Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Automats (India) on 8 June, 2000
Equivalent citations: 2000(72)ECC208, 2000(119)ELT34(TRI-DEL)
ORDER P.G. Chacko, Member (J)
1. The issue referred to this Larger Bench is whether the benefit of exemption under Notification No. 175/86-C.E., dated 1-3-1986 as amended by Notification No. 55/92-C.E., dated 31-3-1992 was available, for the period 1-4-1992 to 21-5-1992, to a small scale industrial (SSI) unit [not registered with the Director of Industries in any State or the Development Commissioner (Small Scale Industries) as a small scale industry under the provisions of the Industries (Development and Regulation) Act, 1951 (Act 65 of 1951)] which had availed the benefit of Clause (b) of the first proviso to para (4) of Notification No. 175/86-C.E. ibid during the preceding financial years.
2. In the case of Commissioner of Central Excise, Mumbai v. Assam Timbers 1999 (112) E.L.T. 226 (T), this Tribunal held that Notification No. 55/92-C.E., dated 31-3-1992 did not affect enjoyment of the benefit of Clause (b) ibid by an unregistered SSI unit. In other words, the benefit of exemption under Notification No. 175/86-C.E. as amended was available to an unregistered SSI unit for the period 1-4-1992 to 21-5-1992 where such unit had availed exemption by virtue of Clause (b) ibid during the preceding financial years. On the other hand, in the case of Duropolyprene (P) Ltd. v. CCE, Calcutta-I 1998 (101) E.L.T. 475 (T), another Bench of this Tribunal took a contrary view by holding that the effect of Notification No. 55/92 was to make Clause (b) ibid inoperative w.e.f. 1-4-1992 so that any unregistered SSI unit would have to fall back on Clause (a) of the first proviso to para 4 ibid for the benefit of exemption under Notification No. 175/86, which meant that the exemption would be available to the SSI unit during 1-4-1992 - 21-5-1992, if the value of clearances of specified goods during the preceding financial year (1991-92) did not exceed Rs. 7.5 lakhs. This view was followed by the Tribunal in many a case later.
3. The above conflict of decisions, which was taken note of by the referring Bench as per Misc. Order No. 129/99, dated 8-11-1999, brought the aforesaid issue before us.
4. For a proper appreciation of the issue, it is necessary to glance through the relevant provisions of Notification No. 175/86-C.E. ibid as well as the amending Notifications 55/92-C.E. dated 31-3-1992 and 67/92-C.E., dated 22-5-1992, before examining the facts of the present cases. Notification No. 175/86-C.E. ibid issued by the Central Government under Rule 8(1) of the Central Excise Rules, 1944 granted exemption from Central Excise duty to specified excisable goods cleared for home consumption by manufacturers. Para 4 of the Notification stipulated that such exemption shall be applicable only to a factory which was an undertaking registered with the Director of Industries in any state or the Development Commissioner (Small Scale Industries) as a small scale industry under the provisions of Act 65 of 1951. This requirement of registration as a small scale industry was, however, dispensed with in certain exceptional situations. These exceptions were stated in Clauses (a) and (b) of the first proviso to Para 4. Though Clause (a) of the proviso, as originally enacted, continued as such over the years, Clause (b) was amended from time to time. A second proviso was added to Para 4 in the due course of time, making Clause (b) of the first proviso inapplicable to cases where manufacturers registered with the Directorate General of Technical Development (in short, DGTD) under Act 65 of 1951 had availed of the exemption under the Notification during the financial year 1986-87 and the aggregate value of clearances of all excisable goods during 1987-88 and 1988-89 did not exceed Rs. 150 lacs. Para 4 with the first and second provisos thereto stood as follows, immediately before 1-4-1992 :-
"4. The exemption contained in this notification shall be applicable only to a factory which is an undertaking registered with the Director of Industries in any State or the Development Commissioner (Small Scale Industries) as a small scale industry under the provisions of the Industries (Development and Regulations) Act, 1951 (65 of 1951):
Provided that nothing contained in this paragraph shall be applicable, -
(a) in a case where the value of clearances from a factory during the preceding financial year or in the current financial year did not exceed or is not likely to exceed rupees seven and a half lakhs; or
(b) in a case where a manufacturer who is manufacturing specified goode in a factory, other than a factory which is registered under the Industries (Development and Regulations) Act, 1951 (65 of 1951) with the Directorate General of Technical- Development in the Ministry of Industry, and has been availing of the exemption under this notification during the preceding financial year:
Provided further that nothing contained in Clause (b) of the first proviso shall apply in a case where a manufacturer who is manufacturing specified goods in a factory and is registered under the Industries (Development and Regulation) Act, 1951 (65 of 1951), with the Directorate General of Technical Development, and has availed of the exemption under this notification during the financial year 1986-87 and the aggregate value of clearances of all excisable goods during the financial year 1986-87 and 1988-89 did not exceed rupees one hundred and fifty lakhs."
