1997 (6) TMI 146 - AT - Central Excise

Summary

Issues: Interpretation of Notification No. 77/85-C.E. regarding the calculation of value of clearances made under rescinded Notification No. 46/81.

In this judgment by the Appellate Tribunal CEGAT, New Delhi, the appellants were manufacturing goods under Tariff Item No. 68 and had availed the benefit of Notification No. 46/81, which exempted goods not manufactured in a factory. However, this notification was rescinded on 1-8-1985. Subsequently, Notification No. 77/85-C.E. exempted the first clearance of such goods up to Rs. 20 lakhs in value from duty, effective from 1-4-1985. The issue arose when the Jurisdictional Officer included the value of clearances made under the rescinded Notification No. 46/81 for calculating the total clearance value in 1985-86. The Assistant Collector confirmed the demand for differential duty, which was upheld by the Collector (Appeals), leading to the present appeal.

The appellants contended that as per Explanation II(a) of Notification No. 77/85, the value of clearances made under the rescinded Notification No. 46/81 should not be considered for calculation. The Respondent argued that the distinction in the notifications meant clearances under Notification No. 46/81 did not qualify for exemption under Explanation II.

Upon considering the submissions, the Tribunal analyzed Explanation II(a) of Notification No. 77/85, which stated that clearances exempted from duty under any other notification should not be taken into account for value calculation. It was noted that Notification No. 46/81 exempted goods from excise duty without considering the value of clearances, satisfying the conditions of Explanation II. The Tribunal rejected the Respondent's argument that the term 'factory' in the notifications created a disqualification, emphasizing that the definition of factory under the Central Excises and Salt Act was applicable, not the Factories Act. As Notification No. 46/81 aimed to exempt factories not meeting the Factories Act definition, the Tribunal ruled in favor of the appellants, setting aside the Collector's order and granting consequential relief as necessary.