TMI Blog1998 (5) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellants are engaged in the manufacture of inter alia, articles of plastic (Plastic insulated wares) and vacuum flasks. They had two factories one at Talegaon and another at Chinchwad, the main factory being the one at Talegaon. The appellants claim that during the period of dispute i.e. from 1-3-1990 to 21-8-1990, more than 84% of the articles manufactured by them in terms of value were exempt from Central Excise Licensing Control under Rule 174A of the Central Excise Rules since all the goods manufactured in their Talegaon factory were fully exempt from duty. During the relevant period only 4% of the production was carried out in the Chinchwad factory. 3. The appellants were served with a show cause notice dated 29-8-1990 allegi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actory. Again, from Chinchwad factory sales were effected. 5. The Asstt. Collector who had adjudicated the matter by his order dated 2-4-1991 held that exemption granted under a certain Notification does not make the product a non-excisable item even when the item was fully exempted. It was, therefore, obligatory on the part of the appellants to follow the Central Excise procedure before manufacturing the goods at their Chinchwad factory. As regards the claim of the appellants that they were covered by Notification No. 11/88, the Asstt. Collector found that the appellants had not complied with the provisions contained in the said notification. The said notification, Asstt. Collector observed, required the manufacturer to maintain records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out manufacturing activities without following the Central Excise Procedure and therefore, not eligible for exemption contained under Notification 53/88. Accordingly, he confirmed the duty demand and imposed the penalty of aforesaid. 6. In appeal, the Collector (Appeals) confirmed the order-in-original. He found that both types of products manufactured by the appellants were excisable. While Rigid Polyurethene Foam was entitled to the benefit of Notification 54/88, other items such as table ware, kitchen ware and other house-hold articles manufactured by the appellants were entitled to the benefit of Notification 53/88. However, he found that the appellants had become liable to duty and penalty for their failure to obtain a licence when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification No. 53/88. As regards Rigid Polyurethene Foam also, in view of the Tribunal s Order No. 694/89-C, dated 21-11-1989 in the case of appellants themselves Rigid Polyurethene Foam was held to be exempted. Since all the items manufactured by the appellants were fully exempt, the appellants were entitled to exemption from Central Excise Licensing Control in terms of declaration filed by them under Notification 11/88. Further, even though strictly speaking Central Excise Licence was not necessary to be taken in view of the full exemption to the items in terms of two notifications referred to above, the appellants had obtained L-4 Licence on 23-8-1990. They had also filed a declaration on 7-12-1990 in terms of exemption Notification 11/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. They relied on the Hon ble Supreme Court decision in M.V. Vodiparo v. Fernado Lopx (AIR 1989 SC 2206) wherein it was held that procedure was meant to subserve and not govern substantial provisions. Further, the appellants have denied the finding of the Appellate Collector that there was any effort on their part to cover up the commencement of their manufacturing operations at the Chinch-wad factory, since both casseroles and the Rigid Polyurethane foam were fully exempt from payment of excise duty. Failure to apply for exemption from Licensing Control was under a bona fide belief that there was no need for them to obtain the said licence. As regards the excisability of Rigid Polyurethane foam, the Collector (Appeals) had failed to notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n behalf of the appellants is that their final products, namely, Rigid Polyurethane foam and casseroles were exempted items and therefore, there was no need on their part to obtain L-4 Licence or to make any declaration or to comply the other requirements of the Central Excise Rules. We do not find that these arguments have any merit. As has been rightly observed by the lower appellate authority an assessee cannot assume that just because a product has been exempted from dut, it had freed the manufacturer from the excise procedures like obtaining of L-4 licence, maintenance of records, filing of returns etc. under the relevant provisions of the Central Excise Rules. As has been held by the Kerala High Court in Eyelik Optical Industries v. C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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