JUDGMENT
V.K. Agrawal, J.
1. The issue involved in these three appeals, filed by M/s. Capstan Meters (India) Ltd., is whether the benefit of Notification No. 175/86-CE, dated 1.3.1986 is available in respect of the goods manufactured by them.
2.1 Shri K.K. Anand, learned Advocate, submitted that the Appellants manufacture water meters and parts thereof and dirt boxes; that they were licensed under the Industries (Development & Regulation) Act 1951; that they were also not registered as a SSI unit with the Director of Industries of State; that, however, they were availing the benefit of Notification No. 77/85-CE prior to 1.3.86; that from 1.3.86 to 30,10.87, they availed of the exemption under Notification No. 175/86-CE; that after amendment of Notification No, 175/86-CE by Notification No. 244/87-CE dated 30.10.1987, they were asked to pay demand of duty short paid during the period from 30.10.87 to 31.3.88 as the units registered under the IDR Act with the Directorate General of Technical Development were no more eligible for the SSI benefit under Notification No. 175/86; that the Assistant Commissioner, under Order-in-Original No. 19/89 dated 29.3.89 denied the benefit of the Notification and confirmed the demand of Rs. 1,97,311.97p. He also mentioned that the Assistant Collector under Order-in-original No. 54/91 dated 29.10.91 rejected their classification list effective from 1.4.91 claiming exemption under Notification No. 175/86; that a show cause notice dated 1.9.91 was issued for demanding duty Rs. l,54,929.71p for the period from 1.4.91 to 25.7.91.
2.2 He, further, submitted that they filed a Writ Petition No. 6905/91 against the Order-in-original No. 54/91 and the show cause notice and the Rajasthan High Court, vide Order dated 23.1.92, directed the Assistant Collector to consider the eligibility for the Notification No. 175/86 for the period from 1.4.91 to 25.7.91 by taking into consideration para 4(b) of the Notification; that the Assistant Collector passed the Order-in-original No. 23/93 dated 19.3.93 by extending the benefit of Notification No. 175/86-CE holding specifically that the appellant is a factory other than the factory which is registered under the IDR Act with the DGTD; that an appeal was filed by the Collector in which the Revenue did not challenge the above-mentioned finding of the Assistant Collector regarding they being not a factory registered with the DGTD; that the Collector (Appeals) allowed the appeal filed by the Collector, vide Order-in-Appeal No. 131/94 dated 31.8.94; that on appeal filed by them, the Tribunal remanded the matter to the Commissioner (Appeals), vide Final Order No. 225-226/95-B1 dated 10.5.1995.
2.3 He also mentioned that the Assistant Collector, under Order-in-Original No. 63/93 dated 23.5.93 also dropped the demand of duty amounting to Rs. 1,54,929.71 paise for the period 1.4.91 to 25.7.1991 made under show cause notice dated 1.11.1991. The Department had filed an appeal before the Commissioner (Appeals).
3.1 The learned Advocate then mentioned that the Commissioner (Appeals) has, under the impugned order, disposed of three appeals arising out of Order-in-original Nos. 19/89 dated 29.3.89, 23/93 dated 19.3.93 and 63/93 dated 23.5.93.
3.2 He, further, mentioned that though the Commissioner (Appeals) has granted the benefit of Para 4(b) in respect to appeal against Order-in-original No. 23/93, he has given an adverse finding in respect to the issue as to whether the unit was registered with the DGTD or not; that he has held that the findings recorded in the said Order No. 23/93 is not maintainable which is wrong as the Commissioner (Appeals) failed to appreciate that the Revenue had filed application only on the ground that the Appellants were not satisfying para 4(b) of the Notification; that on this issue, the Commissioner (Appeals) has decided in their favour and as such he cannot hold that Order-in-original No. 23/93 is not maintainable; that to this extent the impugned order merits to be quashed.
3.3. The learned Advocate mentioned that in respect of appeal relating to Order-in-original No. 63/93, again the Commissioner (Appeals) has granted the benefit of Para 4(b) but had held that the findings recorded in Order-in-original No. 23/93 are not maintainable which is not correct.
4.1 The learned Advocate mentioned that the Appellants’ appeal against Order-in-original No. 19/89 was rejected by the Commissioner (Appeals); that on appeal the Tribunal remanded the matter vide Final Order No. 174/95-B1 to the Commissioner (Appeals); that now under the impugned order he has held that since they were holding out a licence under Rule 7 of the Registration and Licensing of Industrial Undertaking Rules, 1952, they are a factory registered under the IDR Act; that thus Commissioner (Appeals) has rejected their appeal.
