TaxTMI 
TaxTMI 
1998 (1) TMI 167
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....I unit under Notification No. 175/86 on the strength of SSI certificate No. 5055/87/CI/2910 for the factory premises which was owned by M/s. Daulat Ram Dharam Bir Auto Pvt. Ltd. prior to its being taken over by the appellants. The department alleged that since M/s. Daulat Ram Dharam Bir Auto Pvt. Ltd. were paying duty at full tariff rate in terms of para 3 of the exemption Notification No. 175/ 86. The appellants were not entitled to the benefit of the small scale exemption under this notification. The appellants contended that they were holding SSI certificate and had come into production from July, 1987, they were legally entitled to the exemption benefit under Notification No. 175/86 during the financial year 1987-88. It was also contended by the appellants that during the financial year 1986-87, the aggregate value of clearances of M/s. Daulat Ram Dharam Bir Auto Pvt. Ltd. for the unit taken over on lease was only Rs. 64,86,987.31 and thus it was within the limit of Rs. 1.5 crores and entitled to the benefit of the notification in terms of para 3 of the notification. After considering the submissions, the lower authorities held as indicated in the preceding paragraph and hence ....
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....lity for exemption, was less than Rs. 65 lakhs, therefore, the appellants were entitled to the benefit of exemption Notification No. 175/86 and they prayed that their appeal may be allowed. 4. Shri D.S. Negi, ld. DR appearing for the respondent Commissioner submits that para 3 of Notification No. 175/86 clearly stipulates that it is the aggregate value of clearances from one or more factories of the same manufacturer and that it was thus not confined to the aggregate value of clearances of one particular unit. Ld. DR submits that admitted position is that the aggregate value of clearances from all the factories of the same manufacturers in the instant case exceeded Rs. 1.5 crore during the preceding financial year and therefore, the unit taken over by the appellants was not eligible to the exemption under Notification No. 175/86 and SSI certificate even if obtained by the appellants in respect of this unit will not entitle them to the benefit as the benefit was available to the unit and not to the manufacturers. In the instant case ld. DR submits that it was the unit taken on lease during the period when it was not entitled to the benefit as SSI unit. The status of the unit....
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....he aggregate value of clearances from any one factory by one or more manufacturers exceeds Rs. 150 lakhs for the preceding financial year then the concession under Notification 175/86 will not be admissible to the manufacturers. Sub-para (b) covers a situation where from one factory, there has been clearances by more than one manufacturer and if the sum total of all clearances by more than one manufacturer has exceeded Rs. 150 lakh. We note that the exemption will not be available if the aggregate value of clearances from the factory by more than one manufacturer exceeds Rs. 150 lakh. Thus sub-para (a) and sub-para (b) cover two distinct situations. In the instant case during the preceding year it was single manufacturer from whose factories the value of clearances exceeded Rs. 1.5 crore and therefore, during the succeeding year i.e. during the year, 1986-87, the unit will not be eligible for the benefit of exemption notification. We find support for this view from the Hon'ble Gujarat High Court judgment rendered in the case of Indica Laboratories Pvt. Ltd. v. Union of India as reported in 1990 (50) E.L.T. 210. In this case Hon'ble Gujarat High Court held that 13. Point No. 2 :-....
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....lause (b) of the first para provides that in the case of clearances of the specified goods of an aggregate value not exceeding Rs. 60 lakhs, immediately following the said clearances of the value specified in clause (a), concessional rate of duty is prescribed. Proviso to para 1 lays down that the aggregate value of clearances of the specified goods in terms of clauses (a) and (b) of this paragraph taken together shall not exceed Rs. 75 lakhs. Thus, benefit of exemption is made available to small factories at which goods are manufactured upto the quantities laid down in para 1 of the exemption notification. Now follow paras 2 and 3 which are impugned by the learned counsel for the petitioners. They provide that the aggregate value of clearances of the specified goods from any factory by one or more manufacturers in any financial year under clauses (a) and (b) of para 1, shall not exceed Rs. 30 lakhs and Rs. 60 lakhs respectively. There is a proviso to para 2 which lays down that the aggregate value of clearances of the specified goods from any factory by one or more manufacturers in any financial year, in terms of clause (a) and clause (b) of para 1, taken together, shall not ex....
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....uses 2 and 3 must make room for operation of parent para 1. Secondly, it was submitted that in any case, artificial classification has been made by the rule making authority between the sole manufacturers who manufacture their goods at the factory which is SSI unit on the one hand and other class of manufacturers who manufacture their own goods in such factory and also permit other manufacturers to manufacture latter's goods in the same factory by utilising their infrastructures. That would include persons like loan licensees. That is the sole manufacturers manufacture their goods in the factory, their first clearances and subsequent clearances as provided by para 1 will get exempted from payment of duty, but only because they permit other manufacturers to utilise their plant and machinery, the rule making authority has evolved the principle of clubbing their manufactured goods and, therefore, the extent of exemption available to individual manufacturer gets whittled down or curtailed. There is no rational basis underlying such differential treatment to plurality of manufacturers utilising the same factory in given financial year for manufacturing their goods and, therefore, such c....
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.... the petitioners on this aspect. So far as infraction of Article 14 is concerned, we fail to appreciate how it can be said that wordings of notification in question with paras 2 and 3 lay down any scheme of hostile discrimination against plurality of manufacturers manufacturing their goods from the same SSI unit. The preamble of the notification and the relevant clauses of the notification lay down a clear cut scheme of exemption-cum-concession. All the factories which are SSI units are uniformly covered by the sweep of the said notification and the exemption attaches to the clearances of the specified goods cleared from the factory gate of such factory in a given financial year and the extent of total exemption is upto Rs. 30 lakhs and concessional exemption is beyond 30 lakhs upto Rs. 60 lakhs, with limit of Rs. 75 lakhs in a given financial year. This is the basis or heart of the notification. If one manufacturer manufactures specified goods in one financial year alone from that factory and gets the said goods cleared, he gets full exemption and concession to the extent provided by para 1. But if more than one manufacturer utilise the said factory and infrastructures during t....
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....second point, therefore, fails and stands rejected. 7. We find that in the case of Bhavana Apparells v. C.C.E. as reported in 1989 (43) E.L.T. 642, this Tribunal while examining the applicability of Notification No. 150/71, dated 26-7-1971 on a similar issue held that : "Taking into consideration the fact that till M/s. Bhavana Apparells commenced manufacture, the factory was one and even after the lease the alteration of the licensed premises was not approved and the further fact that the same machinery had been used by both, we are satisfied that the factory was one throughout the year, though the manufacturing activity may have been carried on by the two appellants during separate periods (as had been accepted by the lower authorities also)". 8. We note that the appellants cited and relied upon the judgment of this Tribunal in the case of Ganesh Agro Pack (P) Ltd. In this judgment the Tribunal in addition to what was brought to our notice had observed : "We are told that if value of clearances from the respondent's shed effected from Polyspin Ltd. is taken into account, this is within 1.5 crore during the preceding financial year. If that be so, in such a f....