TMI Blog1989 (5) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... fined under Section 2(d) of the Act to mean "goods specified in the First Schedule as being subject to a duty of excise and includes salt." Rule 8 of the Central Excise Rules, 1944 (for short "the Rules") empowers the Central Government to exempt by notification any excisable goods from the whole or part of the duty leviable. Section 6 and Rule 174 provide for taking of licence in relation to specified goods manufactured in India. Rule 174-A empowers the Central Government to exempt any goods from the operation of Rule 174 i.e. from taking a licence for those goods. 4. The Central Government vide notification dated 24th July, 1967 issued under Rule 8 of the Rules exempted certain goods from the duty of excise leviable thereon. This notification was amended from time to time with the result that at the material time footwears of the value not exceeding Rs. 30/- per pair were exempted from the whole of the duty of excise leviable thereon. 5. In exercise of the powers conferred by Rule 8 the Central Government had issued another notification No. 80/80-CE dated 19th June, 1980 which was subsequently amended vide notification No. 123/80-CE dated 18th July, 1980, whereby excisable go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... air was less than Rs. 15/-. As such a declaration regarding the manufacture of chappals was not filed by the petitioners. They also did not obtain any licence because they were exempted from the provisions relating to licensing also. 8A. Transmission rubber beltings falling under tariff Item No. 16-A of the First Schedule were exempt from whole of the Excise duty upto the value of clearances of Rs. 5 lacs during the year 1979-80 and 1980-81 upto the value of Rs. 7.5 lacs during the years 1981-82 and 1982-83 under notification No. 80/80-CE dated 19-6-1980 as amended. 8B. The petitioners were served a show cause notice dated 1st June, 1984 (Copy Annexure P/8). Along with it were appended Annexures 'A' and 'B' showing details of sale of T.R. Beltings and rubber chappals by the petitioner. It was stated in the show cause notice that the petitioners had manufactured and cleared excisable goods namely T.R. beltings falling under tariff Item No. 16-A and valued at Rs. 17,69,660.36 without applying for/obtaining L-4 licence and without payment of Central Excise Duty amounting to Rs. 4,64,535.80 during the years 1980-81,1981-82 and 1982-83. It was stated in the notice that the aggregat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isable goods by him or on his behalf for home consumption, from one or more factories, during the financial year, had exceeded rupees twenty lacs." Explanation with regard to computing the aggregate value of clearances under the said notification has already been extracted above. 11. According to the respondents the T.R. beltings manufactured by the petitioners did not qualify for exemption under notification No. 80/80-CE dated 19th June, 1980 as the value of the clearances of all excisable goods (Value of T.R. beltings plus rubber chappals) exceeded Rs. 20 lacs during the preceding financial year. It is not necessary to refer to the other averments in the written statement. 12. The crucial point for determination in this case is as to whether the value of the rubber chappals manufactured by the petitioners, which goods have been exempted from the Excise Duty because the value of each pair did not exceed Rs. 15/-, can be taken into account while computing the value of T.R beltings manufactured by the petitioners for the purpose of exemption from Excise Duty under notification No. 80/80-CE dated 19-6-1980. For determining this question it has to be decided as to whether goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Act" was in the nature of definition of "taxable goods". The expression "the sale or purchase of which is liable to tax under the Act" was held to qualify the term "goods" and excluded by necessary implication goods, the sale or purchase of which was totally exempted from tax at all points, under Section 8 or Section 17(1) of the Act. It was, therefore, held that the goods so exempted - not being "taxable goods" - could not be brought to charge under Section 7-A of the said Act. It was thus in view of the peculiar provisions under the Tamil Nadu General Sales Tax Act that the above case was decided. In our considered view this does not provide an authority for the proposition that excisable goods ceased to be so when exemption is granted under Rule 8. Apart from the aforesaid Supreme Court decision there is no other reasoning mentioned in Tata Export Limited's case (supra). 18. Reliance has next been placed by the learned counsel for the petitioner on a Division Bench judgment in E. Septon and Company Private Limited v. Superintendent of Central Excise and another, 1985 (19) E.L.T. 57 (All.). In coming to the conclusion that excisable goods, when exempted from excise d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent with the above observations of S.R. Rajasekhara Murthy, J. Apart from what is stated above no reasoning is given for the conclusion reached by the learned judges in E. Septon's case (supra). The contrary view namely that excisable goods do not cease to be excisable goods on exemption being granted under Rule 8, has been taken by the High Courts of Patna, Delhi, Karnataka, Andhra Pradesh and Madras, besides the CEGAT, Special Bench 'C', New Delhi. 19. In Shri Madhav Mill Private Ltd. v. Collector of Central Excise and others, 1984 (17) E.L.T. 310 (Patna), a Division Bench of Patna High Court had to deal with two contentions, namely - i) Maida having been exempted from excise duty was not excisable goods, the value of which could be taken into account for the annual turnover; ii) Even after maida had been exempted from the excise duty, it could not be included in the expression "all excisable goods cleared" used in the first proviso to the notification granting the exemption. B.S. Sinha, J. dealt with only the second question and held that the proviso to the notification granting exemption to maida referred only to such excisable goods on which excise duty had been paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods. The condition precedent to the applicability of Rule 8 is the existence of excisable goods. Exemption from payment of duty is different from goods being excisable or not. Undoubtedly, as item No. 68 still continues to cover aluminium utensils they are excisable goods. …… " 21. The same view was taken by Karnataka High Court in Karnataka Cement Pipe Factory Industrial Estate v. Superintendent of Central Excise and another, 1986 (23) E.L.T. 313 (Karnataka). In this decision, the learned Judge explained some of the authorities in which a contrary view had been taken and relied on the decisions of High Courts of Madras, Andhra Pradcsh and Delhi. It was held that character of a product, as excisable goods, does not depend upon the actual levy of duly, but depends upon the description as excisable goods as contained in the First Schedule to the Act. It was pointed out that the First Schedule to the Act gives description of the goods which are excisable and the rate of duty. It was further pointed out that it was significant that in respect of some of the goods given in the Schedule, duty was nil. 22. A Division Bench of Madras High Court in Tamil Nadu (Madras State) Handlo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l levy of the excise duly. The expression "being subject to" according to Shorter English Oxford Dictionary, means - exposed or open to; prone to or liable to ..... having a tendency prone or disposed of. It follows that the goods mentioned in the Schedule to the Act are liable to attract excise duty. The definition does not mean that the duty must be imposed in order to make the goods excisable goods. To understand the significance of the expression 'subject to', it would be profitable to compare it with the expression 'subjected to'. If the latter expression had been used it could be said that exemption from excise duty under Rule 8 would make the 'excisable goods' non-excisable or outside the definition. The expression occurring in the definition is 'subject to'. It cannot be disputed that even after exemption the exempted 'excisable goods' continues to be included in the schedule and remains liable to reimposilion of excise duty e.g., by withdrawal of the exemption notification. Rule 8 of the Rules under which the Central Government is empowered to grant exemption itself shows that exemption may be granted from time to time which necessarily implies that the exemption granted m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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