ORDER
K. Prakash Anand, Member (T)
1. In this case, it is alleged that appellants cleared a quantity of 6826.5 Kgs. of staple fibre manufactured out of drawn waste on 14th April, 1980 claiming exemption from duty under Notification No. 279/77, dated 12-8-1977. Although it was claimed by the appellants that these goods had been cleared under ‘Nil’ duty gate-pass on 14th April, 1980 but they were actually removed from the factory only on 29th 3uly, 1980. In the meantime, on 24th April, 1980, Notification No. 279/77 which granted exemption to such goods was rescinded by issue of Notification No. 45/80. The appellants have explained that although the goods were cleared from their bonded storeroom under ‘Nil’ duty gate-pass on 14th April 1980, they were kept in the duty paid store-room and not cleared out of the factory as they were not allowed to leave the factory due to labour problems. The Assistant Collector ordered the appellants to pay duty on the impugned goods on the grounds that the company had not been able to produce any proof to show that the gate-pass had been made out prior to 24th April 1980 when the relevant exemption notification was rescinded. When the party went up in appeal, the Appellate Collector upheld the order of the Assistant Collector, on the further ground that the act of the removal of the goods should have been removal from the place of manufacture and that deposit in the duty-paid store-room did not amount to such removal. The Appellate Collector also held that exemption is not admissible in respect of the goods as, under Rule 9A of the Central Excise Rules 1944, the date for determination of duty is the date on which the goods are removed from the factory.
2. Heard Dr. Gouri Shankar, Senior Advocate and Shri Manoj Arora, Advocate for the appellants and Shri K.C. Sachar, 3DR for the department.
3. The learned Senior Advocate has said that the impugned goods were totally exempt at the time of manufacture. Therefore, they would continue to be fully exempt even if cleared from the factory after the date of manufacture. In this connection, he relies on the following case law :
1. HMM Limited v. C.CE., Bangalore – 1986(24) ELT 61 (Trib.).
2. Kirloskar Brothers Ltd. v. Union of India and two Ors. 1978 ELT (J 33).
3. Castrol Ltd. v. C.CE., Patna – 1985(21) ELT 333 (Trib.).
4. The learned 3DR responded briefly by reiterating the view taken by the lower authority. He further stated that Notification No. 279/77, dated 12-8-1977 granted exemption which was restricted to fibres and tops manufactured out of drawn waste falling under sub-items I or II of Item No. 18 of the Central Excise Tariff and the appellants have not furnished any evidence to establish that their product satisfied this condition.
5. The facts of the case and the submissions made before us have been carefully considered. So far as the learned JDR’s point that the appellants have not furnished any evidence that their product satisfied the condition of Notification No. 279/77, dated 12-8-1977 that the fibres and tops should be manufactured out of drawn wastes, is concerned, the doubt raised has no basis in any evidence on record. On the other hand, we find that in para 2 of his order the Appellate Collector has virtually conceded that the appellant is manufacturing staple fibre out of drawn waste. This was not the department’s case, even at the Assistant Collector’s stages; it cannot be allowed to make out a new case against the appellant at this stage.
6. The whole point that is being made by the department is that the exemption which the appellant was enjoying under Notification No. 279/77, dated 12th August, 1977, was rescinded op 24th April, 1980 and that since the impugned goods were removed from the factory on the 29th July, 1980 after the exemption was withdrawn, therefore they are liable to pay duty in respect of such removals. The appellant company in their defence have urged that the goods were, in fact, cleared by them under gate-pass No. 23 on 14th April, 1980 and although they were cleared from the bonded store-room of the factory, they were not removed from the facts but retained in the duty paid store-room because of labour unrest which made it physically impossible for them to remove the goods from the factory. The Asstt. Collector did not accept this plea of the appellants on the ground that no proof had been adduced to show that the relevant gate-pass had been made out prior to 24th April, 1980. The Appellate Collector has gone beyond this and said that assuming that the gate-pass had been prepared on 14th April, 1980 and goods cleared from the bonded store-room removal under Central Excises and Salt Act, 1944, would mean actual removal from the factory and not merely removal rom the bonded store-room.
7. Now before us a point has been raised by the appellant company which had not been raised as precisely and clearly by them before the Appellate Collector and perhaps therefore had not received attention. The point is that the impugned goods were completely exempt when manufactured, that is, before the 24th April, 1980 and therefore no duty would be leviable when this exemption is withdrawn. This is a point on which the law is well settled and the appellant company is well fortified by the case law cited by them in their favour.
8. In this view of the matter it ‘is unnecessary for us to go into the question whether in a case like this removal of goods from the bonded store-room to the duty paid store-room would constitute removal for purposes of duty liability Under Rule 9 of Central Excise Rules, 1944.