TMI Blog2003 (2) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... cturer started availing exemption under the scheme:- (1) Watts Electronics (P) Ltd. v. CCE, Kochi - 1994 (70) E.L.T. 127 (Tri.) (2) CCE, Coimbatore v. Sri Kumaran Spinners (P) Ltd. - 1998 (24) RLT 86 (CEGAT) (3) CCE, Coimbatore v. S.M. Textiles (P) Ltd. - 2001 (135) E.L.T. 260 (Tribunal). In Watts Electronics, it was held that the clearances of the specified goods only from the date (5-8-1991) on which the assessee started availing the benefit of SSI exemption under Notification No. 175/86-C.E. would be included in the first clearances aggregating to the value limit of Rs. 75 lacs for exemption and that the duty-paid clearances from 1-4-91 to 4-8-91 could not be included. In the case of Sri Kumaran Spinners, the value of clearances of cotton yarn only from 23-5-1994, the date from which the assessee availed the benefit of SSI exemption under Notification No. l/93-C.E. as amended, was held to be includible in the first clearances up to Rs. 30 lacs for the purpose of exemption. The Revenue's contention that the clearances from 25-4-1994, the date on which the goods came to be specified for the exemption, should be included in the first clearances for exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id clearances of the period from 25-4-1994 to 19-5-1994 or other dates, as the case may be, from reckoning in the computation of the aggregate value of Rs. 30 lacs under the notification. 5.Heard both sides. 6.Ld. SDR, Shri A.S. Bedi submitted that, once the product (cotton yarn) came to be specified for the purpose of exemption under Notification No. l/93-C.E., the notification with all its conditions became operative and all the clearances made by the SSI unit from the date of specification would, in chronological order, go into reckoning for the purpose of arriving at the limit of aggregate value of clearances for the purpose of exemption. Cotton yarn came to be "specified goods" for the purpose of exemption under Notification No. 1/93-C.E., w.e.f. 25-4-1994, the date on which Notification No. 90/94-C.E. was issued. Small-scale manufacturers of cotton yarn were automatically governed by the exemption Notification No. 1/93-C.E. If any such manufacturer wanted to pay duty on his product at full tariff rate by foregoing the benefit of exemption, it was open to him to opt out of the Exemption Scheme under Para 5 of Notification No. 1/93-C.E. as amended by Notification No. 59/94- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lacs for exemption. Only those clearances which were made without payment of duty from the date of filing classification list would be reckoned in chronological order to arrive at the limit of aggregate clearance value of Rs. 30 lacs. The Consultant relied on the reasoning spelt out in the cases of Watts Electronics (supra), Sri Kumaran Spinners (supra), etc. 8We have. carefully examined the rival arguments. The essential facts of the case have already been stated by us and we need not reiterate them. We shall, however, extract the relevant part of Notification No. 1/93-C.E. hereunder :- "In exercise of the powers conferred by sub-section (1) of Section 5A of the Central Excises and Salt Act, 1944 (1 of 1944) (hereinafter referred to as the said Act), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the excisable goods of the description specified in the Annexure below and falling under the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), (hereinafter referred to as the ''specified goods"), and cleared for home consumption on or after the 1st day of April in any financial year, by a manufacturer from, - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal) and CCE, Surat-II v. Shree Radhey Textiles - 2002 (143) E.L.T. 91 (Tribunal) and is also supported by the Hon'ble Supreme Court's ruling in Pankaj Jain Agencies v. Union of India - 1994 (72) E.L.T. 805 (S.C.) as followed in I.T.C. Ltd. v. CCE, Bombay - 1996 (86) E.L.T. 477 (S.C.). 9.The moot question to be settled by this Bench is whether full effect should be given to the scheme of exemption under Notification No. 1/93-C.E. (as amended) in respect of cotton yarn from 25-4-94 or from the dates on which the SSI units actually started availing the benefit of exemption by clearing the goods without payment of duty. If full effect is given to the scheme of exemption in respect of cotton yarn from 25-4-94, the date on which cotton yarn became "specified goods", then, for the purpose of computing the aggregate value of clearances of Rs. 30 lacs for exemption from payment of duty, clearances of the goods right from 25-4-1994 should be taken into account. The Apex Court's decisions cited above are relevant to this context as well. In Pankaj Jain Agencies (supra), one of the questions considered by their lordships was whether an Exemption Notification under the Customs Act, publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of the High Court examined the scope of the expression "first clearances" under Notification No. 65/81-C.E., dated 25-3-81, which had fixed a concessional rate of excise duty for tyres of certain types of motor vehicles subject to the condition that the aggregate value of first clearances of the goods for home consumption at the concessional rate of duty shall not exceed Rs. 50 lacs in any financial year. That notification had specifically declared that it shall come into force on the first day of April, 1981. The limit of Rs. 50 lacs was enhanced, later on, to Rs. 75 lacs by an amendment of the notification. The High Court held that the intention of the Government was, clearly, to exempt first clearances i.e. the clearances in the chronological order up to the aggregate value of Rs. 75 lacs. The intention was not to grant total concession on the goods cleared at any time during the financial year. The exemption was to be given on first clearances i.e. in the serial order of clearances. As soon as the aggregate clearances attained the value of Rs. 75 lacs, the concession would automatically stop. The Court further observed that any simultaneous clearance of the goods at full rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25-4-1994 for the exemption under Notification 1/93-C.E. The Bench held that the exemption would be applicable only from the date of Notification No. 90/94-C.E., which view is quite correct as we have already held earlier in this order. The Bench further held that the "first clearances" would commence from 1-4-1994 and that the assessee had an option to avail exemption either from 25-4-1994 or from a later date, which view cannot be endorsed for reasons; already recorded. 12.A small-scale manufacturer of cotton yarn automatically came within the realm of operation of Notification No. 1/93-C.E. from 25-4-1994, the date on which cotton yarn was specified for the purpose by the Central Government under Notification No. 90/94-C.E. None of the respondents opted out of the operation of the notification at any time thereafter. Therefore, the clearances of cotton yarn from 25-4-94 in chronological order, whether made on payment of duty or not up to the aggregate value of Rs. 30 lacs would constitute the first clearances in the financial year. The aggregate value has to be reworked and any demand of duty requantified accordingly. We have answered the referred issue in favour of the Reven ..... 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