TaxTMI 
TaxTMI 
1987 (5) TMI 137
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....se, Madras, which had been set aside by the Appellate Collector. The issues involved in the proceedings against both the respondents being the same, they are disposed of by this common order. 2. The facts, briefly stated, are that the respondents are engaged in the manufacture of coated abrasives and grinding wheels, falling under item No. 51(1) and 51(2) respectively of the First Schedule to the Act (the schedule is referred to hereafter as "the CET"). Central Excise Notification No. 198/76, dated 16-6-1976 issued by the Central Government under Rule 8(1) of the Central Excises Rules, 1944 ("the Rules" for short) provided for partial exemption from levy of Central Excise duty in respect inter alia of coated abrasives and grinding wheels cleared during a financial year in excess of the base clearances determined in accordance with the said notification. The notification provided for the method of fixation of the base period and base clearances. Accordingly, the base period in respect of grinding wheels (manufactured by Cutfast Bonded Abrasives Pvt. Ltd.) was fixed by the Asstt. Collector as 1975-76 and the base clearance at Rs. 24,67,662.24. In respect of coated abrasives (ma....
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....ry, in view of the said directions of the High Court, to deal with the merits of the issue, as to how the notification concerned has to be applied, irrespective of the view that we may be inclined to take on the question of limitation on the basis of which the Appellate Collector had disposed of the two appeals before him. That is to say, such findings on the merits of the issue would have to be recorded, as directed by the High Court, as would be necessary for disposal of the refund claims, though such refund claims are not the subject matter of the appeals before us. 4. An application dated 15-1-1987 was moved by the respondents seeking transfer of the present proceedings to the South Regional Bench of this Tribunal at Madras on the ground that they did not involve any question having a relation to the rate of duty or valuation of goods. The application was rejected by the Bench by Order No. M.47/87-D, dated 6-2-1987 and the deemed appeal (The proceedings constitute a deemed appeal under Section 35. p of the Act) was directed to be posted for hearing on 13-2-1987. 5. We have heard Shri K.C. Sachar, departmental representative, for the appellant Collector, and Ms. Nali....
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....sed by us to denote the year or years during which duty concession in respect of excess clearances is claimed) are to be determined. Paragraph 2 of the notification deals with determination of base period. Sub-para (b) thereof is relevant for the present purpose and reads thus :- .. 2(b) - "Where the clearances of all specified goods are compared in terms of value as specified in column (4) of the said Table, such value shall be the value as determined under section 4 of the Central Excises and Salt Act, 1944 (1 of 1944) or,' as the case may be, according to the tariff values fixed or altered under Section 3 of the said Act, as adjusted with reference to the average index number of wholesale prices in India for manufactures (New Series : Base 1961 - 62 - 100) issued by the Government of India in the Ministry of Industry and Civil Supplies for the relevant financial year. Illustration - If the values of clearances as determined under section 4 of the Central Excises and Salt Act, 1944 (1 of 1944) were V1, V2, and V3 in the financial years 1973-74, 1974-75 and 1975-76 respectively and if the corresponding average index number of wholesale prices in India for manufactures in those y....
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....nts claim? 11. We may observe that the provisions set out in para 2(1) of the notification, including the illustration appended thereto, is, as the opening words say : "For the purpose of determining the base period". The notification provides for the adjustment of values with reference to the average index number of wholesale prices in India for the purpose of determining the base period. It does not say such adjustment is to be made for the purpose of arriving at the base clearances i.e. the value of clearances during the base period. Nor, in our view, is there any reason to suppose that that is the intention. 12. The contention of the learned Councel for the respondents is that para 5 of the notification makes the intention clear. It says : "In this notification, "base period" and "base clearances" mean the base period and base clearances as determined in the manner specified in paragraph 2". For the purpose of determining the base period, the value of clearances in the 3 years 1973-74, 1974-75 and 1975-76, have to be "adjusted" in the manner set out in para 2. And, says the learned Councel, having fixed the base period as that year out of the said three years in whi....
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.... of such article the value has been varying in the base period, by adopting the average of the values" (emphasis added). Explanation 2 makes it clear that the expression "value" means the value as determined under section 4 of the Act (tariff value is not relevant for the present purpose), unless, of course, the context otherwise requires. It is thus clear that the value of clearances during the incentive year (for the purpose of computing excess clearance) is to be determined on the basis of the value, or the average value, of like goods during the base period. The object evidently appears to be to bring about a degree of comparability in determining the value of excess clearances having a nexus to the actual increase in production and not to the apparent increase in production which would be the result if values determined under section 4 as such were to be adopted in respect of the incentive year. The comparison is with the value of clearances during the base period, the value being that determined under section 4. A plain reading of the two explanations makes it clear that the intention and purport is as we have set out above. It follows that the value of base clearances is not....
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.... the section 4 value, or average value, prevalent during the base year. This puts the two figures on a comparable basis and would provide a fairly reliable index to the quantum of increased production (clearances). Otherwise, the comparison would be between two non-comparables. 16. The object of the exercise laid down in para 2 of the notification is entirely different. It is to normalise or standardise the figures of value of clearances during the three years 1973-74, 1974-75, 1975-76 with reference to the average index number of whole-sale prices. Only when such a normalisation or standardisation is done will it be possible to arrive at a realistic basis for comparison of the clearances of the 3 years "for the purpose of determining the base period", viz. the year in which the aggregate clearances was the highest [vide para 2(2)(c) which is relevant to the present case]. 17. As observed in para 14 the learned Councel for the appellants accepted in the hearing before us that the method adopted by the appellants for computation of the value of clearance during the incentive year (for the purpose of computing the excess clearance) was not correct. That is to say, she did....
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....ification 198/76, than the Delhi High Court decision cited supra has been brought to our notice. Normally we would have felt compelled to follow that decision in rendering our decision in this appeal in the absence of any contrary decision brought to our notice. But it should be noted that even the learned Councel for the appellants (respondents?) did not urge for acceptance of that interpretation in so far as she had conceded that the method of calculation of the value of clearances (for the purpose of computing excess clearances) in the incentive year adopted by the department was correct. In effect, she had conceded that the quantum of relief claimed by the appellants (and had been earlier granted to them) was not correct. It should also be noted that two refund claims are yet to be disposed of and that they will have to be disposed of with reference to the interpretation now accepted by the learned Councel to be appropriate (i.e.) not in accordance with the interpretation earlier put forward but in accordance with the interpretation now accepted by the appellants to be correct which we have already dilated on. In view of these peculiar circumstances, we feel that we should disp....