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TMI Blog1992 (12) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... r had held in his order that the clearances of first Rs. 30 lakhs should be computed taking into consideration the first clearance value of the specified goods of all the headings simultaneously and not separately. In other words, the first clearances of Rs. 30 lakhs should be computed taking the clearances of first duty-free clearances and duty-paid clearances of the goods of all the headings. He rejected the claim of the present respondents for grant of exemption to the first clearances of Rs. 15 lakhs separately for different items. 2. Shri S. Dutt Majumdar, learned Senior Departmental Representative, argued the matter on behalf of the appellant Collector. On the Bench pointing out that what is posted for hearing is the Appeal itself which has been assigned Special Bench number and not the Stay Petition, Shri Majumdar initially felt that as the subject matter relates to interpretation of exemption Notification No. 175/86 the Appeal would be for the Special Bench. He, however, quickly modified his stand and submitted that as similar Appeals had been disposed of by the South Regional Bench, this Bench having similar powers may hear the Appeal. He, however, submitted that as set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of first clearances including the latter would exceed Rs. 30 lakhs. This point has not been considered by the Tribunal in the decisions followed by the Collector (Appeals). Further, the earlier decision of the Collector (Appeals), which he has referred to, has been appealed against by the Collector before the Tribunal. Shri Majumdar then referred to the commentary on this very question contained in the book Guide to Central Excise Law Practice by Shri Arvind P. Datar, Third Edition, Volume 2" (pages 1326-1327). He read out the relevant portion thereof which are extracted by us later on in this order. The learned SDR then submitted that as followed by the Supreme Court, in the Ujagar Prints case, the matter may be referred to a larger Bench for decision, if we accept his plea on merits and feel inclined to differ from the South Regional Bench decision. 5. Shri K.L. Ganguly, learned Counsel for the respondents, opposed the arguments of Shri Majumdar. He contended that the Collector (Appeals) has decided the matter correctly. Moreover, he was following a valid precedent set by the South Bench in the two decisions referred to in his order. Shri Ganguly then pointed out that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 lakhs or Rs. 20 lakhs cleared on payment of duty is to be included in the total ceiling of first clearances of the specified goods referred to in Para 1(a) of the Notification. They cannot be excluded from the scope of that provision as such clearances on payment of duty are also part of the first clearance of specified goods within Rs. 30 lakhs. The decision under challenge, by allowing separate items the benefit of duty-free clearances so that the total duty-free clearances alone is upto Rs. 30 lakhs has the effect of granting exemption to certain goods even when they are not part of the first clearance of Rs. 30 lakhs, but over and above the same. This is repugnant to the provisions of Para 1(a) of the Notification. An interpretation leading to such a situation is to be avoided. The decision under challenge and the Tribunal decisions followed are to the effect that the value of duty-free clearances alone is to be considered for computing the ceiling of Rs 30 lakhs which is the ceiling for duty-free clearances only and in that computation, duty-paid clearances should not be added. In their view, the inclusion of duty-paid clearances would have the effect of curtailing or whitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinue to enjoy the exemption till the aggregate ceiling of Rs. 30 lakhs exemption for first clearances is reached. It is also observed that in a departmental clarification published and reproduced in 1986 (26) E.L.T. T.4 it has been stated, while clarifying the extent of exemption under Notification No. 175/86, that if a manufacturer manufactured excisable goods falling under more than one tariff heading, he will be allowed to avail of full exemption upto Rs. 30 lakhs, subject to the condition that the value of clearances under full exemption shall not exceed Rs. 15 lakhs in respect of any one heading. It is further seen that the Coimbatore Collectorate of Central Excise had issued a clarification in this regard in C. No. IV/16/527/86-CX-1, dated 30-3-1987, subsequent to the adjudication of this case by the Assistant Collector, which is as follows: The language of Notification No. 175/86 Central Excise dated 1-3-1986 is very clear. It provides for clearance at Nil rate of duty or concessional rate of goods falling under one heading number to the extent of Rupees Fifteen lakhs, where a manufacturer manufactures, goods falling under more than one heading in the schedule the