The following proviso was substituted for the second proviso aforesaid with effect from 1-4-1992 as per amending Notification No. 55/92-C.E. dated 31-3-1992 :-
"Provided further that nothing contained in Clause (b) of the first proviso shall apply in a case where a manufacturer who is manufacturing specified goods in a factory has availed of the exemption in pursuance of Clause (a) of the said proviso in any of the preceding financial years."
A third proviso was added to Para 4 ibid as per amending Notification No. 67/92-C.E., dated 22-5-1992 and the same read as follows :-
"Provided also that nothing contained in the preceding proviso shall apply on and from 22nd May, 1992 to the 31st day of March, 1993."
5. The Respondents in Appeal No. E/2583/93-B, who were engaged in the manufacture of excisable goods falling within the scope of Notification No. 175/86-C.E. as amended, had cleared goods without payment of Central Excise duty during the period 1-4-1992 to 21-5-1992 on the premis that they were entitled to exemption from duty under the said Notification as amended by Notification No. 55/92-C.E., as per the classification list effective from 1-4-1992 filed by them and duly approved by the jurisdictional Assistant Collector of Central Excise. They were holding no SSI registration certificate from the Directorate of Industries and the aggregate value of their clearances had exceeded Rs. 7.5 lacs in the preceeding financial years. Taking note of these facts, the Collector of Central Excise reviewed the classification list approved by the Assistant Collector, consequent whereto an appeal was filed by the Department before the Collector (Appeals) on the ground that the benefit of Notification No. 175/86-C.E. was not available to the assessee for the period 1-4-1992 to 21-5-1992 by virtue of Notification No. 55/92-C.E., dated 31-3-1992 and Notification No. 67/92-CE., dated 22-5-1992. The lower appellate authority rejected the Department's appeal after holding that Clauses (a) and (b) of the first proviso to para 4 were independent of each other by virtue of the disjunctive word "or" between the two clauses and consequently the respondents, though not eligible for the benefit of exemption in terms of Clause (a), were entitled to such benefit in terms of Clause (b) during the above period. Appeal No. E/2583/93-B was filed by the Department against this order of the Collector (Appeals).
The respondents in Appeals E/3250, 3251 & 3253/93-B, who were also manufacturers of excisable goods coming within the scope of Notification No. 175/86-C.E., had no SSI registration with the Directorate of Industries as required by Para 4 of Notification 175/86-C.E. and the aggregate value of clearances made by each of them during 1991-92 exceeded Rs. 7.5 lacs. The respondents in Appeal No. E/3250/93-B had filed classification list effective from 1-4-1992 claiming the benefit of exemption under Notification No. 175/86-C.E. as amended. The jurisdictional Assistant Collector of Central Excise approved the classification list by disallowing the benefit of exemption under the said Notification (as amended) for the period 1-4-1992 to 21-5-1992 and called upon the party to clear their products only on payment of Central Excise duty for the said period. Against this order of the Assistant Collector, they preferred appeal to the Collector (Appeals). The respondents in Appeal No. E/3251/93-B had also cleared goods without payment of Central Excise duty during the period 1-4-1992 to 21-5-1992 claiming exemption under Notification No. 175/86-C.E. as amended. The department raised a demand of duty of Rs. 13,936.28 on the goods so cleared and the same was confirmed by the Assistant Collector. Against this order of the Assistant Collector, the party went in appeal to the Collector (Appeals). The respondents in Appeal No. E/3253/93-B had also cleared goods without payment of duty during 1-4-1992 to 21-5-1992 claiming exemption under Notification No. 175/86-C.E. as amended. The Department demanded duty amounting to Rs. 21,661.68 on the clearances effected during the said period. The demand was confirmed by the Assistant Collector. The assessees, therefore, preferred appeal against the order of the Assistant Collector to the Collector (Appeals). In the appeals filed by the 3 assessees against the orders of the Assistant Collector, the Collector (Appeals) passed a common Order-in-Appeal, dated 4-6-1993 setting aside the orders of the Assistant Collector after holding that the assessees were eligible for exemption under Notification No. 175/86-C.E. (as amended) for the period 1-4-1992 to 21-5-1992. The present appeals E/3250,3251 & 3253/93-B are against this common order of the Collector (Appeals).
