1988 (11) TMI 107 - SC - Central Excise

Supreme Court affirms denial of small-scale manufacturer's Central Excise duty exemption claim

The Supreme Court upheld the decision that the appellant exceeded the clearance limits specified in Notification No. 80/80-C.E., dated 19th June, 1980, ... Whether the appellant is disentitled to the concession granted by Notification No. 80/80-C.E., dated 19th June, 1980 to small scale manufacturers in the matter of Central Excise duty? Held that:- The order made by the court there, so far as this aspect is concerned, was made on a concession of counsel for the Union of India and on the footing that the Union of India was not concerned with the collection of additional duty for earlier years but was merely concerned with the question of law involved in the case. We are also not satisfied that the facts upon which relief was granted in that case Collector of Customs and Central Excise and Another v. Oriental Timber Industries [1985 (3) TMI 62 - SUPREME COURT OF INDIA] arise before us in this case Issues:1. Interpretation of Notification No. 80/80-C.E. dated 19th June, 1980.2. Eligibility of the appellant for exemption under the Notification.3. Consideration of captive consumption in calculating clearances.4. Applicability of Explanation V to the Notification.5. Classification of goods under Tariff Items.6. Estoppel against the Excise authority.7. Recovery of dues from constituents.Analysis:Issue 1: Interpretation of Notification No. 80/80-C.E. dated 19th June, 1980The central issue in this case was the interpretation of Notification No. 80/80-C.E. dated 19th June, 1980, which granted exemptions to small scale manufacturers from Central Excise duty. The key question was whether the appellant had exceeded the prescribed limits for clearances, thus becoming disentitled to the concession.Issue 2: Eligibility of the appellant for exemption under the NotificationThe appellant, a private limited company engaged in manufacturing electric motors, claimed exemption under the Notification for specific periods. However, the Excise Authority disputed the claim, alleging that the appellant had exceeded the clearance limits set in the Notification.Issue 3: Consideration of captive consumption in calculating clearancesA crucial point of contention was whether the electric motors used for captive consumption in the manufacture of monoblock pumps should be included in the calculation of clearances. The Appellate Tribunal ruled that such captive consumption should be considered in determining the appellant's clearances.Issue 4: Applicability of Explanation V to the NotificationThe Appellate Tribunal referred to Explanation V of the Notification, which stated that clearances of inputs used for further manufacturing should not be counted if the inputs and finished goods fall under the same item of the First Schedule to the Act. The Tribunal found that the appellant's clearances were not exempt under this provision.Issue 5: Classification of goods under Tariff ItemsThere was a dispute regarding the classification of goods manufactured by the appellant under Tariff Items. The appellant argued that the goods should be classified as integral components of monoblock pumps, falling under the same Tariff Item. However, the Tribunal rejected this argument.Issue 6: Estoppel against the Excise authorityThe appellant contended that the Excise authority was estopped from taking a different view based on previously approved Classification Lists. The Tribunal dismissed this argument, emphasizing that there can be no estoppel against the law.Issue 7: Recovery of dues from constituentsLastly, the appellant raised a point regarding the recovery of dues from constituents as a basis for setting aside the demand. However, the court found no merit in this argument, citing a previous case where relief was granted on different grounds.In conclusion, the Supreme Court dismissed the appeal, upholding the decision that the appellant had exceeded the clearance limits specified in the Notification, thereby losing entitlement to the exemption.