Tencon Indl. Corpn. vs Collector Of Central Excise, Bombay-I
- SCC(2003) 11 SCC 26
Ratio decidendi
The rule this decision rests on
Where an exemption notification specifies goods falling under a particular tariff item and prescribes a monetary limit for those goods alone, the value of goods manufactured under other tariff items cannot be clubbed together with the specified goods for the purpose of determining whether the monetary threshold has been exceeded, even if the goods are manufactured using the same machinery. The exemption must be applied by reference to the tariff item expressly mentioned in the notification, and the Department's knowledge of the type and value of goods cleared is sufficient to make such a determination without requiring the assessee to follow additional procedural steps to segregate production.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
1. In this appeal, the appellant claims to be a small scale manufacturer of diesel engine parts falling under Tariff Item No. 68 and other parts of motor vehicles falling under Tariff Item No. 34A. The value of the plant and machinery installed in its unit was claimed to be less than Rs. 10 lakhs and since the value of the goods falling under Tariff Item No. 68 cleared by it during any of the previous financial years did not exceed Rs. 30 lakhs, it claimed benefit of the exemption under Notification No. 89/79 whereas in respect of other parts of motor vehicles falling under Tariff Item 34A, it was contended that the same were exempted under Notification No. 99/71, dated 25-5-1971 up to 1-3-1979. However, the Department having taken the view that if the value of the goods falling under the said two Tariff Items are clubbed together, the total amount exceeds Rs. 30 lakhs, therefore, the appellant would not get the benefit of Exemption Notification No. 89/79, dated 1-3-1979. This stand of the respondent-Department was upheld by the Appellate Authorities as well as by the Tribunal. Hence this appeal.
2. It has been brought to our notice by Mr. V. Lakshmikumaran, learned Counsel for the appellant-assessee that this Court in Collector of Central Excise v. Malleable Iron & Steel Castings Co. (P) Ltd., 1998 (100) E.L.T. 8 (S.C.) has taken the view that the language of the Exemption Notification No. 89/79 is quite clear to the effect that the goods manufactured under the other Tariff Items cannot be included in the computation of the goods falling under Tariff Item 68. Similar is the view expressed by this Court in Collector of Central Excise v. Himalayan Co-op. Milk Product Union Ltd., 2000 (122) E.L.T. 327 (S.C.). We find force in the contention of Mr. Lakshmikumaran.
3. Refuting this contention, the learned Senior Counsel for the respondent-Department contended that the appellant-assessee has not followed the proper procedure and the goods manufactured under both the Tariff Items emerge out of the same machinery and, therefore, it would be difficult for them to find out which of the goods fall under which tariff item.
4. When clearances were made by the Department, the type of goods or their value is known to the Department. Therefore, there is no substance in the contention urged on behalf of the respondent-Department.
5. We allow this appeal, set aside the order made by the Tribunal and direct the authorities to pass orders in conformity with this order.
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