1. The Central Government levied ascess the duty of excise at the rate of 1/8% ad valorem on paper and paperboard, all sorts, under Section 9 of the Industries (Development and Regulation) Act, 1951, with effect from 1st November, 1980.
2. On 3-2-1981, by issue of a notification, the Central Government exempted the industrial undertakings "having investment in fixed assets in plant and machinery not exceeding Rs. 20 lakhs" from payment of this cess. By issue of orders subsequently, the Government gave this notification retrospective effect from the date of the levy, i.e., 1-11-1980. Simultaneous with the exemption notification dated 3-2-1981, a clarification was issued by the Collector, by means of a trade notice that- "The cess is payable only on the out-put of paper and paperboard pertaining to the organised sector of the paper industry i.e. units registered with D.G.T.D. or licensed under the Industries (Development and Regulation) Act." The point of dispute in the present appeal before us is whether the respondents were eligible to the exemption from cess contained in the notification dated 3-2-1981.
3. Our attention was drawn to the Order-in-Original of the Assistant Collector which contained the following particulars of the value of the plant and machinery installed in the respondents' factory : Rs. P.1. Original purchase value of Machinery 15,66,088.64 as per Bills The Assistant Collector held that even after excluding the capitalisation amount, the value of plant and machinery came to Rs. 20.51 lakhs, i.e., in excess of Rs. 20 lakhs. He held that because of this, the respondents were not entitled to the exemption. In appeal, the Appellate Collector decided the matter in favour of the respondents. The department is now in appeal before us to get the order of the Assistant Collector restored.
4. The plea of the department is that the matter should be decided strictly in accordance with the wording of the notification. The learned representative of the department stated that erection charges, transport charges and the cost of other materials could not be excluded as all of them went towards the cost of the machinery installed in the respondents' factory. He further stated that the fact that the respondents were registered as a small scale unit by the State Government of TamilNadu, Department of Industries and Commerce, was immaterial. He added that cess, though designated as an excise duty, was different from Central Excise duty inasmuch as the cess collected was meant to be utilised for benefit of the industry itself.
5. The respondents stated that way back in 1975, the Central Government had fixed guidelines as to how the value of plant and machinery was to be determined for the purpose of distinguishing a small scale unit from an organised sector unit. In this connection, they invited our attention to the clarification contained on pages 261-262 of the Central Excise Law Guide by Shri R.K. Jain, Vth Edition, which re-produced these guidelines. According to these guidelines, the value of jigs, tools, dies and spare parts and charges for transport and erection of the machinery were not to be included. The respondents stated that the "other materials" purchased by them were like Felt, Bolts etc., as stated in the certificate of the Chartered Accountant dated 26-9-1981, which were in the nature of accessories whose value was not to be included. They relied on the following two orders of the Tribunal which had decided similar issues by following these guidelines :(C.E.G.A.T.)- Ahmedabad Chemicals Pvt. Ltd. v. Collector of Central Excise, Baroda.
The respondents added that though in the above two orders, the Tribunal had interpreted how the value of plant and machinery installed in an industrial unit was to be determined for the purpose of Central Excise duty exemption, the principle should be equally applicable in the matter of cess which too was designated and collected as a duty of excise. They made it clear that they were not seeking exemption on the basis of depreciated value of their machinery but on its original value after excluding erection and transport charges etc.
6. In a brief rejoinder, the learned representative of the department stated that the item "other materials" in the value calculation was vague and it was for the respondents to prove what these items were. He pleaded that the master should be remanded to the Assistant Collector to enable the respondents to prove their eligibility to the exemption.
7. We have carefully considered the matter. Differential treatment of small scale units in our country is a well-known concept. Concessions of various types have been given by the Government from time to time as a measure of encouragement to small scale industries. In that connection, the point is bound to come up often as to what is a small scale unit or where to draw the line between small scale and large scale. Originally, the limit of Rs. 10 lakhs for value of the plant and machinery installed in the unit was fixed as a dividing line. Later, the limit was raised to Rs. 20 lakhs. On the question as to how this value should be calculated, the Government had fixed certain norms in 1975 so that there was a uniformity of approach in the matter. From the evidence led before us, we notice that these norms fixed by the Central Government have been followed by the State Government of Tamil Nadu also and the Director of Industries and Commerce, Madras registered the respondents as a small scale industrial unit. Simultaneously, the earlier registration of the respondents with the D.G.T.D., when the value limit used to be Rs. 10 lakhs, was cancelled. We find no reason why the same norms should not be followed for interpreting concessional notification under the Industries (Development and Regulation) Act.
Earlier, two Benches of this Tribunal have agreed to follow these norms. We agree with these earlier orders in this respect. As all the necessary data is already available on record, there is no need to remand the matter back to the Assistant Collector because we notice that by excluding any one of the three elements of (i) transport charges, (ii) erection charges, (iii) cost of other materials, the original value of Rs. 20.51 lakhs worked out by the Assistant Collector goes below the limit of Rs. 20 lakhs set out in the notification and the respondents thereby become entitled to the exemption.
8. Accordingly, we reject this appeal of the department and uphold the impugned order of the Appellate Collector. Consequential relief should be granted to the respondents.