aggreg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of first category and overall exemption limit of 30 lakhs. Such an interpretation clearly discriminates between the two manufactures similarly placed merely for the reason that they have adopted different order of clearance of the goods of two categories manufactured by them according to their selling or production programme. An interpretation which brings in such a difference between manufacturers without any rationale has to be discarded. We hold that subject to the other parameters of the notification being satisfied the benefit of the Notification for exemption upto 15 lakhs limit for each category of goods in the notification is available and the same should not be denied to the appellants as has been done in the present case. We, therefore, direct the lower authority to go into the matter de novo and allow the refund claim in respect of goods in question if they satisfy other parameters in the notification notwithstanding the fact that the clearances have exceeded the limit of 15 lakhs in respect of the first category of goods namely plywood and blockboards. Since we have held above that the exemption is available for the first clearance upto 15 lakhs in terms of the Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year. The effect of excluding the value of duty-paid (partially exempted rate or the normal rate) clearances of one or more items in computing the value of goods of other Heading or Chapter, as the case may be, eligible for full exemption or partial exemption will be that a manufacturer can, in an extreme case, clear goods of one Heading or Chapter upto Rs. 185 lakhs (or Rs. 180 lakhs, as the case may be) consisting of Rs. 15 lakhs (or Rs. 20 lakhs) duty-free, Rs. 60 lakhs (or Rs. 55 lakhs) at the concessional rate and Rs. 110 lakhs (Rs. 105 lakhs) at the normal rate and still have his pound of flesh of duty-free clearances of goods of other Heading (or Chapter) upto Rs. 15 lakhs (or Rs. 20 lakhs). When it is considered that the benefit of this exemption Notification is meant for small scale units, the grant of duty-free exemption to a manufacturer who is clearing Rs. 185 lakhs (or Rs. 180 lakhs) of other goods will be anomalous. What is more, it will be beyond the provisions of the Notification. As pointed out in the present appeal, the respondents themselves in their reply to the show cause notice sent to the Assistant Collector had set out their claim for benefit under the Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able for the other goods in any combination. The language of the notification cannot give rise to the presumption that where in the case of any one product, the limit set for that product is exceeded, duty is payable on the other goods, where the limit has not yet been reached." The Tribunal followed this clarification and allowed the assessee s appeal. The effect of the Tribunal s order is that an assessee manufacturing goods under two chapters, say, A B, can clear goods of say, Rs. 22 lakhs of Chapter A (Rs. 15 lakhs under full exemption and the balance Rs. 7 lakhs on payment of duty) and also clear goods of Chapter B of upto Rs. 15 lakhs under full exemption because the limit of Rs. 15 lakhs is still available for Chapter B. The Tribunal has not discussed the consequence of crossing the exemption limit of Rs. 30 lakhs of clearances of goods of both the chapters put together. There is also no discussion of what would happen if the clearances under Chapter A were Rs. 22 lakhs and that of Chapter B were Rs. 7 lakhs, i.e. the aggregate clearances were less than Rs. 30 lakhs. In a recent case, the Tribunal has gone a step further and held that the exemption under this notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rances of goods under Chapters A B are Rs. 22 and 17 lakhs respectively, the position would be as follows : (i) for the year 1989-90 goods can be cleared under nil rate until the value of clearances of either chapter A or B crosses Rs. 15 lakhs. Goods of both chapters will thereafter have to pay duty at the concessional rate, even before the aggregate limit of Rs. 30 lakhs has not been crossed; (ii) for the financial year 1990-91, goods can be cleared under both chapters at nil rate of duty until the value of clearances of goods under Chapter A crosses Rs. 20 lakhs or the aggregate value of clearances under both chapters crosses Rs. 30 lakhs, whichever is earlier. On the happening of either event, goods under both chapters will have to pay duty at the concessional rate." 10. We agree with the views of the learned author to a limited extent insofar as the question of inclusion of value of clearances of goods at the concessional rate under the Notification of goods of one Heading or one Chapter after exhausting the duty-free clearances thereof to the extent of Rs. 15 lakhs or Rs. 20 lakhs in the ceiling of Rs. 30 lakhs is concerned. That is the only issue in the present appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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