1. The short point falling for decision in the present appeal turns on the correct interpretation of Central Excise Notification No. 47/72, dated 17-3-72. In order to appreciate the contentions of the appellants and the respondent it is better to straightaway reproduce the Notification in its extenso : "The Central Government hereby exempts tyres of the description specified in column (1) of the Table hereto annexed, and falling under Sub-item (1) of Item No. 16, from so much of the duty of excise leviable thereon as is in excess of the duty specified and subject to the conditions laid down respectively in the corresponding entries in columns (2) and (3) of the said-----------------------------------------------------------------------Description Duty Conditions-----------------------------------------------------------------------(1) (2) (3)-----------------------------------------------------------------------Tyres for motor Forty per cent If the total value of thevehicles.
tyres for motor vehicles cleared by the manufacturer Provided that such exemption shall apply only in relation to the first clearance of such tyres for home consumption during any financial year upto a total value of Rs. 1.25 crores/fifty lakhs of rupees (w.e.f. 1-4-73) : Provided further that in relation to the period commencing on the 17th March, 1972 and ending with the 31st March, 1972, nothing contained in this Notification shall apply to a manufacturer of tyres for motor vehicles who has already availed of the concession under the notification No. 34/71-C.E., dated 7-4-71 during the period when that notification was in force.
2. The notification No. 40/73-CE shall come into force on the 1st day of April, 1973 vide Notification No. 47/72-CE, dated 17-3-72 as amended by Notification No. 40/73-CE, dated 1-3-73." 2. The appellants are manufacturers of tubes of motor vehicles falling under Item No. 16(1) of the 1st Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as the CET). For the purpose of the said Item, tubes were included by express words within the meaning of the tariff entry "tyres". The appellants did not clear any tubes during the financial year 1972-73. They cleared a certain quantity of tubes during the period from 18-7-73 to 31-3-74 on payment of duty at 40% ad valorem. The Supdt. of Central Excise, Sonepat issued a notice to the appellants demanding .payment of a sum of Rs. 13,556.69 in terms of Rule 10 of the Central Excise Rules, 1944 as the amount representing the difference between 40% ad valorem, the concessional rate of duty, specified in the above notification, and the effective rate of duty but for the concession. On adjudication, the Assistant Collector confirmed the demand holding that since the appellants had not cleared any tubes in the preceding financial year, they were not entitled to clearance of the tubes at the concessional rate of 40% ad valorem in the financial year 1973-74. The appeal preferred by the appellants against this order was rejected by the Appellate Collector who upheld the Assistant Collector's order. It is against this order that the appellants filed a Revision Application to the Central Government which, as earlier pointed out, stands transferred to this Tribunal for disposal.
3. Shri A.K.S. Bedi, Advocate, appeared on behalf of the appellants and Shri K.D. Tayal, SDR, on behalf of the Respondent during the hearing of the appeal on the 22nd March, 1983. Shri Bedi framed the following issue for determination : "Whether under Notification No. 47/72-CE dated 17-3-72, as amended by Notification No. 40/73-C.E., dated 1-3-73, a manufacturer of tyres or tubes who had not cleared any tyres or tubes during the preceding financial year was entitled to the concessional rate of duty of 40% ad valorem as against the normal rate of 50% ad valorem during the following financial year".
Shri Bedi submitted that there was no provision in the Notification which had the effect of denying the appellants the benefit of the concessional rate of duty even if there was no clearance during the preceding financial year. The Notification only provided that the total value of tyres (or tubes) for motor vehicles cleared by the manufacturer during the preceding financial year for home consumption should not exceed the value limits specified in the Notification.
Obviously, he urged, this provision should not be construed to mean, as the Deptt. had construed, that there should in fact have been clearances of tyres and tubes during the preceding financial year. In this connection Shri Bedi drew our attention to the CE Notification No.89/80, dated 19-6-80 in which it had been specifically provided that a manufacturer who had not cleared any paper or paper board in the preceding financial year would nevertheless be entitled to the exemption contained in the said Notification subject, of course, to fulfilment of the prescribed conditions. The absence of such a provision in Notification No. 47/72, dated 17-3-72 would not make any material difference. A similar provision was also to be found in CE Notification No. 80/80. Shri Bedi submitted that the intention of these Notifications, including Notification No. 47/72, being to assist to small scale industries with duty concession, the object of the Notification should not be defeated by a narrow construction of the Notification which again was not warranted by the words used in the Notification. He urged in this context that if the construction put on the Notification by the Department were to be accepted, the result would be that a manufacturer who cleared even one tyre (or tube) during the preceding financial year would get the benefit of the Notification in the succeeding financial year, whereas another manufacturer who did not produce or did not clear even one tyre (or tube) would be denied the benefit of the Notification during the succeeding financial year.
This would lead to an anamolous situation.
4. Appearing on behalf of the Department, Shri Tayal submitted that when the Notification provided that the clearances of tyres (or tubes) during the preceding financial year should not have exceeded certain prescribed limits, it meant that there should in fact have been some clearances. As such, he opposed the appellants' pleas.
5. We have given careful consideration to the submissions of both the parties. In our opinion, Notification No. 47/72 should not be construed in a manner which defeats the very purpose of the Notification. If the Department's interpretation is to be accepted that would be the result because if the manufacturer had cleared even one tyre (or tube) during the preceding financial year, he would be entitled to the benefits of the Notification in the succeeding financial year, while another manufacturer who did not clear even one tyre (or tube) during the preceding financial year would not be so entitled. This is an anamolous and invidious situation. We are, therefore, inclined to take the view that all what the Notification stipulates is that if there had been clearances during the preceding financial year, the value of such clearances should not have exceeded the prescribed limits. That this was the intention is also clear from the analogies of the two other Notifications referred to by the appellants' Counsel. We, therefore, hold that since the appellants had not cleared any tyres (or tubes) during the financial year 1972-73, they were entitled to the benefits of Notification No. 47/72 during the financial year 1973-74 subject to compliance with the other conditions laid down in the said Notification. We, therefore, set aside the Appellate Collector's order and allow the appeal in the light of the above observations and direct that consequential relief shall be granted to the appellants by the Assistant Collector of Central Excise within 60 days from the date of communication of this order.