6. We have examined the orders of the lower authorities and connected records. We have, also, heard learned JDR, Shri M.P. Singh for the appellants and learned Advocate, Shri M.H. Patil for the respondents. We have also heard learned Advocates, S/Shri Shekhar Vyas and M.P. Devnath, who have argued in favour of the respondents, as intervenors with leave of this Bench.
7. It is not disputed that the respondents had no SSI registration till 31-3-1992 and that, in respect of each of them, the aggregate value of clearances of goods during the financial year 1991-92 exceeded Rs. 7.5 lacs. It is also not in dispute that these assessees had been availing themselves of exemption from payment of Central Excise duty on their products till 28-2-1986 under various Notifications and had continued to avail of such exemption under Notification No. 175/86-C.E. after 28-2-1986. The Department did not object to such availment of exemption under Notification No. 175/86-C.E. (as amended) upto 31-3-1992. The controversy before us is only in respect of the period 1-4-1992 to 21-5-1992. This controversy has arisen on acccunt of the different ways in which the Department and the assessees have understood the effect of the amending Notifications 55/92-C.E., dated 31-3-1992 and 67/92-C.E., dated 21-5-1992 on the first proviso to para 4.
8. The stand taken by the appellant/Revenue as reiterated by learned JDR is that Clauses (a) and (b) of the first proviso to Para 4 of Notification No. 175/86-C.E. (as amended) should be read conjunctively. In other words, the word "or" appearing between the two clauses should be read as "and". According to learned JDR, only a conjunctive reading of the two clauses would promote the purpose of the Notification. He has, in this connection, relied on the decision of the Hon'ble Supreme Court in the case of Govindhlji Maharaj and Ors. v. State of Rajasthan and Ors. AIR 1963 S.C. 1638, wherein the word "or" in Clause (g) under Section 5(2) of the Rajasthan Nathdwara Temple Act was held to mean "and" as required by the context. Learned JDR has also relied on the decision of the Madhya Pradesh High Court in the case of Municipal Council v. Bishandas Nathusmal [AIR 1969 M.P. 147], wherein a Division Bench of the Court held thus :-
"The word "and" is normally conjunctive and the word "or" is normally disjunctive but sometimes they are read as vice versa to give effect to the manifest intention of the legislature as disclosed from the context."
