ORDER
Lajja Ram, Member (T)
1. These are two appeals filed by the Revenue being aggrieved with the common order-in-appeal dated 23-6-1987 passed by the Collector of Central Excise (Appeals), Bombay. The respondents are M/s. Elemech Industries, Pimpri, Pune. The matter relates to the availment of Small Scale Exemption under Notification No. 77/85-C.E., dated 17-3-1985 as applicable prior to the introduction of the new Central Excise Tariff under Schedule to the CETA, 1985, and Notification No. 213/86-CE., dated 25-3-1986 as applicable after 1-3-1986 on introduction of the new Central Excise Tariff. Under Notification No. 167/79-C.E. the parts and accessories of motor vehicles and tractors including trailers were exempted from the whole of the duty of excise leviable thereon if such parts and accessories were intended for use in further manufacture of excisable goods either in the factory in which they were manufactured or in any other factory of the same manufactures or of another manufacturer subject to certain procedural safeguards. Under Notification No. 77/85-C.E. and Notification No. 213/86-C.E. it was provided that the clearances of excisable goods which were chargeable to nil rate of duty or were exempted from the whole of the duty of excise leviable thereon by any other Notification (not being a Notification for exemption from the whole of the duty of excise leviable thereon granted based upon the value or quantity of clearances made in the financial year) shall not be taken into account. The Assistant Collector of Central Excise, Pimpri, Pune who adjudicated the matter held that the value of clearances under Notification No. 167/79-C.E. were not required to be excluded for the purposes of computing the value of clearances under Notification No. 77/85-C.E., dated 17-3-1985. On appeal the Collector of Central Excise, Bombay observed that Notification No. 167/79-C.E. envisaged total exemption of the goods falling under Item No. 68 of the Old Central Excise Tariff provided the procedure prescribed was followed the said exemption Notification was issued under Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 and the exemption envisaged under that Notification was neither based on value nor quantity of the goods but granted for specific use and subject to observance of certain procedure.
2. The matter was posted for hearing on 13-12-1996. No one is present for the respondents. The notice for today’s hearing had been issued on 20-11-1996 and had been received by the respondents on 27-11-1996. For the appellants Revenue Shri M. Jayaraman, Ld. JDR is present.
3. We have carefully considered the matter.
4. Under exemption Notification No. 167/79-C.E., dated 19-4-1979 (as amended) issued in exercise of the powers confirmed by Sub-rule (1) of Rule 8 of Central Excise Rules, 1944, the exemption from the whole of the duty of excise leviable on the parts and accessories of motor vehicles and tractors including trailers, had been provided when such parts and accessories are intended for use in further manufacture of excisable goods either in the factory in which they were manufactured or in any other factory. This exemption was complete and un-conditional when the parts and accessories were used in the factory of manufacture. For the use in another factory of the same manufacturer the Proper Officer had to be satisfied that the said parts and accessories were intended for use in further manufacture of excisable goods. In a case where the use was not a factory of another manufacturer the procedure under Chapter 10 of the Rules was to be observed.
5. Now coming to the small scale exemption Notification No. 77/85-C.E., dated 17-3-1985 we are only concerned with the interpretation of Clause (a) under explanation therein after para 4 of the Notification. The explanation in so far as Clause (a) is concerned reads as under :-
“Explanation 2 – For the purpose of computing the value of clearances under this Notification, –
(a) the clearances of excisable goods, which are exempted from the whole of the duty of excise leviable thereon by any other Notification (not being a Notification where exemption from the whole of the duty of excise leviable thereon is granted based upon the value or quantity of clearances made in a financial year) issued under Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 and for the time being in force, shall not be taken into account”.
6. It is seen from Notification No. 167/79-C.E. that it provides exemption from the whole of duty from the excise leviable thereon. When the parts and accessories of motor vehicles etc. are used in the factory of the manufacturer no condition whatsoever is laid down. Only when the use in another factory of the same manufacturer or a factory of another manufacturer satisfaction of the proper officer or observance of Chapter 10 procedure had been prescribed subject to which the exemption was available. It does not mean that the excisable goods were not exempt from the whole of the duty of excise leviable thereon. This exemption Notification No. 167/79-C.E. is not an exemption based on the value or quantity of clearances and the exemption related only to the use in further manufacture of excisable goods.
7. The Collector of Central Excise (Appeals), Bombay had observed as under :-
“With a views to examining the issue, it is necessary that Notification No. 77/85 read with Notification No. 213/86 is understood. The explanation II appended to Notification No. 213/86, provides as follows, (a) the clearances of excisable goods which are chargeable to nil rate of duty or are exempted from the whole of the duty of excise leviable thereon by any other notification (not being notification where exemption from the whole of the duty of excise leviable thereon is granted based upon the value of quantity of clearances made in a financial year) issued under Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, and for the time being in force, shall not be taken into account. It would be seen from the Explanation II that it does not provide any unconditional exemption as sought to be read into it by the Assistant Collector in the impugned orders. Notification No. 167/79, dated 19-4-1979 envisages total exemption of the goods falling under Tariff Item 68 CET provided the procedure prescribed is observed; the said notification is issued under Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944. The exemption envisaged under this notification is neither based on value nor quantity of the goods but granted for specific use and observance of certain procedure. The interpretation by the Assistant Collector of Notification 167/79 is not legally sustainable. I, therefore, set aside both the orders of the lower authority and accept the appeals.”
8. We have discussed the provisions of Notification No. 167/79-C.E. and that of 77/85-C.E. The Notification No. 213/86-C.E. is couched in the same language as Notification No. 77/85-C.E. Keeping in view the above discussion we do not find any infirmity in the view taken by the ld. Collector of Central Excise (Appeals).
9. As a result, we do not find any merit in both these appeals filed by the Revenue and the same are rejected.
10. The cross objections filed by the Revenue are also disposed of in the above terms.
