J.K. Mohanty, J.
1. The petitioner company, M/s. Mamta Drinks and Industries Limited, carries on business at Rourkela and has installed a factory for manufacturing aerated water. The company also manufactures ice in the same factory premises. It is not disputed that aerated water is covered under Tariff Item No. ID of the Central Excise Tariff whereas ice falls under Tariff Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (for short 'the Act'). It is also not disputed that both the items manufactured by the petitioner are classified under two different Tariffs of the First Schedule to the Act. The company submitted classification list No. 6/ID/78 with effect from 18-6-1977 for their excisable goods falling under T.I. ID on 10-2-1978. They incorporated ice against Item No. 5, i.e., under the heading 'particulars of other goods produced or manufactured and intended to be removed by the assessee'. As such, they did not treat ice as excisable. They also cleared the ice produced without payment of duty and without observance of the procedure under Chapter VII of the Central Excise Rules, 1944. The petitioner claimed exemption on the basis of Annexure-4, the Notification dated 18-6-1977 of the Government of India, Department of Revenue and Banking. The relevant portion of the said notification is as follows :-
'In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempt goods falling under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) and cleared for home consumption on or after the first day of April in any financial year, by or on behalf of manufacturer from one or more factories from the whole of the duty of excise leviable thereon, if an officer not below the rank of an Assistant Collector of Central Excise is satisfied that the sum total of the value of the capital investment made from time to time on plant and machinery installed in the industrial unit in which the goods under clearance are manufactured is not more than rupees ten lakhs :
Provided that this exemption shall not be applicable to a manufacturer if the total value of all excisable goods cleared by him or on his behalf in the preceding financial year had exceeded rupees thirty lakhs.'
The above claim of the petitioner was rejected by the Assistant Collector, Central Excise, Rourkela as per his order in Annexure-10. He held that the petitioner's contention that ice is not excisable is not tenable inasmuch as under Notification No. 176/77-C.E., dated 18-6-1977 as amended, their capital investment on plant and machinery exceeds ten lakhs. The clearance value of all excisable goods including Gold Spot, Limca, Kismet, Soda cleared on behalf of the manufacturers of the above products under franchise agreement with M/s. Parle Bottling Co. (Private) Ltd./Parle Exports Private Limited exceeds Rs. 30 lakhs. He directed that proper action be initiated under law for breach of the Central Excises and Salt Act, 1944 and the rules made thereunder and separate classification lists from 18-6-1977 and 1-3-1978 must be filed for ice. Against this order the petitioners have come up to this Court with a prayer to quash the order.
2. Learned counsel for the petitioners has contended before us that since the two goods manufactured by the petitioner-company (ice and aerated water) do not fall under Tariff Item No. 68 of the First Schedule to the Act, the total investment made by the petitioner on plant and machinery installed in the two units cannot be clubbed together for grant of exemption as contemplated in the notification (Annexure-4). On the other hand, learned Standing Counsel (Central) submitted that the manufacturing of both the items is done in the same premises. They are not two units as claimed by the petitioners. It is a single unit manufacturing both the items.
3. The condition precedent for invoking the authority under the notification (Annexure-4) is that the two commodities manufactured by the petitioner-company in different units must fall under Tariff Item No. 68. Admittedly the two commodities manufactured by the petitioner-company fall under different Tariff Items, i.e., Item No. 1 D and No. 68. The manufacturing is also done by two different units which is evident from the balance-sheet (Annexure-2) produced by the petitioner-company. The value of the ice plant has been separately shown as Rs. 1,43,881/-. The opposite parties cannot, therefore, take the help of the notification for clubbing the capital investment of the plant and machinery installed in the two units for the purpose of exemption. From the proviso to the aforesaid notification it is also evident that even the ice manufactured by the petitioner, though falls under Tariff Item No. 68 of the First Schedule, is exempted from payment of excise duty in case the clearance made by it does not exceed Rs. 30 lakhs in the preceding financial year. The Assistant Collector of Central Excise has held that the clearance value of all excisable goods including Gold Spot, Limca, Kismet and Soda cleared on behalf of the manufacturers of the above products under franchise agreement with M/s. Parle Bottling Co. (Private) Ltd./Parle Exports Pvt. Limited exceeds Rs. 30 lakhs. That means he has included the value of excisable goods cleared by M/s. Parle Bottling Co. (Private) Ltd./Parle Exports Pvt. Ltd. with that of the petitioner in order to arrive at the conclusion that the total excisable goods cleared has exceeded Rs. 30 lakhs in the preceding financial year. This, in our opinion, is not correct in view of our earlier decision in O.J.C. No. 1510/78 disposed of on 9-7-1985. It has also not been found by O.P. No. 1, the Assistant Collector of Central Excise, Rourkela, that the total value of all excisable goods cleared by the petitioner in the preceding financial year had exceeded Rs. 30 lakhs. Similar question also came up before the Allahabad High Court in the case of E. Septon and Company Private Limited v. Superintendent of Central Excise and Anr -1985 (19) E.L.T. 57, and it was held that the total investment made by a company on plant and machinery installed in the two units cannot be iclubbed together for the purpose of exemption.
4. In the result, therefore, this writ petition is allowed and the order of the Assistant Collector, Central Excise, Rourkela, as per Annexure-1 is quashed. The case shall go back to the Assistant Collector who will dispose of the claim of the petitioner according to law keeping in view the observations made above. No costs.
K.P. Mohapatra, J.
5. I agree.