ORDER
D.C. Mandal Member (T)
1. Appellants manufacture excisable goods specified in the Notification No. 80/80-C.E., dated 19-6-1980. They also manufacture Thinner falling under Item 68 of the Central Excise Tariff, which was exempted from the whole of excise duty under Notification No. 179/77-C.E. The lower authorities have denied the benefit of exemption under Notification No. 80/80-C.E. in respect of the goods specified in the Notification. In the impugned order, the Collector (Appeals) has stated that the Notification No. 80/80-C.E. provides for duty free clearance of specified goods upto the value of Rs. 5 lacs and thereafter on concession upto 25%, if the total clearances of the specified goods in the preceding financial year did not exceed Rs. 15 lakhs and total clearances of all excisable goods during the previous financial year did not exceed Rs. 20 Sakhs. He has observed that Explanation V to the Notification laid down the method of computation of aggregate clearance value and according to this Explanation, clearances of any specified goods which are totally exempt by any other notification shall not be taken in for computing the value of aggregate clearances. According to the said Explanation, exclusion from the computation is permissible only for such exempted excisable goods which are specified in the Schedule to the Notification No. 80/80-C.E. and he has held that as the Thinner is not specified in the Schedule to the Notification, the value of its clearances should not be excluded from the computation of lot al clearances of excisable goods in the previous financial year. The value of the excisable goods in the previous financial year exceeded Rs. 20 lakhs including the value of clearances of Thinner. The Collector (Appeals) has, accordingly, held that the benefit of notification was not available to the appellants. Hence, this appeal before us.
2. We have heard Shri J.S. Aggarwal, Consultant for the appellants and Shri C. V. Durghayya, J.D.R. for the respondent. Shri Aggarwal has argued that Thinner being fully exempted from duty under Notification No. 179/77-C.E., dated 18-6-1977, is not “excisable goods” and hence, the value of its clearances should not be included in the computation of aggregate value of clearances of all excisable goods during the previous financial year. In support of his argument, Shri Aggarwal has relied on the decisions reported in (i) 1988 (33) E.L.T. 58 (All), (ii) 1985 (22) E.L.T. 732 (M.P.), (iii) 1978 (2) E.L.T. (J 525) (Delhi), (iv) 1984 (17) E.L.T. 310 (Patna) and (v) 1980 (6) E.L.T. 538 (Gujarat). He has also argued that the decisions of High Courts are binding on the Tribunal. He has cited the decisions of Supreme Court reported in 1983 (13) E.L.T. 1342 (S.C.) and Tribunal’s decision reported in 1988 (35) E.L.T. 398 (CEGAT) in support of binding effect of High Court judgment.
3. Shri Durghayya has argued that Thinner falling under Tariff Item 68, but exempted by Notification is “excisable goods” and hence, the value thereof has been correctly included in the computation of clearances of all excisable goods during the previous financial year. In support of his argument, he has cited the decision of this Tribunal reported in 1987 (31) E.L.T. 541 (Tribunal) in the case of Techno Chemical Industries v. Collector of Central Excise, Cochin, decided on 30-10-1986. He has stated (hat this judgment of the Tribunal considered the various judgments of High Courts, and followed majority of those judgments. He has, therefore, submitted that this decision of the Tribunal should be followed and the appeal filed by the assessee should be dismissed.
4. We have considered the records of the case and the arguments of both sides. We observe that Allahabad, Madhya Pradesh and Patna High Courts, in their judgments reported in 1988 (33) E.L.T. 58 (All.), 1985 (22) E.L.T. 732 (M.P.) and 1984 (17) E.L.T. 310 (Patna), respectively have held that excisable goods become non-excisable if exempted by Notification. The decision of Delhi High Court reported in 1978 (2) E.L.T. (J 525) (Delhi), decided on 25-8-1971 stands superseded by the subsequent judgment of the same High Court dated 19-3-1982 in the case of Vishal Andhra Industries v. Union of India, reported in 1983 (14) E.L.T. 2265 (Del.) . The judgment of Gujarat High Court reported in 1980 (6) E.L.T. 538 relied on by Shri Aggarwal is not relevant to the point al issue in the present case. As against the above decisions of Allahabad, Madhya Pradesh and Patna High Courts, we observe that Delhi, Karnataka, Madras and Andhra Pradesh High Courts, in their decisions reported in 1983 (14) E.L.T. 2265 (Delhi) in the case of Vishal Andhra Industries v. Union of India, 1986 (23) E.L.T. 313 (Karnataka) in the case of Karnataka Cement Pipe Factory Industrial Estate v. Superintendent of Central Excise & Anr., 1978 (2) E.L.T. (J 57) (Madras) in the case at Co-operative Society Ltd. v. Assistant Collector of Central Excise, Erode and 1980 (6) E.L.T. 210 (A.P.) in the case of Andhra Pradesh Paper Mills Ltd., Rajahmundry v. Assistant Collector of Central Excise, Rajahmundry and Another respectively, have held that excisable goods do not become non-excisable goods after exemption by notification. These four High Courts have decided that such goods continue to be “excisable goods” after being fully exempted by notification. In the case of Techno Chemical Industries v. Collector of Central Excise, Cochin, reported in 1987 (31) E.L.T. 541 (Tribunal), this Tribunal considered various judgments of High Courts and has held that excisable goods do not become non-excisable after being exempted by notification. We, respectfully, follow the aforesaid four judgments of Delhi, Karnataka, Madras and Andhra Pradesh High Courts and also decision of this Tribunal reported in 1987 (31) E.L.T. 541 (Tribunal) and hold the same view that excisable goods do not become non-excisable after being fully exempted by notification.
