1992 (12) TMI 141 - AT - Central Excise

Including Duty-Paid Clearances in Total Value Calculation | Resolving Interpretation Conflicts

The Tribunal concluded that the value of duty-paid clearances should be included in the computation of the total value of first clearances of Rs. 30 ... Exemption to S.S.I. Units Issues Involved:1. Interpretation of Exemption Notification No. 175/86.2. Calculation of duty-free clearances up to Rs. 30 lakhs.3. Inclusion of duty-paid clearances in the computation of total clearances.Detailed Analysis:1. Interpretation of Exemption Notification No. 175/86:The primary issue revolves around the interpretation of Exemption Notification No. 175/86 dated 1-3-1986, which provides for duty-free clearances up to Rs. 30 lakhs for specified goods. The contention is whether the value of goods cleared in excess of Rs. 15 lakhs on payment of duty should be included in the computation of the total value of first clearances of Rs. 30 lakhs.2. Calculation of Duty-Free Clearances up to Rs. 30 lakhs:The Assistant Collector of Central Excise, Dum Dum Division, held that the first clearances of Rs. 30 lakhs should be computed by considering the first clearance value of specified goods of all headings simultaneously, including both duty-free and duty-paid clearances. This interpretation was challenged by the respondents, who argued that the first clearances of Rs. 15 lakhs should be computed separately for different items.3. Inclusion of Duty-Paid Clearances in the Computation of Total Clearances:The Collector of Central Excise, Calcutta-II Collectorate, appealed against the decision of the Collector of Central Excise (Appeals), Calcutta, which allowed the respondents' appeal. The Collector argued that the inclusion of duty-paid clearances in the computation of the total value of first clearances of Rs. 30 lakhs is necessary to avoid granting duty-free benefits beyond the overall ceiling of Rs. 30 lakhs. The respondents contended that the decision of the Collector (Appeals) was correct and followed valid precedents set by the South Regional Bench in similar cases.Analysis of Arguments:Appellant's Arguments:Shri S. Dutt Majumdar, representing the appellant, argued that the subject exemption Notification provides for exemption up to Rs. 30 lakhs for the first clearance of specified goods as stipulated in Clause 1(a)(ii). He contended that the proviso restricts the value of duty-free clearances of goods falling under one heading to Rs. 15 lakhs. If a manufacturer clears one item beyond this ceiling and pays duty on the excess value, the value of such duty-paid goods should be included in the computation of the total value of first clearances of Rs. 30 lakhs. He cited the commentary in 'Guide to Central Excise Law & Practice' by Shri Arvind P. Datar to support his argument.Respondent's Arguments:Shri K.L. Ganguly, representing the respondents, opposed the appellant's arguments, stating that the Collector (Appeals) had correctly decided the matter by following valid precedents set by the South Regional Bench. He referred to the decisions in Premier Rubber & Trades v. Collector of Central Excise and Union of India v. Kamalakshi Finance Corporation Ltd., emphasizing the binding nature of higher authorities' decisions. He argued that judicial discipline requires respecting these decisions and that the impugned order was neither illegal nor improper.Tribunal's Findings:The Tribunal considered the submissions and reviewed the record and relevant decisions. It noted that the proviso of the Notification, limiting the exemption for goods under one heading to Rs. 15 lakhs, should be read with the main provision, which refers to an overall ceiling of Rs. 30 lakhs for duty-free clearances. The Tribunal found that the decision under challenge allowed separate items the benefit of duty-free clearances, leading to a situation where the total duty-free clearances exceeded Rs. 30 lakhs, contrary to the provisions of the Notification.The Tribunal referred to the decisions in El. P. Em. Industries v. Collector of Central Excise and Purushotham Goculdas Plywood Co. v. Collector of Central Excise, which interpreted the Notification to allow duty-free clearances up to Rs. 15 lakhs for each specified item, subject to an aggregate limit of Rs. 30 lakhs. However, the Tribunal disagreed with this interpretation, stating that it resulted in discrimination between manufacturers based on their order of clearance and was contrary to the plain reading of the Notification.Conclusion:The Tribunal concluded that the value of duty-paid clearances should be included in the computation of the total value of first clearances of Rs. 30 lakhs. It referred the matter to a larger Bench for resolution, given the differing interpretations by the South Regional Bench. The Tribunal emphasized that the interpretation leading to granting duty-free exemption to goods beyond the overall ceiling of Rs. 30 lakhs should be avoided.The appeal and the purported Cross Objection were placed before the Honourable President of the Tribunal for referring the case to a larger Bench for resolving the difference. The Tribunal also noted that the issue, being related to the interpretation of an exemption Notification and the rate of duty, might require a decision by a Special Bench of the Tribunal.