Learned JDR further submitted that Clause (a) of the first proviso to Para 4 had the effect of exempting from the requirement of SSI registration those cases where the value of clearances during the preceding financial year did not exceed Rs. 7.5 lacs or the value of clearances during the current financial year was not likely to exceed Rs. 7.5 lacs. Under Clause (b) of the said proviso, SSI registration would not be necessary if the manufacturer, other than one registered with the DGTD under Act 65 of 1951, had been availing of exemption under Notification No. 175/86-C.E. during the preceding financial year. However, w.e.f. 1-4-1992 by virtue of Notification No. 55/92-C.E., the benefit of Clause (b) would not be available to an unregistered SSI manufacturer who had availed of exemption in terms of Clause (a) of the first proviso in any of the preceding financial years. The contention of learned DR is that the respondents in these appeals had already crossed the annual clearance value limit of Rs. 7.5 lacs prescribed in Clause (a) of the first proviso to para 4 of Notification No. 175/86-C.E. thereby disentitling themselves to any benefit of the first proviso. Moreover, the second proviso rendered Clause (b) of the first proviso inapplicable to the respondents' case w.e.f. 1-4-1992 and therefore they were not entitled to invoke Clause (b) of the said proviso for taking the benefit of exemption under the Notification. This legal position, according to learned JDR, continued till 21-5-1992. It was only with the issue of Notification No. 67/92-C.E., dated 22-5-1992 that the operation of the second proviso was suspended and such suspension was explicitly for the period from 22-5-1992 to 31-3-1993. There was nothing in this amending Notification No. 67/92-C.E. to indicate that the Notification had retrospective effect so as to cover the entire period from 1-4-1992 onwards. Learned JDR would, therefore, read Notifications 55/92-C.E. and 67/92-C.E. together to expound that the second proviso to para 4 of Notification No. 175/86-C.E. (as amended) did operate during the period 1-4-1992 to 21-5-1992, thereby making Clause (b) of the first proviso inapplicable to an unregistered SSI manufacturer who had availed of exemption in terms of Clause (a) of the said proviso in any of the preceding financial years. The respondents in all these appeals had availed of exemption in terms of Clause (a) of the first proviso in one or more of the preceding financial years. In such situation, the benefit of Clause (b) of the first proviso to para 4 would not accrue to them during the period 1-4-1992 to 21-5-1992, submits learned JDR. In support of these arguments, he has relied on the following decisions of the Tribunal :-
(i) Duropolyprene (P) Limited v. CCE, Calcutta-I 1998 (101) E.L.T. 475 (T)
(ii) Collector of Central Excise v. Ideal Graphic Industries [1999 (111) E.L.T. 242 (T)]
(iii) D.B. Shingadia v. CCE, Bombay-I [1999 (32) RLT 477 (CEGAT)]
(iv) Final Order No. 900/99-B dated 16-8-1999 in CCE, Mumbai v. Philips Engg. Company
(v) CCE, Bombay v. Khanna Petrochem Company [1999 (108) E.L.T. 782 (T)]
(vi) Final Order No. 1051/99-B dated 7-9-1999 in CCE, Mumbai v. Texocaps
(vii) CCE, Bombay v. Rajco Industries [1999 (114) E.L.T. 1004]
(viii) Final Order No.ll02/99-B, dated 6-10-1999 in CCE, Mumbai v. Bhagwati Steel Industries
(ix) Final Order No. 1221/99-B, dated 9-11-1999 in CCE, Bombay v. Chetna Engineering.
9. According to the assessees, Clauses (a) and (b) of the first proviso to Para 4 are independent of each other and have to be read disjunctively as held by the lower appellate authority. Learned Counsel for the respondents has submitted that all the assessees had been availing themselves of exemption from duty under one or the other Notification prior to 1-3-1986 and had continued to enjoy exemption from 1-3-1986 under Notification No. 175/86-C.E. as amended. The assessees had been availing of such exemption during consecutive financial years after 1-3-1986 not in terms of Clause (a) but in terms of Clause (b) of the first proviso to para 4 of the Notification. Since Clause (b) is independent of Clause (a), the second proviso introduced by Notification No. 55/92-C.E. did not in any way affect the assessees' right to avail of the exemption in terms of Clause (b). Learned counsel would, therefore, urge that the decision of the Collector (Appeals) holding the assessees to be entitled to exemption under Notification No. 175/86-C.E. dated 1-3-86 (as amended) for the period 1-4-1992 to 21-5-1992 is only liable to be upheld. In support of his arguments, learned counsel has relied on the following decisions of the Tribunal :-
(i) CCE, Mumbai v. Assam Timbers 1999 (112) E.L.T. 226 (T)
(ii) CCE, Mumbai-I v. Bharat Automatics 1999 (112) E.L.T. 387 (T)
(iii) CCE, Bombay v. P.H. Industries 1998 (28) RLT 215
10. Learned Advocates, who intervened in support of the assessees, have also drawn our attention to the provisions of Notifications 175/86-C.E., 55/92-C.E. and 67/92-C.E. and have argued that it would be too narrow an interpretation of the provisions to hold that unregistered SSI units would not be entitled to exemption under Notification No. 175/86-C.E. (as amended) for the brief period 1-4-1992 to 21-5-1992 while, for the rest of the financial year (22-5-1992 to 31-3-1993), they are held to be entitled to the exemption. Such an interpretation, according to learned Advocates, would run counter to the very object of the exemption Notification No. 175/86-C.E. which was issued in furtherance of the Government policy of promoting small scale industries in the country.
