Full Judgment Text
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CASE NO.:
Appeal (civil) 2358-2359 of 2000
PETITIONER:
COMMISSIONER OF CENTRAL EXCISE AHMEDABAD
RESPONDENT:
JALARAM WOOD CRAFTS (P) LTD.
DATE OF JUDGMENT: 12/03/2003
BENCH:
SYED SHAH MOHAMMED QUADRI & ASHOK BHAN
JUDGMENT:
JUDGMENT
2003(2) SCR 1047
The following Order of the Court was delivered :
SYED SHAH MOHAMMED QUADRl, J. These two appeals relate to the same assessee
and arise from the common Final Order Nos. 718-719/ 99-D of the Customs,
Excise and Gold (Control ) Appellate Tribunal, New Delhi (for short, the
Tribunal) in Appeal Nos. E/A 4559/94-D and 4460/94-D, dated August 5, 1999.
When these appeals came up for admission on March 3, 2000, they were
directed to be tagged with Civil Appeal Nos. 11441-11442/95. This was
obviously for the reason that the question which was involved in those
appeals was pressed into service in these appeals also. Be that as it may,
Mr. Anoop Chaudhary, the learned senior counsel appearing for the Revenue,
opened his case disputing that these appeals are covered by the decision in
Civil Appeals No. 11441-11442/95, (Collector of Central Excise, New Delhi
v. Universal Electrical Industries and Anr., dated March 11, 2003.
We may note a few relevant facts of this case.
The assessee is manufacturing plywood veneer, panel flush door, panel
doors, veneer timber board and block boards. It is also manufacturing glue,
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UF resins and wood veneer, which are used as inputs for the manufacture of
the afore-mentioned final products. Admittedly, the assessee is a SSI Unit.
Under Notification No, 175/86, dated 1.3.1986, it is entitled to exemption
for clearance of the goods upto a limit of Rs.20 lakhs. The assessee
enjoyed that benefit. On February 25, 1992 and on September 23, 1992, the
Assistant Collector, Central Excise, Division Gandhinagar Vidhyalaya,
issued a notice to the assessee to show cause as to why the benefit of
notification No.217/ 86, dated April 2, 1986, should not be denied to it as
its final products were cleared under full exemption and why the central
excise duty amounting to Rs. 93, 147 and Rs. 32,607 should not be demanded.
The assessee, in reply, stated that as per Explanation-Ill of Notification
No. 175/86, the clearance value of inputs that were used in the manufacture
of final products, was not to be taken into account while computing the
aggregate value of the final products. In his order dated December 30,
1992, the Assistant Collector noted that the assessee had availed the
benefit of Notification No.217/86 for the inputs-glue, UF resin and wood
veneer-used for the manufacture of their final products-plywood, veneer,
panel flush door, panel doors, etc. It was also noted that the assessee had
availed SSI exemption under Notification No. 175/86 and cleared the goods
under full exemption for first clearance of Rs.20 lakhs. In regard to the
defence of the assessee in reply to the show cause notices, it is
interesting to notice the following comment of the Assistant Collector:
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"The point raised by the assessee in their defence reply regarding
Explanation-Ill of the Notification No. 175/85 is not understandable. The
said explanation is for computing aggregate value of clearances of final
product for the purpose of Notification No. 175/86 which is not at all the
point of dispute in this case."
Thus expressing, the Assistant Collector confirmed the demand. On appeal to
the Collector, Central Excise and Customs (Appeals), by the assessee, it
was pointed out that the exemption under Notification No. 217/86 for the
intermediate products manufactured by the assessee, namely, glue, UF resin
and wood veneer etc. used in the manufacture of final products, namely,
plywood, veneer, panel flush doors etc., is not available to the assessee
as the final products were exempted under Notification No. 175/86. In
regard to the defence of the assessee, the Appellate Collector noted.
"The disputed issue is regarding the availability of the benefit of the
Notification No. 217/86. Hence the appellants reference to explanation III
under notification 175/86 is simply not relevant."
The assessee carried the matter in further appeals to the Tribunal. By the
impugned order, the Tribunal allowed the appeals holding that the dispute
was covered by its earlier order in the case of Universal Electrical
Industries v. C.C.E., (1994) 70 ELT 279.
In as much as the respondent did not enter appearance inspite of service of
notice, we requested Mr. V. Lakshmi Kumaran, Advocate, to assist us as
amicus curiae in this case. We record our appreciation for the valuable
service he has rendered in putting up the case of the unrepresented
respondent to assist the Court.
In the light of the contentions of the learned counsel, after giving our
anxious consideration, we are of the view that the point raised in these
appeals is squarely covered by the decision of this Court in C.A.Nos.l
1441-11442/ 95, dated March 11, 2003. The assessee is a SSI unit and is
entitled to exemption under Notification No. 175/86. It is not in dispute
that both the inputs as well as the final products are specified goods as
they have been mentioned in the annexure to the notification. For purposes
of computing the aggregate value, both Explanation II and Explanation III
have to be read together and the clearance value of the inputs will have to
be excluded. This is what the assessee stated in its reply which was not
appreciated either by the Assistant Collector or the Collector (Appeals ).
Even if the claim of exemption by the assessee in regard to the inputs is
based on Notification No. 217/86 and it is not entitled to the same, it
hardly makes any difference as the inputs fall within the meaning of
’specified goods’ in Notification No. 175/86. Therefore, their clearance
value ought to have been excluded while arriving at the aggregate value for
the purposes of Notification No. 175/86.
It is true that, read by itself, Notification No. 217/86 applies only to
such inputs which are used in the manufacture of final products which are
not entitled to any exemption under the Central Excise Act. 1944. But that
question would become irrelevant if the inputs are entitled to exemption
under Notification No. 175/86 itself.
However, Mr. Chaudhary submitted that it is not clear from the record as to
whether the same inputs in regard to which exemption under Notification No.
217/86 was claimed by the assessee had gone into the manufacture of final
products which are said to have been cleared upto a limit of Rs. 20 lakhs.
It will suffice to observe that we leave it open to the Excise authorities
to verify the said fact. If the claim of exemption under Notification No.
217/ 86 is in regard to inputs which have gone into manufacture of the
final products which were cleared under Notification No. 175/86, there can
be no further demand of excise duty, even though the assessee claimed
exemption under Notification No. 217/86. But, if under Notification No.
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175/86 the clearance value of the inputs was already excluded in arriving
at the aggregate value of Rs. 20 lakhs and claim for exemption of inputs
under Notification No. 217/86 relates to different final products which are
exempt under a different Notification, then the assessee will be liable to
pay the duty in demand.
Accordingly, following the decision in Civil Appeal Nos. 11441-1142/ 95,
dated March 11, 2003, we confirm the order of the Tribunal and dismiss
these appeals.
There shall be no order as to costs.