ORDER
V.P. Gulati, Member (T)
1. This appeal is against the order of Collector of Central Excise (Appeals), Madras, dated 25-5-1988.
2. The brief facts are that the appellants who were registered with the D.G.T. D. were availing of the benefit of Notification 175/86 dated 1-3-1986 as they satisfied the criterion laid down in proviso 4(b) of the said Notification. After the amendment of this notification by Notification 244/87 the eligibility criterion under proviso 4(b) was modified and as per the new eligibility criterion the appellants no longer fall within the purview of proviso 4(b) of the said notification. The said proviso after the amending notification for the purpose of eligibility to the benefit of notification is reproduced :
“4. The exemption contained in this notification shall be applicable only to a factory which is an undertaking registered with the Director of Industries in any State or the Development Commissioner (Small Scale Industries) as a small scale industry under the provisions of the Industries (Development and Regulations) Act, 1951 (65 of 1951) : Provided that nothing contained in this paragraph shall be applicable –
(a) in a case where the value of clearances from a factory during the preceding financial year or in the current financial year did not exceed or is not likely to exceed rupees seven and half lakhs; or
(b) in a case where a manufacturer who is manufacturing specified goods in a factory, other than a factory which is registered under the Industries (Development and Regulations) Act, 1951 (65 of 1951), with the Directorate General of Technical Development in the Ministry of Industry, has been availing of the exemption under this notification or any of the notifications specified below during the preceding financial year :
(i) 166/72CE dated 13-7-1972
(ii) 39/73CE dated 1-3-1973
(iii) 158/77CE dated 18-6-1977
(iv) 74/78CE dated 1-3-1978
(v) 70/81CE dated 25-3-1981
(vi) 43/82CE dated 28-2-1982
(vii) 44/82CE dated 28-2-1982
(viii) 148/82CE dated 22-4-1982
(ix) 77/83CE dated 1-3-1983
(x) 83/83CE dated 1-3-1983
(xi) 77/85CE dated 17-3-1985
(xii) 85/85CE dated 17-3-1985″
After the issue of the amending notification by which time the appellants had already cleared goods for more than Rs. 7.5 lakhs they claimed the benefit of notification under proviso 4(a) by claiming that their clearances in the previous financial year did not exceed Rs. 7.5 lakhs and notwithstanding the fact that their current year’s clearances exceeded Rs. 7.5 lakhs they were eligible to the said notification. The lower authorities held that inasmuch as their clearance in the current financial year had exceeded Rs. 7.5 lakhs they were not eligible for the benefit. The short point that arises for consideration in the present appeal is whether their eligibility to the exemption has to be determined with reference to the past clearances in the preceding financial year or their clearances made in the current financial year are also to be taken into account for the purpose and if in either case the clearances do not exceed Rs. 7.5 lakhs whether they would become ineligible for the concession. Admittedly they were not registered with the Director of Small Scale Industries of the State or the Development Commissioner (Small Scale Industries) as a Small Scale Industry and they were registered with the Directorate General of Technical Development. Proviso 4(b) does not apply to them as their Unit was registered with D.G.T.D. They are however, eligible for consideration of their claim in terms of proviso 4(a) of the said Notification.
3. Shri Vijayaraghavan, the learned Consultant for the appellants pleaded that under proviso 4(a) in either of two contingencies if the clearances did not exceed Rs. 7.5 lakhs for the previous year or in the current year, they became eligible for the concession as a Small Scale Unit.
4. Shri K.K. Bhatia, the learned S.D.R. appearing for the Department adopted the reasoning of the Collector (Appeals) and pleaded that the appellants had no case.
5. We observe that as per para 4, the exemption contained in Notification 175/86 is made applicable only to the factory which is an undertaking registered with the Director of Industries in any State or the Development Commissioner (Small Scale Industries) as a Small Scale Industry, as mentioned in the earlier para. However, the benefit has been made applicable to other cases where the Unit is not registered subject to the clearances of the factory not exceeding Rs. 7.5 lakhs in the preceding financial year or in the current financial year. For the purpose of these proceedings, proviso 4(b) is not required to be considered. We observe that in terms of the Notification a Unit has to be considered as a Small Scale Unit by virtue of the conditions prescribed under para 4 i.e. by virtue of registration done with the authorities mentioned therein. However, where the Unit is not registered, same is deemed to be a Small Scale Unit for the purpose of the Notification subject to the fulfilment of the conditions set out in the proviso 4(a) & 4(b). The appellants are claiming the benefit under proviso 4(a). This provides for two contingencies, i.e. either the Unit should not have cleared goods for more than Rs. 7.5 lakhs in the preceding financial year or their clearances are not likely to exceed Rs. 7.5 lakhs in the current financial year. Admittedly, the appellants’ clearances in the current financial year had already exceeded Rs. 7.5 lakhs and with the amending Notification No. 244/87 they had become ineligible for the concession which they were enjoying under Notification No. 175/86 and for the continuance of this concession they had to fulfil the conditions as set out in the proviso 4(a). The confusion in the interpretation of the scope of the proviso 4(a) as above has been created in the mind of the appellants by the use of the conjunction “or” between the expression “in a case where the value of the clearances during the preceding financial year” and the expression “in the current financial year”. The appellants want the term “or” as used above to be so read that if either of the two criteria i.e. if the clearances do not exceed Rs. 7.5 lakhs in the previous year or in the current financial year, the appellants would be eligible to the concession as a Small Scale Unit for the purpose of notification. It is well settled principles of law that the notification should not be so interpreted that any portion thereof or any words used therein become redundant. We observe that the word “or” used as above in the context of the notification is to be read as “and” as only in that way all the words used in the proviso 4(a) will become meaningful. In this context, therefore, we observe that for a manufacturer who is registered with the D.G.T.D. and is not holding a Small Scale Unit Industries registration certificate, the benefit of notification will be available only if the clearances in the previous financial year have not exceeded Rs. 7.5 lakhs and the current financial year’s clearances are also not likely to exceed Rs. 7.5 lakhs. The effect of this would be that for such non-registered Small Scale Units, will be eligible for the benefit only when their clearances are upto Rs. 7.5 lakhs in the previous financial year and also in the current financial year. It appears to us that the proviso has been provided to enable the licensees to get the Small Scale Industries registration done and the breather given for the purpose is till the clearances upto Rs. 7.5 lakhs have been made. In view of this, we hold that there is no infirmity in the order of the lower authority and accordingly the appeal is rejected.