According to learned intervenors, the bar created by Notification 55/92-C.E., dated 31-3-92 was applicable only to those cases where the unregistered SSI manufacturer had taken advantage of Clause (a) of the first proviso to para 4 of Notification 175/86 during one or more of the preceding financial years. Any such manufacturer who had been availing of the exemption under Notification 1785/86 in terms of Clause (b) of the said proviso in all the preceding financial years would not be hit by the mischief of Notification 55/92. Learned advocates placed before us the following illustrations :-
"Suppose in the financial year 1985-86, manufacturer "Y" has availed of the benefit of Notification 85/85. This is one of the notifications mentioned under Clause (b) (as this clause stood prior to 1-4-1989) of the first proviso of para 4. Consequently, in the financial year 1986-87, manufacturer "X" will be eligible for exemption under Notification No. 175/86 under Clause (b) of first proviso of para 4. Since it has availed of benefit of Notification No. 175/86 in one financial year, it will continue to avail benefit of the said notification for subsequent financial years also be successive application of para 4 (b). Such a manufacturer "Y" has never availed of the benefit of Clause (a) of para 4. To him, amendment of Notification No. 55/92 will not apply. [Parenthesis added]"
"Take for instance manufacturer "Z". Suppose in the year 1989-90 he has a provisional registration with SSI. On the strength of his provisional registration, he would have availed of Notification No. 175/86 under main para 4. Suppose the registration was not renewed in the financial year 1990-91, for the financial year 1990-91, he would still get the benefit of notification No. 175/86 by virtue of Clause (b) to first proviso to para 4, since he has availed of the benefit under Notification 175/86 in the preceding financial year 1989-90. He will continue to avail of the benefit of Notification No. 175/86 for subsequent financial years, due to successive application of Clause (b) of first proviso to para 4. To the manufacturer "Z", amendment to Notification No. 55/92 will not apply, since he has never availed of exemption under Clause (a) in any of the preceding financial years."
11. Ld. Counsel for the respondents has taken his cue from the above illustrations and has submitted that all the respondents were like manufacturer "y" in ld. Advocates' illustration and did not attract the mischief of .the second proviso introduced by Notification 55/92. Therefore, the exemption under Notification 175/86 (as amended) would be available to the respondents for the financial year, 1992-93 in terms of Clause (b) of the first proviso to para 4 thereof. He has contextually referred to Notification 67/92 which, by introducing a third proviso to para 4, suspended the operation of the second proviso to para 4 for the period 22-5-1992 to 31-3-1993. He has contended that, since Notification 67/92 was issued by Government pursuant to representations made by unregistered SSI manufacturers who wanted relief from the mischief of Notification 55/92, the purpose of Notification 67/92 should be understood as to suspend the operation of Notification 55/92 w.e.f. 1-4-1992 itself and not w.e.f. 22-5-1992. To restrict the operation of Notification 67/92 to the period (22-5-1992 to 31-3-1993) specified therein would, according to ld. Counsel, do violence to the very intent of the notification as well as to the general scheme of the exemption Notification 175/85-C.E. To buttress these arguments, ld. Counsel has brought on record a copy of the Ministry's letter F. No. 332/2/92-TRU (Ft), dated 1-6-1992 addressed to Collectors of Central Excise on the subject of amendments to Notification No. 175/86-C.E. According to learned Counsel, this letter clarifies the Central Government's stand regarding the issue under consideration. We have perused the letter. The object of amending Notifications No. 55/92-CE. and 67/92-C.E. has been stated in Paragraphs 3 and 4 of this letter extracted below :-
"3. It had come to notice that units which had claimed exemption from the condition of registration under sub-para (a) mentioned above by virtue of their clearances not exceeding Rs. 7.5 lakhs in a year, were continuing to claim exemption in the succeeding years under aforesaid sub-para (b) even though their clearances exceeded Rs. 7.5 lakhs per year. As the same was contrary to the intention, Notification 175/86-C.E. was amended by Notification No. 55/92-C.E., dated 31-3-1992 so as to debar unregistered units which had availed of the exemption under Clause (a) of paragraph 4 of the Notification No. 175/86-C.E. in any of the preceding financial years. Consequently unregistered units whose aggregate value of clearances exceeded Rs. 7.5 lakhs in the current financial year became ineligible for availing the exemption with effect from 1-4-1992.
