1996 (7) TMI 265 - AT - Central Excise

Tribunal upholds Collector's decision on duty exemption appeal under Notification No. 77/85-C.E.

The Tribunal upheld the Collector (Appeals) decision, rejecting the appellant's appeal regarding duty exemption under Notification No. 77/85-C.E. The ... Value of clearances - Computation of Issues:1. Interpretation of Notification No. 77/85-C.E. for duty exemption.2. Whether goods manufactured by independent units can be considered for calculating aggregate value of clearances.Analysis:Issue 1: Interpretation of Notification No. 77/85-C.E. for duty exemptionThe appeal was against the order of the Collector (Appeals) regarding the eligibility of duty exemption under Notification No. 77/85-C.E. The Collector had held that the bought-out items cannot be included in the clearances value for determining exemption benefit. The excise law does not prohibit licensees from engaging in trading activities. The appellant argued that the value of clearances had exceeded the exemption limit of Rs. 75 lacs. The Assistant Collector denied the benefit of the notification, but the Collector (Appeals) allowed it. The Tribunal found that the issue revolved around whether the goods manufactured by different units, including those supplied raw materials by the appellant, could be clubbed together to determine the exemption limit. The Tribunal concluded that the other units were independent and their clearances could not be considered for the appellant's eligibility under the notification. Therefore, the appeal was rejected, and the impugned order was upheld.Issue 2: Whether goods manufactured by independent units can be considered for calculating aggregate value of clearancesThe key question was whether the goods manufactured and cleared by independent units, to whom raw materials were supplied by the appellant, could be added up to determine the exemption limit under Notification No. 77/85-C.E. The appellant contended that the total value of clearances exceeded the exemption limit due to goods manufactured by different units. The Tribunal noted that there was no evidence to suggest that the units manufacturing the goods were dummy units for the appellant or that they were hired labor of the appellant. In the absence of such evidence and considering the settled legal position on the supply of raw materials, the Tribunal held that the units manufacturing the goods were independent entities. Therefore, the clearances of these units could not be aggregated or considered for determining the appellant's eligibility for exemption under the notification. As a result, the appeal was dismissed, and the Collector's decision was upheld.