility criteria based on the capacity of the kiln versus the capacity of the factory. The appellants contended that as long as the kiln installed in their factory had a capacity of 200 tonnes for the vertical shaft kiln, they should be entitled to the notification's benefit. However, the Revenue argued that the production capacity of the factory for cement, not just the kiln's capacity for clinker production, should be considered. Consequently, the appellants were denied the benefit of the notification due to this discrepancy.

The learned Senior Advocate for the appellants referred to predecessor notifications, such as Notification No. 23/89 and Notification No. 123/89, to highlight the wording disparities. He emphasized that the wording of Notification No. 172/89, particularly in Clause (a), indicated that the licensing capacity of the kiln, not the factory, should be the determining factor for eligibility. Despite conceding that considering the kiln capacity would limit clinker production, the Senior Advocate argued that the licensing capacity of the kiln should be decisive. However, upon examination of the legislative history and the licensing process under the Industries (Development and Regulation) Act, 1951, it was found that the capacity certified pertained only to the cement production capacity of the factory, not individual components like the kiln.

The Departmental Representative contended that the appellants' existing licensing capacity of 5.25 lakh tonnes, with an application for expansion, automatically disqualified them from the notification's benefit. This argument was not disputed by the Senior Advocate for the appellants. The Tribunal considered the arguments presented by both sides and observed that the crux of the issue lay in interpreting the language of Notification 172/89. It was noted that the licensing capacity certified under the Industries (Development and Regulation) Act, 1951 pertained to the specific commodity covered by the Act, which, in this case, was cement. The Tribunal emphasized that the wording of the notification indicated that the factory's capacity, not the kiln's capacity, should not exceed 200 metric tonnes per day to qualify for the benefit. The use of 'licensed capacity' in the notification underscored the factory's sanctioned capacity for producing the specified commodity, without any provision or mechanism for certifying kiln capacity under the law.

In conclusion, the Tribunal upheld the lower authority's interpretation, affirming that the benefit of the notification was intended for smaller units with limited daily capacities based on the kiln type used. Since the appellants' cement production capacity exceeded 200 tonnes per day, they were deemed ineligible for the notification's benefit, leading to the dismissal of the appeal.