Customs, Excise and Gold Tribunal - Bangalore
M/S Arpee Electrical Pvt Ltd., ... vs The Commissioner Of Central Excise, ... on 25 April, 2001
Equivalent citations: 2001(76)ECC512, 2002(147)ELT404(TRI-BANG)
ORDER
Shri S.S. Sekhhon
1. The appellants are a SSI unit, engaged in the manufacture of 'Copper winding wires' and were availing the benefit of small scale exemption under Notification No. 1/93. They filed C.L. No. 2/94 dated 04.4.1994 effective from 01-4-94 claiming SSI exemption on 'Copper winding wires' but did not claim SSI exemption on 'Copper scrap' which was cleared at Tariff Rate (normal rate) of duty. The said C.L. was approved by A.C. on 28-04-94 without any modifications. The aggregate value of clearance of Copper winding wires was Rs 4999897 i.e. below 50 lacs. The value of scrap cleared by them was Rs 366480/-. A Show Cause Notice was issued on 19-4-94, alleging that the benefit of Notification No. 1/93 has been wrongly claimed and a duty demand of Rs. 18,319/- was demanded on the grounds that the turn over of scrap cleared at Tariff rate (normal rate) should be added to the aggregated value of the clearance. Therefore, the slab of 50 lacs would be crossed and duty was required to be paid on this crossed value slab limits.
2. The Assistant Collector, confirmed the demand by coming to a finding that value of clearance on 'waste and scrap' should be included in computing this slab applicable, under the Notification No. 1/93. The Commissioner (Appeals) in the Order impugned before us held as follows-
"The short question involved in this case, whether the value of clearances of waste and scrap of copper cleared at normal rate of duty is to be added to the aggregate value of goods cleared to determine the exemption under notification No. 1/93 or not. The appellants are manufacturing winding wire of copper classifiable under Ch. No. 8544.00 availing modvat & SSI exemption. The waste & scrap of copper arising in the process is classified under CH. NO. 7404.00 paying normal rate of duty. The said waste and scrap of copper falling under ch. no. 7404.00 is a specified goods as per the Annexure to notfn. no. 1/93. Hence the value of clearance of scrap has to be added to determine the aggregate value of clearance of the specified goods in terms of provisions of SSI Notification No. 1/93. Explanation II to noftn. no. 1/93 is quite clear for the purpose 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 duty of excise leviable thereon by any other notification shall not be taken into account. In this case the appellant filed the classification list declaring the waste and scrap of copper under heading no. 7404.00 indicating the duty at 15%, which was approved and the appellant also paid the duty at 15%. Therefore, the value of clearance for the said scrap has to be included to arrive at the aggregate value since it is not falling into the category of good explained in Explanation II. Therefore, the Asst Commissioner has rightly held that value of waste and scrap of copper cleared on payment of normal rate of duty has to be included to determine the aggregate value of clearances in the financial year and hence the order in original has to be upheld."
and confirmed the Order-in-Original of the Assistant Collector and rejected the appeal.
3. We have heard both sides and considered the submissions and after considering the same, we find-
(a) Examining the Notification No. 1/93, we find the notification does not define 'specified goods'. This term is only referred to in para 1 of this notification as follows-
"....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 manufacture..."
A plain ruling of the above indicates the 'specified goods' are, gods exempted by this notification, they are listed in the annexure to the said notification and which are cleared for home consumption on or after the 1st April in any financial year by manufacturer. These three conditions have to be read together to qualify the goods to be "specified goods". If the goods are not exempted from duty, even though they may be referred to or listed in the Annexure and are cleared, they would not remain to be covered by term 'specified goods'.
(b) We find that the Larger Bench of Tribunal, in the case of Inertec Vs. CCE, Gaziabad 2001(127) ELT 609 (Tri-LB) in pare 4 of the reported decision have observed and held as-
"Para 4 - Notification No. 1/93-CE., dated 28-2-1993 as amended by subsequent notifications extended exemption to clearances of specified goods upto the value fixed therein on payment of concessional duty. Limits within which the benefit available to the manufactures were contained in clauses 1 to 3 of the said notification. Clause 4 of the notification specifically provided that the exemption contained in the notification should not apply to the specified goods bearing a brand name or trade name of another person. Thereafter, the notification contains the following clause :-
"Notwithstanding the exemption contained in paragraph 1 of this notification, a manufacturer shall have an option for not availing of the benefit of the exemption contained in said paragraph and to pay duty of excise at the rate applicable to the specified goods but for the exemption contained in the said paragraph 1, subject to the condition that such manufacturer shall pay duty at the rate applicable but for aforesaid exemption on all subsequent clearances of specified goods made after availing such option, in a financial year in which such date of option falls."
This provision contained in the notification can apply only to the goods, which are entitled to exemption as provided in paragraph 1 therein. If the goods fall outside the purview of paragraph 1, as a result of the provisions contained in paragraph 4 dealing with branded goods, they will not fall within the category of specified goods mentioned in the above provision. the specified goods mentioned in the above quoted clause must be goods falling under paragraph 1. If the goods manufactured by the SSI Unit fall outside paragraph 1 consequent on it being branded goods, payment of full duty on such branded goods will not disentitle the other products from getting the benefit of the notification."
Since the Larger Bench, in this decision mentioned (supra), has considered para 4 of the notification 1/93, beginning with the non-obstente clause in the notification and thereafter have held that-
"If the goods manufactured by the SSI Unit fall outside paragraph 1 consequent on it being branded goods, payment of full duty on such branded goods will not disentitle the other products from getting the benefit of the notification."
We have therefore, no hesitation in coming to a finding, that if for any of the goods mentioned in the Annexure, the manufacturer opts to pay the full Tariff Rate (normal rate of duty), then such goods and duty payment at those rates will not disentitle availment of the benefit of the notification to the other goods mentioned in the Annexure. Such goods, which are cleared at the Tariff rate, will not also be covered as 'specified goods'. Therefore, in this case, if waste and scrap of Copper have been cleared on payment of duty after approval of the classification list, the clearance value of such goods cannot be computed along with the value of the 'winding wires', to arrive at next slab of the duty, as is being proposed by the Lower Authority in this case.
(c) We find that there is a reason for charging full rate of duty Tariff Rate (normal rate of duty) on 'waste and scrap' but there is no reason thereafter, to compute the value of such duty paid 'waste & scrap' or by adding this turn over to 'Copper Winding Wires' turn over under notification 1/93 and to demand duty in the next slab at 5%. The same goods and value thereof, cannot be charged to duty once duty has been discharged on them at the tariff rates.
4. In view of our findings, we set aside the order of the Lower Authority and allow the appeal.
(Pronounced in the court on .....)