4. Subsequent to the issue of amending Notification 55/92-C.E. dated 31-3-1992 representations were received that such small scale units especially those which are located in non-conforming areas have become ineligible for the concession under Notification No. 175/86-C.E. Accordingly, the matter has been re-examined. In order to give time to such unregistered units to get themselves registered with the concerned small scale authorities, Notification No. 67/92-C.E. has been issued on 22nd May 1992 which provides that the restriction imposed by Notification No. 55/92-C.E. dated 31-3-1992 comes into effect only from 1-4-1993. In other words, the position prevailing before the issue of amending Notification 55/92-C.E. dated 31-3-1992 has been restored in respect of unregistered units whose clearances exceed Rs. 7.5 lakhs per year and claim exemption under first proviso to paragraph 4 of Notification No. 175/86-C.E.. These units should get themselves registered with the concerned authorities by 31-3-1993." [Emphasis supplied] Heavily relying on the above clarification of Government, learned Counsel has submitted that the bar created by Notification No. 55/92-C.E., dated 31-3-1992 came into effect only from 1-4-1993 and therefore, during the period 1-4-1992 to 21-5-1992, the second proviso (introduced by Notification No. 55/92-C.E.) to para 4 of Notification No. 175/86-C.E. was rendered inoperative by Notification No. 67/92-C.E. so that the assessees could avail themselves of the exemption under Notification 175-86-C.E. in terms of Clause (b) of the first proviso to para 4 thereof during 1-4-1992 - 21-5-1992. Counsel has so submitted assuming (but without conceding) that the second proviso was also intended to apply to a manufacturer who had availed of exemption only in terms of Clause (b). Learned Counsel has, therefore, urged that the Department's appeals be rejected.
12. We have carefully considered the rival submissions. We have also examined the relevant notifications. We note that amending Notification No. 55/92-C.E., dated 31-3-1992 which introduced the second proviso to para 4 of Notification No. 175/86-C.E. made Clause (b) of the first proviso inapplicable to a case where manufacturer had availed of the exemption in pursuance of Clause (a) of the first proviso in any of the preceding financial years. This meant that an unregistered SSI unit which has already availed of the exemption in pursuance of Clause (a) of the first proviso to para 4 in any of the preceding financial years would not be entitle to take the benefit of Clause (b) of the said proviso from 1-4-1992. A relevant question of fact arises here and the same is whether the respondents had availed of the exemption in terms of Clause (a) in any of the preceding financial years i.e., upto (and including) 1991-92. But before going into this question, let us see what happened to the second proviso almost on the heels of its introduction by Notification 55/92. Amending Notification No. 67/92-C.E., added a third proviso to Para 4 making the second proviso inoperative from 22-5-1992 to 31-3-1993. It did not, prima facie, affect the operation of the second proviso for the period 1-4-1992 to 21-5-1992, which meant that, during this period (1-4-1992 to 21-5-1992), the second proviso was in force making Clause (b) of the first proviso inapplicable to a case where a manufacturer had availed of the exemption in terms of Clause (a) of the first proviso in any of the preceding financial years. This is, however, a matter of controversy before us inasmuch as it has been urged on behalf of the respondents that Notification 67/92 should be construed in the light of its purpose as clarified in the Ministry's letter. The question which has arisen at this juncture is a question of law as to whether Notification 67/92 did or did not affect the operation of the second proviso to para 4 of Notification 175/86 for the period 1-4-92 to 21-5-1992. We will be addressing this question as well.