4.2 The learned Advocate submitted that under Order-in-original Nos. 23/93 and 63/93, the Assistant Collector had clearly held that they were not registered with DGTD which had not been challenged by the Collector in applications flied before the Commissioner (Appeals); that thus the said finding has become final and, therefore, the Commissioner (Appeals) was bound to apply the same principles in respect of the present proceedings also. He also contended that the Appellants had been granted industrial licence in terms of Section 11 of the IDR Act whereas the registration is required for existing undertakings is terms of Section 10 of the IDR Act; that as they were not existing undertakings, they had neither applied for nor had been granted registration under Section 10; that both Sections 10 and 11 are mutually exclusive; that since the Appellants were only licensed under Section 11, it could not be said that they were registered under IDR Act and accordingly they are entitled for the benefit of exemption under Notification No. 175/86-CE. He also relied upon the decision in Nickson Pharmaceutical v. CCE, Bombay, 1998 (26) RLT 662 (CEGAT) wherein it has been held that if the Revenue has not raised a ground in the application filed by it/ Commissioner (Appeals) in deciding the said point has “travelled beyond the scope of the application before him. Therefore, even if his logic is correct, his order does not sustain.”
5.1 Countering the arguments, Shri V. Valte, learned SDR, submitted that the Applications under Section 35E of the Central Excise Act against the Order-in-Original Nos. 23/93 and 63/93 were filed as the benefit of Notification No. 175/86-CE had been wrongly allowed to the Appellants; that it has been clearly and specifically mentioned in both the Applications that the Assistant Collector had wrongly held that the Appellants had fulfilled the conditions of proviso (b) to Para 4 of the Notification No. 175/86-CE; that it has also been specifically mentioned in both the Applications filed by the Collector before the Commissioner (Appeals) that the Appellants had not availed of exemption under the said Notification from 30.10.87 to 31.3.91 because the exemption had boon disallowed to them under Order-in-original No. 19/89; that thus a reference was made to Order-in-original No. 19/89 by which the Assistant Collector had clearly held that the Appellants were a unit registered with DGTD; that accordingly this issue was also before the Commissioner (Appeals) for decision and it cannot, therefore, be alleged that the Commissioner (Appeals) has travelled beyond the applications before him.
5.2 The learned SDR, further, submitted that admittedly a licence under Section 11 of the IDR Act had been issued to the Appellants; that the said licence was granted under Rule 7 of the Registration & Licensing of Industrial Undertaking Rules, 1952, framed under IDR Act; that DGTD had clarified that the Appellants had been allotted Registration No. DW-210114. In this regard, he also reiterated the findings as contained in the impugned order and contended that as they were registered under IDR Act with DGTD, they were not eligible for the benefit of exemption under Notification No. 175/86-CE, dated 1.3.1986.
6. We have considered the submissions of both the sides. Notification No. 175/86-CE provides exemption from payment of Central Excise duty to the goods manufactured by a small scale unit subject to the conditions stipulated in the Notification. One of such condition was contained in Para 4 of the Notification which reads as under:
“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 Development 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 a 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 who is manufacturing specified goods in a factory, other than a factory which is registered under the Industries (Development and Regulation) Act, 1951 (65 of 1951) with the Directorate General of Technical Development in the Ministry of Industry, and has been availing of the exemption under this notification during the preceding financial year.
“Provided further that nothing contained in clause (b) of the first proviso shall apply in a case where a manufacturer who is manufacturing specified goods in a factory and is registered under the Industries (Development &Regulation) Act, 1951 (65 of 1951), with the Directorate General of Technical Development, and has availed of the exemption under this notification during the financial year 1986-87 and the aggregate value of clearances of all excisable goods during the financial years 1987-88 and 1988-89 did not exceed rupees one hundred and fifty lakhs.”
