Customs, Excise and Gold Tribunal - Mumbai
Mehtachem Industries vs Commissioner Of Central Excise on 19 October, 2000
Equivalent citations: 2001(127)ELT793(TRI-MUMBAI)
ORDER J.H. Joglekar, Member (T)
1. In these two applications, prayer is made for waiver of pre-deposit of duty confirmed amounting to Rs. 2,50,318/- & Rs. 1,002/- and penalty of Rs. 52,000/- & Rs. 200/-. We have heard Shri Deven Parikh, Advocate for the applicants and Shri K.M. Patwari, J.D.R. for the revenue.
2. The applicants operated under the benefit of Notification 140/83 which provided concessional rates of duty for cosmetics and toilet preparations falling under Chapter 33 of the CETA. They were also availing of the benefit of Notification 1/93 for the other products manufactured by them. Notification 140/83 provides for duty free clearances of cosmetics etc. up to the aggregate value of Rs. 15 lakhs and prescribes a concessional rate of subsequent clearances of such products of the further aggregate value of Rs. 15 lakhs. The explanation II to the notification reads as under :-
"Explanation II. - For the purposes of computing the aggregate value of clearances under this notification, (the clearances of any excisable goods, which are chargeable to nil rate of duty or) which are exempted from the whole of the duty of excise leviable thereon by any other notification (not being a notification where exemption from the whole of the duty of excise leviable thereon is granted based upon the value or quantity of clearances made in a financial year) issued under Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 or Sub-section (1) of Section 5A of the Central Excises and Salt Act, 1944 (1 of 1944) and for the time being in force, shall not be taken into account."
The Notification 1/93 and the Notification 16/97 both prescribed exemption where the value of clearances was the basic criteria therefor. In calculating the value of the eligible clearances of cosmetics etc. the value of goods cleared under the other notifications was also taken into account. As a result the jurisdictional authorities came to the finding that the benefit of Notification 140/83 had been taken in excess. Four show cause notices were issued seeking recovery of Rs. 2,51,320/- as differential duty. In two orders-in-original the demand was confirmed and total penalties of Rs. 52,200/- were imposed. In his common order the Commissioner (Appeals) upheld the earlier orders. Hence the appeals and the present applications.
3. We have considered the submissions. The explanation as reproduced above would seem to apply in case of calculation of the value of clearances of both of goods exempted under the notification as also the goods exempted under other notification. However, if the value of clearances of total goods is calculated and is to be taken as a factor determinant of the eligibility of clearances of the specified goods, then the result would be the possibility that the benefit of this notification being taken away in its entirety or to a substantial extent.
4. A similar issue was considered by the Larger Bench of the Tribunal in the case of Ramakrishna Engg. Works v. CCE - 1996 (83) E.L.T. 346. In this judgment the notification for interpretation was 175/86 dated 1-3-1986. This notification provided duty free clearances of a certain value limit, at the same time prescribing individual value limits for different commodities manufactured by the manufacturer availing of this notification. The judgment of the Tribunal in this case was that the expression "first clearances" would cover all clearances made chronologically and by such calculation the entire benefit was not available to the manufacturer, it was due to the construction of this notification. In holding so the Tribunal had taken cognizance of the judgment in the case of EL P.EM. Industries v. CCE -1989 (43) E.L.T. 599 and had deviated from the ratio thereof. This judgment was however followed by the Tribunal in the case of Khalsa Pulp and Paper Industries. The Khalsa judgments were challenged by the revenue. In civil appeal No. 5248 of 1990 the Supreme Court dismissed the civil appeal 1997 (92) E.L.T. A76. The Tribunal in the latter judgment of Solar Packaging Pvt. Ltd. 1999 (30) RLT 867 chose not to follow the Larger Bench judgment in the case of Ramakrishna Engg. Works.
5. Although the facts are entirely different and the notifications are not the same, the issue involved in the present case is also whether by mechanical calculation the benefit sought to be given by a notification can be taken away. The Solar Packaging Pvt. Ltd. judgment makes a statement that the assessee cannot be discriminated against by an interpretation of exemption modification.
6. Although this issue will have to be finally argued at the time of disposal of the appeals, at this stage we appreciate the prayers made by the applicants and waive the pre-deposit of the duties confirmed and penalties imposed.