1998 (7) TMI 335 - Commissioner - Central Excise

Summary

Issues:
1. Denial of SSI exemption under Notification No. 1/93-C.E.
2. Appellants' eligibility for exemption in the middle of the Financial Year.
3. Interpretation of para 4 of the Notification regarding exercising the option.

Analysis:
1. The appellants manufactured Mixies and parts, initially paying duty at 20% ad valorem, then opting for SSI exemption under Notification No. 1/93-C.E. from 31-7-1996 at 10% ad valorem. The lower authority demanded differential duty of Rs. 1,37,436, claiming the appellants did not opt for SSI benefit from 1-4-1996. Appellants argued they learned of the exemption in July 1996 and promptly filed for it. They contended there was no restriction on exercising the option only once. The lower authority denied the exemption based on the initial duty payment choice made by the appellants.

2. The question was whether the appellants could claim the exemption in the middle of the Financial Year. Para 4 of the Notification allows manufacturers to opt out of the exemption and pay duty at the normal rate. However, the appellants opted for the exemption under para 1 of the Notification, which grants exemption to specified goods cleared for home consumption from the first day of April in any Financial Year. The Notification provides an option for the manufacturer on or after the first of April in any Financial Year to avail the exemption. Thus, the lower authority's argument that the appellants could not exercise the option in the middle of the Financial Year was legally incorrect.

3. The Notification's wording indicates that the exemption is available for goods cleared for home consumption from the first day of April in any Financial Year. Therefore, a manufacturer can avail the exemption at any time during the Financial Year if all conditions are met, even if they initially paid duty at the normal rates. The crucial phrase "on or after the first day of April in any Financial Year" is significant. The Commissioner allowed the appeal, setting aside the lower authority's order as they incorrectly disallowed the benefit to the appellants despite meeting the Notification's conditions.

This judgment clarifies the eligibility for SSI exemption under Notification No. 1/93-C.E., emphasizing the timing of exercising the option and the availability of exemption during the Financial Year. The analysis highlights the legal interpretation of the Notification's provisions and the correct application of the exemption criteria, ultimately leading to the appeal being allowed.