CASE NO.: Appeal (civil) 4171 of 1986 PETITIONER: COLLECTOR OF CENTRAL EXCISE, MADRAS RESPONDENT: ARESON AND COMPANY DATE OF JUDGMENT: 20/03/1997 BENCH: A.M. AHMADI CJI & S.P. KURDUKAR JUDGMENT:
JUDGMENT
1997 (3) SCR 111
The Judgment of the Court was delivered by
AHMADI, CJI. This appeal by the Collector Central Excise, Madras, is
directed against the judgment and order of the Customs, Excise and Gold
(Control) Appellate Tribunal (‘the Tribunal’ for short) July 8, 1986,
whereby it affirmed the order dated August 1, 1981 of the Appellant
Collector of Central Excise, Madras granting refund of excise duty to the
respondent-assessee in reversal of the order passed by the Assistant-Col-
lector of Central Excise, Tirunelveli on February 27, 1981. Briefly stated
the facts are as under;
The respondent manufactured Trailers and Steel Furniture liable to payment
of excise duty under Tariff Item No. 34(iii) and Tariff Item No.40
respectively. The respondent was clearing the goods after payment of duty
without claiming exemption under Notification dated March 1, 1978 as
amended subsequently by Notification No. 8O/80 dated June 19, 1980.
Paragraph 2 of the said Notification which is relevant for our purpose
reads thus :
“(2) Nothing contained in this Notification shall apply to a manufacturer
–
(i) if the aggregate value of clearances of each serial no. of the
specified goods, if any by him or on his behalf for home consumption from
one or more factories, during the preceding financial year, had exceeded
rupees fifteen lakhs.
(ii) who manufactures excisable goods falling under more than one Item
number of the said first schedule and the aggregate value of clearances of
all excisable goods by him or on his behalf for home consumption, from one
or more factories, during the preceding financial year, had exceeded rupees
twenty lakhs.”
The respondent claimed refund of duty paid during the period from April, 1,
1980 to September 30, 1980 amounting to Rs. 65,285.68 on the plea that the
aggregate value of the clearances of both the excisable items did not
exceed Rs. 20 lakhs during the previous financial year. The Assistant
Collector found that during the year 1979-80, the assessee had cleared
Trailers worth Rs. 19,32,960 and Steel Furniture worth Rs. 1032 aggregat-
ing Rs. 19,33,992 i.e., less than Rs. 20 lakhs. Since the aggregate value
exceeded Rs. 15 lakhs, in view of the proviso to paragraph 2(i) of the
Notification, the Assistant Collector held that the assessee was not
eligible for exemption and rejected the claim for refund. The assessee
preferred an appeal. The Appellate Collector reversed the view of the
Assistant Collector and held that as the aggregate value did not exceed Rs.
20 lakhs, the assessee was entitled to the benefit of exemption under the
afore-men-tioned Notification and ordered refund. The Tribunal affirmed
this view in the Revenue’s appeal to that body. Hence the appeal.
Paragraph 1 of the Notification refers to specified goods i.e. goods
specified in column 3 of the table annexed to the Notification, Paragraph 2
extracted earlier sets out the conditions for the grunt of the exemption.
Both the Trailers and Steel Furniture being specified goods, the assessee
contends that as the value of the Trailers and the Steel furniture did not
exceed Rs. 20 lakhs, sub-paragraph (ii) of paragraph 2 of the Notification
was attracted and hence he was entitled for refund. The Revenue’s con-
tention is that since the maximum limit of Rs. 15 lakhs set out in sub-
para-graph (i) of paragraph 2 was crossed in the previous year, there was
no question of granting refund to the assessee. It was contended before he
Tribunal that sub-paragraphs (i) and (ii) had to be read together but the
Tribunal felt that even if they were so read, it is clear that sub-
paragraph (i) fixes the limit of Rs. 15 lakhs for one single item of
specified goods while sub-paragraph (ii) fixes the limit of Rs. 20 lakhs
where the clearance is for both specified and unspecified goods. This is
the controversy.
Paragraph 2(i) speaks of aggregate value of clearances of each serial
number of the specified goods’ whereas paragraph 2(ii) speaks of ‘excisable
goods’ falling under more than one item. It is thus clear that clause (i)
is confined to ‘specified goods’ whereas clause (ii) refers to ‘excisable
goods’. Now all specified goods may be excisable too, but if one were to
read clause (ii) as independent of clause (i) it would create an anomalous
situation, in that, a manufacturer who is not eligible for exemption under
clause (i) as the aggregate value exceeds Rs. 15 lakhs can still hop on to
clause (ii) and contend that since the aggregate value of the specified
goods which are excisable does not exceed Rs. 20 lakhs, he would still be
entitled to exemption. Such an interpretation would render clause (i)
redundant. We are, therefore, of the opinion that if the goods, i.e. all
items fall within the expression ‘specified goods’ the case would be
covered by clause (i), as in the present case, and not clause (ii).
Accordingly, the appeal is allowed and the impugned orders of the
authorities below holding that the case falls in clause (ii) are set aside.
There will be no order as to costs.