ORDER
S.L. Peeran, Member (J)
1. Both the appeals raise a common issue and hence they are taken up together for disposal as per law.
2. Misc. 960/91 has been filed by the appellants with a request to adduce additional evidence and they are in the nature of three documents. It is stated by the appellants that they were prevented from producing these documents earlier as no opportunity whatsoever was granted by the Collector (Appeals) before placing reliance on the suo motu enquiries made by him from the concerned authorities of the Director of Industries. As the matter in issue pertains to grant of exemption under Notification No. 175/86, the production of these documents are material and also necessary to determine the controversy in the case. Hence, on a careful consideration of the matter, the Misc. application is allowed in the interest of justice.
3. The issue that arises for our consideration in this appeal is the grant of exemption of Notification No. 175/86, dated 1-3-1986 to the appellants. The facts of the case are that the appellants had filed classification list No. 5/87-88 for the year 1987-88 for their products Diamond Drilling Bits and Reamer Shells, Segmented Saws and Diamond Dressers below 6″ length under Chapter 82 and claimed exemption under Notification No. 175/86, dated 1-3-1986 (as amended). The said classification list was approved by the Assistant Collector of Central Excise, Division K-II, Bombay on 8-5-1987 granting the said exemption.
4. The department being aggrieved with the said approval, filed review application under Section 35E(4) of the Central Excises and Salt Act, 1944 before the Collector (Appeals) for reviewing the said order of the Asstt. Collector of Central Excise of approving the classification list. The department had urged before the Collector (Appeals) that the assessee had not fulfilled any conditions laid down under the proviso 4, 4(a) and 4(b) of the Notification No. 175/86, dated 1-3-1986 as amended which provides inter alia that the exemption contained in the notification shall apply only to a factory which is an undertaking registered with the Director of Industries in any State or the Development Commissioner as a SSI unit under the provisions of the Industries (Development & Regulation) Act, 1951.
5. The assessee had contended that they were entitled to the benefit of Notification No. 77/85-C.E., dated 17-3-1985 as such for the period from 18-11-1985 till the close of the financial year 1985-86. That they had not claimed and availed the said benefit in view of the fact that the factory earlier was run in the name of M/s. Bharat Diamond Industries who had already crossed the limits of Rs. 40 lakhs at the concessional rates of duty in terms of the said notification at the time of their take over. As a result there was no concessional rate of duty available to them under the said Notification No. 77/85-C.E. in respect of clearance from the said factory thereafter till 31-3-1985. They had also contended that there was an unintended omission on their part in not claiming the benefit of the said notification and that they were deemed to be availing the benefit of Notification No. 77/85-C.E. They had also raised several other contentions before the Collector (Appeals). The learned Collector (Appeals) has not accepted their plea that they had forgotten to mention about the availability of the benefit of the said notification in their classification list. The Collector (Appeals) has also held that on enquiries from the Joint Director of Industries (BMB) Bombay with regard to the status of M/s. Bharat Diamond Industries had been informed by them that the SSI Registration Certificate No. 11/07/17035/ PMT/SSI dated 14-6-1965 issued to Bharat Diamond Industries had stood cancelled vide office letter dated 8-8-1983 as it had been found to have been simultaneously registered with both the State Directorate of Industries and also with the Directorate General & Technical Development Order dated 19-3-1986. The Joint Director of Industries had further informed that Bharat Diamond Industries were no longer registered with the Directorate of Industries as SSI unit. Hence, the request of M/s. Mehta Gem Tools (appellants) could not be considered for change of registration when they had applied to the said Directorate. The Collector (Appeals) had accepted the department’s review petition on the sole basis of the letter he had received from the Director of Industries.