13. The question whether the respondents had availed of the exemption in terms of Clause (a) of the first proviso to para 4 in any of the financial years preceding 1992-93 requires to be examined first. Their case is that they have never taken the benefit of Clause (a). They had been availing of the exemption under one or the other Notification specified under Clause (b) (as this clause stood prior to 1-4-89) during the period prior to 1-3-86 and continued to avail of exemption from 1-3-86 in pursuance of Clause (b) [as amended from time to time]. In order to appreciate this plea of the respondents, it is necessary to look at Clause (b) of the period prior to 1-4-89, which read as under :-
"(b) in a case where a manufacturer has been availing of the exemption under this notification or any of the notifications specified below during the preceding financial year :-
(i) 166/72-C.E., dated the 13th July, 1972
(ii) 39/73-CE., dated the 1st July, 1973
(iii) 158/77-C.E., dated the 18th June, 1977
(iv) 74/78-C.E., dated the 1st March, 1978
(v) 70/81-C.E., dated the 25th March, 1981
(vi) 43/82-C.E., dated the 28th February, 1982
(vii) 44/82-C.E., dated the 28th February, 1982
(viii) 148/82-C.E., dated the 22nd April, 1982
(ix) 77/83-C.E., dated 1st March, 1983
(x) 83/83-C.E., dated 1st March, 1983
(xi) 77/85-C.E., dated 17th March, 1985
(xii) 85 /85-C.E., dated 17th March, 1985"
All the 12 notifications specified above were rescinded on or before 1-3-1986 and therefore it was otiose to retain these notifications in the text of the above clause after the first financial year of operation of Notification No. 175/86-C.E., dated 1-3-1986. Counsel for the respondents has submitted that they had been availing of exemption under Notifications 77/83-C.E., 83/83-C.E., 77/85-C.E. and 85/85-C.E. during the financial years 1984-85 and 1985-86. In 1986-87, they took the benefit of Clause (b) of the proviso to para 4 of Notification No. 175/86-C.E. on the basis of their having availed of exemption in the preceding financial year (1985-86) under some of the notifications specified under the said clause. In 1987-88, they took similar benefit on the basis of their having availed of exemption in the preceding financial year (1986-87) under the same Notification (175/86-C.E.). Thereafter also, they continued to avail of exemption in a similar way in successive financial years. Thus, according to the respondents, they were continuously and uninterruptedly (since 1-3-86) taking advantage of Clause (b) of the proviso to para 4 and never resorted to Clause (a) of the proviso.
14. We note that the above facts were consistently pleaded by the assessees before the lower appellate authority and that the said authority rendered its decision having regard to such facts. In his order which is challenged in Appeal No. E/2583/93-B, the Collector (Appeals) held thus :-
"The eligibility to the Notification in terms of the proviso (b) would not (be) bound to be affected merely on account of the fact that in the previous years the clearance had exceeded Rs. 7.5 lakhs. The proviso (a) and (b) to para 4 are separate and independent of each other as seen by the presence of the disjunctive word "or" between the two."
In his order, which is challenged in Appeal Nos. E/3250,3251,3253/93-B, the Collector (Appeals) reached a finding thus :-
"...the appellants' claim that they have not availed of exemption under Clause (a) of the first proviso to para 4 and availed exemption only under Clause (b) is therefore seen to be correct."
Though the impugned orders were based on a finding of fact that the assessees had availed of exemption only in terms of Clause (b) in the previous years (i.e. years preceding 1992-93), the Revenue has not challenged such finding in the present appeals. Therefore, we have to accept the said finding and hold that the respondents had not availed of the exemption in terms of Clause (a) of the first proviso to para 4 in any of the financial years preceding 1992-93. Consequently, it has also to be held that the respondents' right to avail of the exemption in 1992-93 in terms of Clause (b) of the first proviso to para 4 was not in any way affected by the second proviso introduced by Notification 55/92-C.E. inasmuch as the bar created by the second proviso was applicable only to an unregistered SSI manufacturer who, unlike the respondents, had availed of exemption in terms of Clause (a) of the first proviso in any of the preceding financial years.
