9911796707
TMI Blog1999 (11) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... and presently under Chapter Heading No. 6901 of the Central Excise Tariff Act, 1985. They were also availing of Small Scale exemption under Notification No. 175/86 as amended. The case of the Department is that with effect from 30-10-1987 and upto November, 1988, VR had become ineligible for the benefit of Notification No. 175/86 since VR were registered with the Director General of Technical Development (DGTD) and therefore they had become ineligible for SSI exemption in terms of Paragraph 4(b) of that Notification as amended by Notification No. 244/87. On 30-10-1987 by Notification No. 244/87 SSI Notification No. 175/86 was amended excluding from the purview of Paragraph 4(b) of the parent Notification 175/86, units which were registered under the Industries Development and Regulation Act (IDR Act) with DGTD. On adjudication, Collector confirmed the duty demand and imposed penalty as proposed under show cause notice alleging that VR had contravened the provisions of Rules 9(i) and 173G inasmuch as the DGTD had by letter dated 26-5-1989 stated that VR was on their list and were being given necessary assistance including allocation of coal. 4. Explaining the genesis of the dispu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w industrial undertaking, i.e., any industrial undertaking established after the commencement of the IDR Act, 1951 has to obtain a 1icence issued in that behalf by the Central Government. According to Section 11(2) a licence or permission given under Section 11(1) may contain conditions relating to the location of the undertaking, minimum standards in respect of size, etc., in accordance with rules made by the Central Government under Section 30. In terms of Section 11 A of the Act, the owner of an industrial undertaking registered under Section 10 or in respect of an undertaking which has obtained a licence under Section 11 can produce or manufacture any new article only if such undertaking has obtained a licence for producing or manufacturing such new article or subject to the existing licence issued under Section 11 having been amended in the prescribed manner. Under Section 13(l)(c) any industrial undertaking to which the provisions of the IDR Act did not originally apply but became applicable after the commencement of the Act for any reason, can carry on the business of the undertaking after the expiry of three months from the date on which the provisions of the Act became app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he COB licence obtained under Section 13 was a licence granted by the Central Government and was different from registration with the DGTD. The DGTD itself had by letter dated 16-9-1979 advised VR to obtain such licence. When such COB licence was issued by the Department of Industrial Development on 26-6-1980, appellants had become a licenced undertaking in terms of Section 13(1)(c) read with Section 11. He submitted that the Carry-on-business licence obtained from the Ministry of Industrial Development was not the same thing as registration with DGTD and therefore the assumption of the Collector that M/s. Rainbow had been registered with the DGTD in 1974 and as successor, to M/s. Rainbow, VR was also registered with DGTD, was not correct and was not based on a correct appreciation of the scheme of 1DR Act and the terms of Notification No.175/86. In this connection, he invited our attention to a Govt. Press Note being Press Note No.12 (161/LP-79, dated 13-8-1979 - (page 28 of the case file) in which the distinction between registration with DGTD- and registration-under Section 10 of the 1DR Act had been clearly explained. He submitted that the observation of the Collector in the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel relating to the scheme of the IDR Act, we find that the distinction sought to be made by the ld. Counsel between registration of existing Industrial undertakings under Section 10 of the Act and registration with DGTD has great force. In this connection it will be worthwhile to reproduce the Press Note dated 13-8-1979 which had been brought to our notice by the ld. Counsel. The said Press Note reads as under : Distinction between registration with DGTD and registration under Section 1 For some time past, a number of enquiries have been received in this Ministry seeking clarification as to whether an undertaking registered with DGTD or any other Technical Authority under the liberalised licensing procedures is required to get its productive capacity endorsed on the registration certificate as required under Section 10 of the IDR Act. Such enquiries have arisen presumably due to some confusion in regard to the nature of registration with DGTD and registration granted under Section 10. With a view to remove any doubts, it is necessary to understand the distinction between the two types of registration. 2. All industrial undertakings which fulfil the conditions for exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the country. Further, the provision for issuance of a Carry on Business Licence under Section 13(1) relates to issuance of a licence under the IDR Act itself and by the Ministry of Industrial Development. Since Notification 213/78 had reserved manufacture of Fire Clay Refractories exclusively for the Small Scale Sector, it became necessary for any industrial undertaking engaged in the manufacture of Fire Clay Refractories to obtain fresh licence under Section 13(1). Such licence was to be obtained from the Ministry of Industries itself and not from DGTD since DGTD was not competent to issue such a licence. Ld. Counsel s submission was that the DGTD advice to the Appellants as per letter dated 15-9-1979 advising them to obtain COB licence from the Ministry of Industry makes this position quite clear. We are in agreement with this submission. As regards the averment of the Department that the appellants themselves had conceded that M/s. Rainbow were registered with DGTD and the subsequent affidavit by the Managing Director of VR dated 4-2-1988 denying that VR was not registered with DGTD was untenable does not appear to be correct. We observe from the Press Note quoted above t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al decision in Pratap Rajasthan Copper Foils and Laminates Ltd. v. C.C.E. - [1989 (44) E.L.T. 775]. In that case also Department had contended that Assistant Collector was competent to issue notice for alleged suppression and mis-statement without invoking the extended period under Section 11 A(1) proviso. The Tribunal had held ......Section 11A(1) makes a clear distinction between cases where short levy has arisen by reason of fraud, collusion or wilful mis-statement or suppression of facts, and cases where short levy is due to other reasons. In the latter case the notice may be issued by any Central Excise Officer. In the former cases, however, with the amendment effective from 15-11-1980, Section 21 of the Customs, Excise and Salt and Central Board of Revenue (Amendment) Act, 1978, the notice has to be issued by the Collector. This statutory requirement does not get whittled down by the fact that the demand is made only for the normal period of six months and not the extended period..... 