1. This is an appeal filed by M/s. Jaideep Corporation, Hubli, against order-in-appeal No. 2354/80, dated 29-12-80 passed by the Appellate Collector of Central Excise, Madras.
2. M/s. Jaideep Corporation manufactures sodium silicate in the factory of M/s. Shree Hubli Chemical Works, another licensee who manufactures the same commodity. M/s. Jaideep Corporation started production in the factory from January, 1980 and claimed exemption under Notification No.71/78-CE, dated 1-3-78. They also claim that they were loan licensee under the terms of Notification No. 305/77-CE, dated 5-11-77.
3. The Assistant Collector gave an order dated 5-3-80 in which he said that M/s. Shree Hubli Chemical Works had already availed of the exemption under Notification No. 71/78-CE during the financial year 1979-80 and, therefore, the clearances of nil rate of duty of the goods from the same factory by M/s. Jaideep Corporation being in excess of Rs. 5 lakhs would not be permissible. The Appellate Collector agreed with the interpretation of the Assistant Collector.
4. The part of the notification that produced this problem for the assessee was a clause that ran like this : where a factory producing the specified goods is run at different times of any financial year by different manufacturers, the value of the specified goods so cleared from such factory in any such year at nil rate of duty should not exceed 5 lakhs.
5. The Assistant Collector said that the factory had previously been producing under the management of Shree Hubli Chemical Works and had already enjoyed the exemption of nil assessment up to the value of 5 lakhs.
6. Shri B.M. Patel, accounts manager, argued before the Tribunal that M/s Jaideep was a loan licensee in the factory of M/s Hubli Chemical Works for the manufacture of sodium silicate and had also filed the declaration under notification 305/77-CE and was, therefore, entitled to be considered as a separate manufacturer whose production should be taken independently of the production by Shree Hubli Chemical Works.
7. He said that in a similar case the Collector of Central Excise, Baroda, had passed an order holding that such exemption was available to loan licensee independently. He referred to trade notices issued by Baroda Col-lectorate and Indore Collectorate that goods cleared by the manufacturer on behalf of his loan licensee should not be taken into account for the purpose of determining the eligibility of the manufacturer to the said exemption and that the loan licensee would be eligible to the exemption under Notification No. 71/78-CE separately.
He also quoted judgment of the Allahabad High Court in Hind Lamp Limited v. Union of India and Ors.Writ petition No. 2189/83 decided on 14-5-74, in which the Court decided that if the goods were manufactured on behalf of the customer, then the customer would become the manufacturer and would be liable to pay the excise duty.
8. The learned counsel for the department submitted that notification 71/78-CE was very clear and lays down that all the productions in any financial year by different manufacturers should be clubbed together in order to determine the nil rate of duty clearances which should not exceed Rs. 5 lakhs. He said he did not need to say anything more.
9. It appears to be true that the exemption has been extended to loan licensee in some Collectorates. But the question before us is not that some Col-lectorates have done what the appellants wished to be done or not but whether the notification allows the exemption to be given in the conditions under which the appellants operated. The relevant words of the notification which we have reproduced laid down that if the factory is run at different times of any financial year by different manufacturers, the value of the specified goods so cleared from that factory in that year at nil rate of duty should not exceed 5 lakhs. The value of 5 lakhs rupees-is not in respect of each manufacturer ; it is in respect of the factory and this factory had already seen clearances of rupees five lakhs free of duty, although on behalf of another manufacturer viz. Shree Hubli Chemical Works. We do not know why the Collectorate officers under which M/s. Jaideep Corporation produced their sodium silicate did not give the exemption as other Collectorates did. But we only know that they denied it, and going by the notification we cannot say they did wrong. The clarifications and trade notices issued by the Collectorates and Government of India may bind the Collectorates but not this Tribunal. We go only by law as it is worded. We cannot direct extension of an exemption in conditions that are not covered by the strict words of the notification.
10. The learned counsel for M/s Jaideep argued that the Supreme Court in Anglo Afghan Agencies (AIR 1968, SC 718) observed that "the Government and its officers are on the authorities of this Court not entitled at their mere whim to ignore the promises made by the Government". This is a ruling that was made in respect of trade notices which made promises and which, apparently, the government went back upon. The situation before us is different. M/s Jaideep Corporation says that it is a separate and independent firm with no legal connection with Shree Hubli Chemical Works as can be seen from paragraph 4 of the Assistant Collector's orders. The trade notices speak of goods cleared by the manufacturer on behalf of his loan licensee as the goods which should not be taken into account for the purpose of determining the eligibility of the manufacturer to the said exemption. There is a difference in the situation envisaged by the trade notices and the one in which M/s Jaideep Corporation operated.
11. The clarification in the trade notices issued by Baroda and Indore Collectorates say that the value of the goods cleared by the manufacturer on behalf of his loan licensee should not be taken into account for the purpose of determining the eligibility of the manufacturer to the said exemption. The benefit of this clarification is primarily meant for the manufacturer; in this case it would be Shree Hubli Chemical Works. Although M/s Jaideep Corporation say it operated as a loan licensee, it is asking for the benefit for itself. Had it been the loan licensee and been producing the goods on benalf of the principal, it would be the principal Shree Hubli Chemical Works who would be asking for the benefit. The fact that Shree Hubli Chemical Works is asking for the benefit of the exemption for its production from January, 1980, does not square with its claim that it is a loan licensee. [It claimed before the Assistant Collector that it was an independent partnership firm]. The clarification given by the Collectorates also has this condition : "provided the clearances do not exceed the limits prescribed in the said notification". The clearances on behalf of Shree Hubli Chemical Works exceed the limits laid down by the, notification because these are in excess of 5 lakhs quota for the factory and that quota had already been reached by the previous manufacturer by Shree Hubli Chemical Works; the principal. It is, therefore, clear that Shree Hubli's clearances are not entitled to the exemption.
12. Shree Hubli Chemical Works claims that it had registered itself under notification 305/77-CE. This notification exempts the manufacturer from the operation of Rule 174 of the Central Excise Rules, that is, the necessity to obtain a licence, if he gets his goods manufactured on his account from any other person, subject to certain conditions. Shree Hubli did not get its goods manufactured on its account by any other person and, therefore, we are not clear how this notification operates in its case. It seems to us that the appellants have not understood the terms of this notification.
13. In any case, we have seen the clear words of the notification and we will have to go by it whereby the appeal must fail. We, accordingly, dismiss it.