6. We have heard Shri V. Sridharan, learned advocate for the appellants and Shri S.K. Sharma, learned DR Shri Sridharan has filed letter dated 31-1-1991 issued by the Joint Director of Industries clarifying that the cancellation letter dated 8-8-1983 for cancellation of SSI registration certificate dated 14-6-1965 has been withdrawn. Another letter dated 31 -1-1991 is also produced which notes the change in the name of the unit and necessary endorsement duly made in the SSI Registration Certificate by the concerned authorities. He also relied on the Order No. E/157/99-B1, dated 16-8-1991 passed by Tribunal as reported in 1992 (58) E.L.T. 98 in the case of Accura Industries v. Collector of Central Excise. In this case on the consideration of the admitted fact of clearances made during preceding three years, the Bench had held that the assessee were availing the exemption under Notification No. 77/85 during the preceding financial year 1985-86 and hence the exemption for 1986-87 was rightly given. The Bench has held at para 4 as follows :-
We have carefully considered the pleas advanced on both the sides. Para 4 of the exemption notification for a proper appreciation of the controversy arising in this matter is reproduced below :-
“4. The exemption contained in this notification shall be applicable only to a factory which is an undertaking registered with the Director of Industries in any State or the Developmental Commissioner (Small Scale Industries) as a small scale industry under the provisions of the Industries (Development and Regulations) Act, 1951 (65 of 1951):
Provided that nothing contained in this paragraph shall be applicable :-
(a) in case where the value of clearances from a factory during the preceding financial year or in the current financial year did not exceed or is not likely to exceed rupees seven and a half lakhs; or
(b) in a case where a manufacturer has been availing of the exemption under this notification or any of the notifications specified below, during the preceding financial year :-
(i) 166/72-C.E., dt. 13th July, 1972
(ii) 39/73-C.E., dt. 1st March, 1973
(iii) 158/77-C.E., dt. 18th June, 1977
(iv) 74/78-C.E., dt. 1st March, 1978
(v) 70/81-C.E., dt. 25th March, 1981
(vi) 43/82-C.E., dt. 28th February, 1982
(vii) 44/82-C.E., dt. 28th February, 1982
(viii) 148/82-C.E., dt. 22nd April, 1982
(ix) 77/83-C.E., dt. 1st March, 1983
(x) 83/83-C.E., dt. 1st March, 1983
(xi) 77/85-C.E., dt. 17th March, 1985
(xii) 85/85-C.E., dt. 17th March, 1985
It is apparent from the given facts that the appellants do not have an SSI registration certificate in respect of their unit at Lower Parel. Their plea that SSI registration certificate for their unit at Andheri (since sold out) should be treated as applicable for their unit at Lower Parel cannot be accepted. We however, find sufficient merit in their plea that they had been availing of the exemption during the preceding financial year under this notification or the Notification No. 77/83 or 77/85. The fact that they were availing of the exemption in the preceding financial year under this very Notification 175/86 cannot be disputed at this stage because it is admitted in the order-in-original that the benefit of the Notification 175/86 was extended to them by the approval of the classification list by the competent authority. It is immaterial for the purpose of classification list 1 to 3/87 that the classification list for the financial year 1986 was wrongly approved as alleged. The fact remains that the appellants were availing of the benefit of this Notification 175/86 during the preceding financial year. There is also sufficient force in the learned consultant’s plea that the scope of the expression ‘availing of the exemption’ occurring in proviso (b) to para 4 of the Notification 175/86 reproduced above, cannot be restricted to cases where a person has filed a declaration under Notification 111/78 or Notification 2/81. The question whether a manufacturer was availing of the exemption would depend upon whether it was liable to avail of the exemption on the basis of the conditions set out in any of the notifications listed in para 4(b). We agree with the learned Consultant’s plea that the availment of an exemption notification is independent of exemption from licensing control on filing of a declaration under Notification 111/78 or Notification 2/81. The lower authorities have not denied that the extent of clearances during the preceding financial year have been (as given in para 3 of the Statement of Facts to the appeal memorandum) as follows :-
1983-84 Rs. 5.72 lakhs 1984-85 Rs. 8.50 lakhs 1985-86 Rs. 10.52 lakhs
Therefore it has to be held that the appellants herein were availing of the exemption under Notification 77/85 during the preceding financial year 1985-86 and hence it was rightly given the exemption under Notification 175/86 for the financial year 1986-87″.
Shri Sridharan relying on the documents and the ruling noted above, argues that the citation is fully applicable to the facts of his case. Sh. Sharma learned DR contended that the benefit has been wrongly availed and hence the benefit of the notification cannot be granted to the appellants.
7. We have carefully considered the submissions of both the sides. The Bench in the case of Accura Industries (supra) has observed in para 4 of the order that ‘the question whether a manufacturer was availing of the exemption would depend upon whether it was liable to avail of the exemption on the basis of the conditions set out in any of the notification listed in para 4(b)’. The Bench was having all the material facts regarding clearances which had not been denied by the department and basing on those figures had upheld the assessee’s contentions. In this case, the learned Collector has proceeded to base his findings solely on the letter he has received from the Jt. Director of Industries informing him about the cancellation of the registration. Now that the assessee has produced the three noted letters, the matter requires to be remanded to the Collector (Appeals) to consider the case afresh in the light of the fresh documents produced and also in the light of the ruling of Accura Industries case.
8. The appeal is remanded to the Collector (Appeals) for de novo consideration.