7. The facts which are not in dispute are that the Appellants were not registered with the Director of Industries or the Development Commissioner (Small Scale Industries) as a small scale industry; they were licensed under the provisions of Industries (Development & Regulation) Act, 1951 with the Director General of Technical Development. It is not also the case of the Appellants that they were covered by proviso (a) to Para 4 of the Notification as nothing has been brought on record that the value of clearances during the preceding financial year did not exceed Rs. 7.5 lakhs. Another undisputed fact is that the Assistant Collector has given a categorical finding vide Order-in-Original No. 19/89 that the Appellants are a unit registered with DGTD. However, the Assistant Collector in Order-in-original No. 23/93 has clearly held that the Appellants’ unit is a factory other than the factory which is registered under the IDR Act with the DGTD. This order was followed by the Assistant Collector while passing the Order-in-original No. 63/93. Thus these were three appeals before the Commissioner (Appeals) — one filed by the Appellants and two filed by the Collector — on the issue regarding availability of benefit of Notification No. 175/86-CE. The Commissioner (Appeals), we observe, has referred to the various amendments made in Notification No. 175/86 from time to time. Proviso to sub-clause (b) of first Proviso to Para 4 was inserted by Notification No. 174/89-CE, dated 1.9.89. Thus the said Proviso was not attracted in deciding the appeal against Order-in-original No. 19/89. It is perhaps for this reason the Hon’ble High Court of Rajasthan in its Order had clearly mentioned that “….so far as the dispute relates to the period prior to 1.9.89 the petitioner would avail the remedy which has already been availed of and no decision is given in respect thereof.” The Commissioner (Appeals) thus has to decide the question as to whether the Appellants were a unit registered under IDR Act with DGRD or not. The Commissioner (Appeals) has recorded his findings on this aspect as under:
“The appellants claim is on the procedure defined in Section 10 for registration. These provisions provide for registration of a factory already in existence at the time the Act came into force. Sec 11 of the IDA lists procedure for those factories, which came in existence after the commencement of the Act. Both the registration and the licensing have to be under the Rules framed under IDA. In Order-in-Original No. 19/89, the Assistant Collector had referred to the licence/registration held by them under Rule 7 of the Registration and Licensing of Industrial Undertaking Rules, 1952. It has been seen that the meaning to the words “….other than a factory registered under the IDA….” will have to be given in the common parlance and not with reference to the provisions contained in the IDA regarding registration and licensing of a factory. In the common meaning, registration means the same thing as licensing. Also, the intention of the provisions in para 4 of the notification has to be kept in consideration. If the submissions of the appellants were accepted, it would mean the clause in para 4 intended to create a difference between the units registered under IDA with the DGTD and those licensed under the IDA with the DGTD. Looking into the scope and scheme of exemption provided, no such dichotomy of units under para 4 of the Notification No. 175/86 was envisaged and intended. The provisions refer to the word “registration” in a simple and ordinary meaning as understood in common parlance. Further, if the intention was to have a reference only to units under Section 10 of the IDA, the notification would have made it clear. Therefore, in my opinion, the submissions of the appellants that they were not a registered factory under Sec. 10 of the IDA but were licensed under Sec. 11 of the IDA and thus would qualify as a factory other than a factory registered under the IDA with the DGTD under clause (b) of para 4 of the notification are not acceptable and tenable. Since they were holding out a licence under Rule 7 of the Registration and Licensing of Industrial Undertaking Rules, 1952, the appellants have to held as a registered factory under IDA.”
8. We agree with these findings of the Commissioner (Appeals) and find no reason to interfere with the same. Section 10 provides registration of the units which were in existence when IDR Act came into force and Section 11 provides for the licensing of industrial undertaking coming into existence after the commencement of the Act. Notification No. 175/86-CE used the word ‘registered” as a verb which encompasses both registration under Section 10 and licensing under Section 11 of the IDR Act. Accordingly, the Order-in-Original No. 19/89 is sustainable. We find substance in the submission of the learned SDR that once the Grounds of Appeal, filed by the Collector against the Orders No. 23/93 and 63/93 clearly mentioned that “the Assistant Collector has wrongly held that the assessee fulfilled the condition of proviso (b) to para 4 of the Notification No. 175/86-CE, dated 1.3.86 as amended” it cannot be claimed by the Appellants that the Assistant Collector’s finding regarding their unit not being registered with DGTD was not challenged. This is also apparent from other ground of appeal. In ground No. Ill it is clearly averred that “the Assistant Collector was not right in presuming the Order No. 19/89 dated 29.3.89 to be ineffective during the financial year, 1990-91 when that Order has not yet been set aside.” Moreover, the Commissioner (Appeals) has also rightly observed “on the same fact there could not be two different positions one holding that they were a unit registered with the DGTD and the other that the unit was other than a registered factory with the DGTD.” We also observe from the impugned order that the Appellants had made an alternate submission before the Commissioner (Appeals) that if they were considered a unit registered with the DGTD, they would still be eligible for exemption in view of the proviso added to clause (b) vide Notification No. 174/89 dated 1.9.89 as their aggregate value of clearances in the year 1987-88 and 1988-89 had not exceeded Rs. 150 lakhs. The Commissioner (Appeals) has thus allowed the benefit of Notification No. 175/86 for the period from 1.4.91 as according to him, “the proviso directly covers such unit”. The Commissioner (Appeals) has only set aside the Order No. 23/93 to the extent that the appellants’ unit was not registered with the DGTD under the IDR Act. In view of this, we find no reason to interfere with the impugned order. Accordingly, all the three appeals are rejected.