15. As per the second proviso to para 4, if any unregistered SSI unit had availed of exemption in pursuance of Clause (a) of the first proviso in any previous financial year, it will not be entitled to avail of exemption in pursuance of Clause (b) in 1992-93. Notification 55/92-C.E., which introduced the second proviso, virtually recognised the legal position that Clauses (a) and (b) of the first proviso were independent of each other as rightly stated by learned Collector (Appeals). We are, therefore, unable to accept ld. JDR's argument that Clauses (a) and (b) should be read conjunctively. In our view, the context underlying the first proviso to para 4 of Notification 175/86-C.E. does not warrant such a conjunctive reading of the two clauses. The decisions of the M.P. High Court [AIR 1969 MP 147] and the Supreme Court [AIR 1963 SC 1638] cited in this connection by ld. DR have only persuaded us only to read "or" as "or" between the two clauses.
16. Notification 67/92-C.E., which added the third proviso to para 4, made the second proviso (as introduced by Notification 55/92-C.E.) inoperative for a part (22-5-1992 to 31-3-1993) of the financial year 1992-93. But we have already held that the second proviso was not applicable to the respondents. Consequently, the third proviso also did not affect them.
17. Even if it be assumed that the second proviso introduced by Notification 55/92-C.E. affected the respondents' right to avail of exemption during 1992-93 in terms of Clause (b) of the first proviso, the respondents were protected from the mischief of the second proviso by the third proviso (added by Notification 67/92-C.E.) which suspended the operation of the second proviso during the said period. Though, literally, the third proviso suspended the operation of the second proviso only from 22-5-1992 to 31-3-1993, its purport was to suspend such operation from 1-4-1992 to 31-3-1993 as clarified by Government themselves in the Ministry's letter dated 1-6-92 (supra). Para (4) of the letter is self explanatory on this point. When the rule-making authority itself clarifies any enigmatic expression contained in any rule, such clarification has to be employed as an aid for construing the rule, especially when such clarification reveals the very object of the rule. The Ministry's letter made it clear that, by virtue of Notification 67/92-C.E. dated 21-5-92, the restriction imposed by Notification 55/92-C.E. dated 31-3-92 came into effect only from 1-4-93. This meant that the operation of the second proviso stood suspended during 1-4-92 - 31-3-1993. In the result, the said proviso did not affect anybody's right during 1992-93. An interpretation by ignoring the rule-making authority's clarification of the purpose of Notification 67/92-C.E. might lead to an anomalous and unintended situation in which an SSI unit could be held to be ineligible for exemption for a part of the financial year 1992-93 and to be eligible for the remaining part of the financial year. Such interpretation in our view, should be eschewed.
18. In all the cases relied on by the ld. DR mentioned at Sl. Nos. I to IX in para (8) of this order, the second proviso (introduced by Notification 55/92-C.E.) to para 4 of Notification 175/86-C.E. was held to be operative for the period 1-4-92 - 21-5-92. The Ministry's clarificatory letter (supra) had not been brought to the notice of the Tribunal in those cases. Apart from this, none of the different Benches which heard those cases appears to have taken serious note of the disjunctive between Clause (a) and (b) of the first proviso to para 4 of Notification 175/86-CE.. Moreover, it appears, the assessees in . those cases had not denied that they had availed of exemption in terms of Clause (a) in one or more of the financial years preceding 1992-93. This is not the position in the instant cases as already seen. The said decisions, therefore, cannot be accepted as correct in law.
19. On the other hand, the decision in the cases of Assam Timbers (supra), Bharat Automatics (supra) and P.H. Industries (supra) relied on by the respondents' counsel have made the correct proposition of law on the subject.
20. Ld. Counsel submitted that the respondents in Appeal No. E/2583/93-B had since obtained SSI registration w.e.f. 1-4-1992. This being so, the appeal has become infructuous and is accordingly dismissed. The cross-objection in that appeal is also dismissed. Appeal Nos. E/3250, 3251 & 3253/93-B are rejected on merits in the light of our finding that the respondents were entitled to exemption from duty during the period 1-4-1992 to 21-5-92 in terms of Clause (b) of the first proviso to para 4 of Notification No. 175/86-C.E. dated 1-3-86 (as amended).
21. The referred issue stands answered in favour of the respondents.