13. Following the ratio of the aforesaid decision, we find no merit in the Revenue appeal and the same is rejected. Sd/- (A.C.C. Unni) Member (J) 14. [Contra per : P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th DGTD under LLP. On the other hand, it appears that V.R. was advised to obtain COB license so that the privileges enjoyed by such registrant/licensee continue, after it took over Rainbow Industries. It is also on record that V.R. was supplied the requirement of steam, coal etc. by DGTD as successor of Rainbow Industries and on the strength of COB licence obtained by the former. I, therefore, hold that V.R. was registered with DGTD under the said Act and is not entitled to get the benefit of Notification 175/86-C.E. (as amended). Therefore, I allow the appeal of Revenue and disallow the appeals of M/s. Vishwa Rattan. Sd/- (P.C. Jain) Vice President 19. In view of the difference of opinion, the matter is referred to the Third Member to decide; the following issue viz., whether in the facts and circumstances of the case, the assessee, viz., M/s. Vishwa Rattan Refractories (P) Ltd., are entitled to the benefit of Notification No. 175/86-C.E. (as amended). Sd/- (P.C. Jain) Vice President Sd/- (A.C.C. Unni) Member (J) DIFFERENCE OF OPINION 20. [Order per : G.R. Sharma, Member (T)]. - The point of difference referred to the u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for issuance of a Carry on Business Licence under Section 13(1) relates to issuance of a licence under the IDR Act itself and by the Ministry of Industrial Development. Since Notification 213/78 had reserved manufacture of Fire Clay Refractories exclusively for the Small Scale Sector, it became necessary for any industrial undertaking engaged in the manufacture of Fire Clay Refractories to obtain fresh licence under Section 13(1). Such licence was to be obtained from the Ministry of Industries itself and not from DGTD since DGTD was not competent to issue such a licence. Ld. Counsel s submission was that the DGTD advice to the Appellants as per letter dated 15-9-1979 advising them to obtain COB Licence from the Ministry of Industry makes this position quite clear. We are in agreement with this submission. As regards the averment of the Department that the appellants themselves had conceded that M/s. Rainbow were registered with DGTD and the subsequent affidavit by the Managing Director of VR dated 4-2-1988 denying that VR was not registered with DGTD was untenable does not appear to be correct. We observe from the Press Note quoted above that registration with the DGTD is res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be registered with the Central Govt. Ld. Counsel submitted that new industrial undertaking is set up for the manufacture of an article already covered by the schedule, had to obtain a licence under Section 11 of the Act; that Section 11A of the Act required a new licence for manufacture of a new article by such undertaking. He submitted that under Section 29B(1) of the Act, the Central Govt. has power to issue a notification granting exemption from the operation of all or any of the provisions of the Act; that Central Govt. issues notifications reserving certain articles exclusively for small scale sector; that Notification No. 98, dated 16-2-1973 was issued by the Central Govt. under Section 29B(1) of the Act exempting from the operation of Sections 10, 11, 11A and 13 the specified industrial undertakings; that the first category specified was the small scale undertakings; that in terms of para 2, ancillary industrial undertakings were also exempt; that in terms of para 3, other undertakings in which investment in plant and machinery did not exceed Rs. 3 crores (later enhanced to Rs. 5 crores); that in sub-para (d), it was provided that such undertakings shall not be eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry on business licence. Ld. Counsel submitted that this licence under Section 13 read with Section 11(2) is granted by the Central Govt. and not by DGTD. 24. Tracing the history of the appellant company ld. Counsel submitted that M/s. Rainbow Refractories got itself registered with DGTD in terms of exemption Notification No. 98, dated 16-2-1973; that by an exemption Notification No. 281-E, dated 26-4-1978, S.No. 327 was added to Schedule 1 of the notification covering fire clay bricks and blocks ; that on and from 26-4-1978, fire clay bricks and blocks became an item reserved for small scale sector; that consequently the exemption conferred by para 3 of the Notification dt. 16-2-1973 became no longer applicable. Therefore, in terms of Section 13(1)(c) the undertaking had to apply for a licence; that the appellant was issued a licence on 26-6-1980; that the appellant undertaking is an undertaking licensed by the Central Govt. under Section 13(1)(c) read with Section 11 and that it is not a unit registered under the IDR Act with the DGTD. Ld. Counsel submitted that the District Industries Centre by their letter dated 21-5-1988 clarified that the industrial licence granted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the appellant had taken over the business of the so registered company, they should be deemed to be registered. He adopts the arguments adduced before the Bench at the time of hearing the appeal. 26. I have read the rival submissions. I have perused the various sections of the Industrial Development Regulation Act, 1951 as also the Notifications issued thereunder. I find that Notification No. 98-E, dated 16-2-1973 provided for registration of certain units with DGTD and thus the finding of the ld. Member (T) does not appeared to be correct. Having regard to this view, I agree with the findings of the ld. Member (J) and hold that the benefit of Notification No. 175/86 will be admissible to the appellants. The papers are sent back to original bench for recording the majority order. Sd/- (G.R. Sharma) Member (T) 27. [Order per : A.C.C. Unni, Member (J)]. - In the light of the views expressed by the majority, the two appeals of M/s. Vishwa Rattan Refractories (P) Ltd. are allowed and it is held that the benefit of Notification No. 175/86 will be admissible to the said appellants. Sd/- (A.C.C. Unni) Member (J) Dated 17-11-1999 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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