5. In view of the above discussions, we hold that the value of Thinner was correctly included in the computation of total value of clearances of all excisable goods during the previous financial year and as the total value of clearances of all excisable goods including !he value of Thinner exceeded Rs. 20 Lakhs in the previous financial year, the benefit of exemption under Notification No. 80/80-C.E., should not be available to the appellants. In the result, the impugned order is upheld and the appeal is dismissed.
G.P. Agarwal, Member (J)
6. I have had the advantage of reading the erudite judgment prepared by my learned Brother D.C. Mandal, Technical Member. While agreeing with the main conclusion that excisable goods do not become non-excisable merely by reason of exemption given under a Notification 1 would like to state my own reasons as under –
7. As back as in 1971 it was held by the Delhi High Court in the case of Sulekh Ram and Sons v. U.O.I., decided on 25-8-1971 and reported in 1978 (2) E.L.T. (J 525) that “excisable goods become non-excisable after being exempted by a Notification”. Relying upon this judgment of the Delhi High Court a Division Bench of the Allahabad High Court also took the similar view in the case of Nagrath Paints Pvt. Ltd. v. U.O.I. decided on 5-12-1977 and reported in 1988 (33) E.L.T. 58. The High Courts of Patna and Madhya Pradesh also took the similar view in the case of Shri Madhav Mill Pvt. Ltd. v. Collector of Central Excise, 1984 (17) E.L.T. 310 (Patna) and Tata Export Limited v. U.O.I., 1985 (22) E.L.T. 732 (M.P.) respectively.
8. However, it deserves to be noticed that the Delhi High Court itself over-ruled its earlier decision rendered in the case of Sulekh Ram and Sons v. U.O.I, in its subsequent decision rendered in the ease of Vishal Andhra Industries v. U.O.I., 1983 (14) E.L.T. 2265. The High Courts of Karnataka, Madias and Andhra Pradesh have also taken the same view holding that “excisable goods do not become non-excisable merely by reason of exemption given under a Notification” (See Karnataka Cement Pipe Factory Industrial Estate v. Superintendent of Central Excise, 1986 (23) E.L.T. 313 (Karnataka); Tamil Nadu (Madras State) Handloom Weavers Co-operative Society Ltd. v. Assistant Collector of Central Excise, 1978 (2) E.L.T. (J 57) (Madras);
Andhra Pradesh Paper Mills v. Asst. Collector, 1980 (6) E.L.T. 210 (A.P.). On an earlier occasion this Tribunal also had an occasion to deal with this issue in the case of Techno Chemical Industries v. Collector,1987 (31) E.L.T. 541 and after noticing the entire case law on the subject concluded that excisable goods do not become non-excisable merely by reason of exemption given under a Notification.
9. It may also be stated that the recent observation made by a Division Bench of the Gujarat High Court in the case of Maheshwari Mills Ltd. v. U.O.I., 1988 (35) E.L.T. 252 are also relevant. In that case the Division Bench held that the relevant date for the purpose of levying excise duty is the date of removal and not the date of manufacture even though the taxable event is the manufacture or production of an excisable article. The Division Bench laid the emphasis on the scheme of the Central Excises and Salt Act, 1944 and the Rules made thereunder and held that the scheme of the Act and the Rules framed thereunder, particularly Rule 9A, reveals that while the taxable event is the fact of manufacture or production of an excisable article, the payment of duty is related to the date of removal of such article from the factory. In that case the Division Bench also noticed the case of Kirloskar Brothers Ltd, v. U.6.I., 1978 (2) E.L.T. (.J.33) decided by the Madhya Pradesh High Court wherein it was held that goods manufactured during the exempted period cannot be taxed even if removed after the exemption is withdrawn. And after so noticing the Division Bench observed as follows –
“…With respect, the High Court thinks that the moment there comes into existence an excisable article, the point of time for levy and collection of duty gets fixed to the date of manufacture, a view which ignores the provision in Rule 9 A of the Rules. In a subsequent decision in M.P. No, 338/79, dated 16th January, 1982 that High Court differed with its earlier decision and held on the basis of Rule 9A ‘that the excise authorities were right in applying the rates prevailing on the date of removal, and thereby agreed with the conclusion of this Court in Alembic Chemical Works case (supra) – See paragraph 17 of Sirpur Paper Mills case (ibid).”
10. In the result I, as stated above, agree with the main conclusion recorded by my learned Brother that excisable goods do not become non-excisable merely by reason of exemption given under a Notification and the reason for agreeing is that besides the Delhi High Court, other High Courts have also taken a similar view and these decisions were referred to by Karnataka High Court in the case of Karnalaka Cement Pipe Factory’s case, supra.
P.C. Jain, Member (T)
11. I agree with the views expressed by my learned brother Judicial Member Shri G.P. Agarwal and the conclusions arrived at by learned brothers Shri D.C. Mandal, Technical Member and Shri G.P. Agarwal, Judicial Member. Hence the appeal deserves to be dismissed. Ordered accordingly.