ORDER
I.J. Rao, Member (T)
1. The appellants manufacture goods which were being classified under 15A(2) of Central Excise Tariff (CET). These goods were exempted by virtue of Notification No. 68/71-C.E., till 28-2-1982 on which date certain changes took place in the description of Tariff Item 15A(2). Notification No. 52/82 was issued on 28-2-1982 and the goods manufactured by the appellants were required to pay duty @8% ad valorem. On 22-4-1982, another Notification (No. 149/82) was issued by which the goods were again exempted from payment of duty.
2. The dispute arose in respect of goods cleared by appellants during the period 28-2-1982 to 21-4-1982. When a show cause notice was issued to the appellants demanding duty and threatening other action, the appellants pleaded that they were not liable to duty or any other action under the Central Excise Law. Following three reasons were given in support of their pleas :-
(a) clearances made on 22-4-1982 have been taken for working out the amount of demand. From 22-4-1982 the said goods are exempted; (b) duty has been wrongly demanded on goods manufactured during the exempted period prior to 28-2-1982 which is not recoverable; (c) the goods namely "Indola PVC Grips" are actually parts of motor vehicles and should be classified as non-specified parts of motor vehicles under T.I. 68 and not as articles of plastic under T.I. 15A(2).
The first contention at (a) above was accepted by the Assistant Collector and the other two contentions were rejected by him. Therefore, they filed an appeal before the Collector of Central Excise (Appeals) wherein they raised the following grounds :-
(i) The Assistant Collector had erred in confirming the demand as the goods were manufactured during the period prior to 28-2-1982, when there was total exemption and they could not be charged to Central Excise duty as Central Excise duty was on manufacture and not on clearance. They relied on various judgments of High Courts and one order of Central Board of Central Excise & Customs in support of this ground.
(ii) The goods which, inter alia, consisted of Indola PVC Grips were non-specified parts of motor vehicles. The appellants in this context, argued that if there was any ambiguity about the classification of an item, classification which is more favourable to the assessee, should be adopted.
3. The Collector of Central Excise (Appeals) rejected the first ground relying on some judgments of the High Courts. These judgments are:
1. Gujarat High Court in the case of Alembic Chemical Works Company Limited, Baroda v. Union of India and Ors. (reported in 1979 E.L.T. J 258);
2. Kesar Sugar Works v. Union of India and Ors. (Allahabad High Court) reported in 1983 E.L.T. 285; and 3. The Union of India and Ors. v. The Elphinstone Spinning & Weaving Mills Company Limited (reported in 1978 E.L.T. J 680). The Collector of Central Excise (Appeals) accepted only a minor ground about the amount of demand, but otherwise rejected the appeal. Hence the present appeal before us.
4. Shri Gopal Prasad, the learned Consultant for the appellants, reiterated the two grounds raised before the Appellate Collector, namely, that the goods which were manufactured at the time when there was total exemption could not be subjected to duty at the time of clearance even if exemption was removed by the time of clearance and that Indola PVC Grips were non-specified parts of motor vehicles and were to be classified under Item 68 CET and not under 15A(2).
5. In support of first ground, Shri Gopal Prasad cited the judgment of the Tribunal in the case of Castrol Limited, Calcutta v. Collector of Central Excise, Patna [reported in 1985 (21) E.L.T. 333 (Tribunal)]. Arguing that the Indola PVC Grips were non-specified parts of motor vehicles, Shri Gopal Prasad cited the judgment in the case of Maharashtra Safety Glass Works Private Limited, Poona v. The Union of India and Ors. [reported in 1982 (10) E.L.T. 237 (Bom.)].
6. Shrimati J.K. Chander, the learned JDR opposing the arguments, submitted that the goods were classified under Item 15A (2) CET by an Order of the Assistant Collector and were exempted under a notification. The relevant classification list was never challenged. She submitted that there is a legal way of seeking changes in classification list and merely because of change in the scheme of taxation, the classification cannot be changed unilaterally at the will of the manufacturer.
7. Insofar as the second ground of non-excisability of the goods was concerned, Smt. Chander submitted that the date of manufacture of the goods cleared between 28-2-82 and 21-4-82 was not known. She referred to the various arguments advanced by the Revenue in the matter of Castrol Limited, Calcutta v. Collector of Central Excise, Patna (supra) and reiterated the same.
8. We have considered the arguments of both side. Insofar as the classification of the goods is concerned, it is obvious that these goods are made of plastic. It may be true that the grips are used on motor vehicles only but being plastic articles they were classified under 15 A(2) and whatever else there may be, they did not cease to be articles manufactured out of plastic. It appears that the goods were classified under 15A(2) after certain proceedings by the Assistant Collector. The appellants acquiesced in the classification till 28-2-82 and it appears from what was stated by the JDR are not denied by the learned Counsel for the appellants, that after 21-4-1982 when full exemption was granted, the appellants again classified the goods only under 15 A(2) CET. Some of these facts could not be verified and neither the appellants nor the JDR could give us the necessary documents, but the position seems to be substantially correct. Keeping this in view and also that the goods were made out of plastic, we see no reason to interfere with the classification. We, therefore, reject this ground.
9. The other ground of the appellants is that the goods manufactured during period of exemption are not liable to duty even if they are cleared after the exemption is removed. We have perused this judgment cited by them (Castrol Limited, supra) which by a majority held that duty is not leviable on a commodity totally exempted from duty by notification at the time of manufacture even though the goods were cleared subsequent to the withdrawal of the notification. The Tribunal while coming to this decision, considered various judgments, including the following :-
(i) Krloskar Brothers Ltd. v. Union of India (1978 E.L.T. 33) (Madhya Pradesh) (1978 Cen-Cus 12D), dated 26-4-1979;
(ii) Union of India v. Delhi Cloth & General Mills [1978(2) E.L.T. 177] (Allahabad);
(iii) Sirpur Paper Mills Ltd. v. Union of India [1984 (17) E.L.T. 217] (Andhra Pradesh), dated 16-7-1984;
(iv) Union of India v. Elphinstone Spinning & Weaving Mills (1978 (2) E.L.T. 680) (Bombay), dated 20-1-1978;
(v) Alembic Chemical Works Company Ltd. v. Union of India [1979 (4)E.L.T. 258] (Gujarat) (1979 Cen-Cus 477D), dated 18-7-1975;
(vi) Kesar Sugar Works v. Union of India [1983 (12)E.L.T. 285 (All.)];
(vii) Shree Synthetics Ltd. v. Union of India[l982 (10)E.L.T. 97] (Madhya Pradesh), dated 16-1-1982.
10. The facts of the present case are the same as in the one before the Tribunal. The facts are also similar to the case considered by the Supreme Court and referred to in paragraph 9 of the CEGAT judgment in the case of Kirloskar Brothers Limited, Dewas v. Union of India [1978(2) E.L.T. J 690].
11. We see no reason to differ from the ratio of this judgment. We note the submissions made by the learned JDR in this regard and reject them for the same reasons as recorded in the cited judgment (Castrol Limited: supra).
12. We, therefore, hold that the goods manufactured by the appellants when they were fully exempt, should not have been charged to duty at the time of clearance even though the exemption was withdrawn. We allow the appeal on this ground. While granting the relief, we lay down that the appellants should prove before the Central Excise authorities that the goods for which they sought relief and for which the relief is now granted, were actually produced prior to 28-2-1982 and were cleared during the disputed period. For this purpose, the Collector (Appeals) may give a reasonable opportunity to the appellants to prove the facts about the date of production of the goods for which they sought clearance.
The appeal is disposed of in these terms.