Calculation of Clearances Excludes Previous Notifications

The Tribunal held that clearances under Notification 46/81 should not be considered when calculating clearances under Notification 178/85 for the financial year 1985-86. The impugned order was set aside, and the appeals were allowed, subject to the provisions of unjust enrichment under Section 11B of the Central Excise Act.

---

---

Issues:
Interpretation of Notification No. 178/85-C.E. dated 1-8-1985 regarding the effective date of exemption and calculation of clearances under the notification.

Analysis:
The case involved two appeals against a common order-in-appeal regarding the interpretation of Notification No. 178/85-C.E. dated 1-8-1985. The appellants, engaged in manufacturing goods falling under Item 68 of the tariff, previously availed benefits under Notification No. 46/81 dated 1-3-1981, which exempted goods from excise duty. This notification was superseded by Notification No. 178/85 dated 1-8-1985, providing exemption up to Rs. 20 lakh in a financial year for goods manufactured in a factory. The issue was whether the first clearance under Notification 178/85 should be calculated from the date of its issuance on 1-8-1985 or from the beginning of the financial year on 1-4-1985.

The Collector of Central Excise held that under Notification No. 178/85, the value of clearance should be considered from the beginning of the financial year on 1-4-1985. The appellants filed refund claims for the period from 1-8-1985 to 31-12-1985 and from 1-8-1985 to 23-10-1985, arguing that the first clearance under Notification 178/85 should start from 1-8-1985. The adjudicating authority rejected the claims, stating that clearances under Notification 46/81 should be counted towards the new Notification 178/85.

The appellants contended that they were eligible for benefits under Notification 46/81 until its supersession by Notification 178/85. The Revenue did not dispute this eligibility. The appellants argued that they should not be disadvantaged for choosing Notification 178/85 over 46/81 and that clearances under the old notification should not be included in calculating clearances under the new one.

After considering the arguments, the Tribunal found merit in the appellants' contention. It held that clearances under Notification 46/81 should not be considered when calculating clearances under Notification 178/85 for the financial year 1985-86. Consequently, the impugned order was set aside, and the appeals were allowed, subject to the provisions of unjust enrichment under Section 11B of the Central Excise Act.

---