ORDER
I.J. Rao, Member (T)
1. The facts necessary for the decision in this matter are that the respondents are engaged in the manufacture of Tractors in Mohali, Punjab. They commenced production in 1974-75. The Central Board of Excise and Customs by an order dated 24-11-1975 exempted them on the ground that the tractors would be manufactured entirely from the indigenous components/raw materials. This order did not say that it exempted the product from the payment of duty, but it has been issued under Rule 8(2) of the Central Excise Rules. Its effect is that the Board exempted the product from payment of central excise duty.
2. The respondents cleared some tractors availing of this exemption during the years 1974-75 and 1975-76. In 1976 the Central Government issued Notification No. 198/76-C.E., whereby 25% concession was allowed on the production of tractors in excess of base clearances.
3. Central Excise Department, while calculating base clearances, which in this case, was the average clearance of three years took into consideration also the tractors cleared without payment of duty under the Board’s order. Clause (b) of Notification No. 198/76 prescribed that “the clearances of any specified goods, exempted from the whole of the duty leviable———-shall not be taken into account…”. However, the Assistant Collector passed an order to the effect that tractors removed under the exemption order of the Board should also be taken into account for the purpose of calculating base clearances.
4. The respondents went up in appeal before the Collector (Appeals). Collector (Appeals) took the view that Notification No. 198/76 does not make any distinction between goods wholly exempted under Sub-rule (1) or (2) of Rule 8 of the Central Excise Rules and therefore allowed the appeal. Aggrieved by this order Revenue filed the present appeal.
5. Shri Arora, learned Departmental Representative submitted that a Notification should be interpreted very strictly. He wanted to cite case law to support this proposition but did not do so as the Bench expressed that this is an accepted principle. He then submitted that words used in Rule 8(1) are that the exemption was granted in respect of the “duty leviable thereon”, whereas under Rule 8(2) the Board could exempt the excisable goods from “payment of duty”. The learned J.D.R., submitted that in view of this difference in the wording, the interpretation of Notification No. 198/76 would not exclude the value of goods cleared under exemption order granted by the Central Board of Excise and Customs for calculating base clearance.
6. Shri Mehta, the learned Consultant for the respondents submitted that a Notification should be strictly interpreted. He argued that there is nothing in clause (b) of Notification No. 198/76 to justify any distinction between exemption granted by Rule 8(1) and by Rule 8(2), as is sought to be made by the Department. He referred to the wording of Sub-section (1) and (2) of Section 8 and submitted that the powers of exemption are to be exercised by different authorities’ orders but the effect is the same and that the goods were wholly exempted from payment of duty by virtue of the Board’s order.
7. We have considered the submissions of both sides. We have also perused the Notification No. 198/76 and the Board’s order of exemption dated 24-11-1975. According to the Notification No. 198/76-C.E., the clearances of any specified goods exempted from the whole of the duty leviable thereon shall not be taken into account (in computing base clearances). This notification does not refer to Sub-rule (1) or (2) of Rule 8 of the Central Excise Rules. In fact, the respondents did not pay any duty on the goods which were cleared under the Board’s exemption order. The distinction between Rule 8(1) and 8(2) of the Rules cannot be introduced under this Notification which is clear by itself. It does not contain any words or indication that such a distinction should be made. We, therefore, hold that the Collector (Appeals) was correct in the view he has taken. We find no justification to interfere with his order.
8. We dismiss the appeal. The Cross Objection No. 86/85-B.l also abates.