1. The captioned appeal was initially filed as a Revision Application before the Central Government, which under Section 35-P of the Central Excises & Salt Act, 1944, has come as transferred proceedings to this Tribunal, for disposal as if it were an appeal filed before it.
2. The appellants are manufacturers of Sodium Silicate. The appellants claim is that they were entitled to the benefit of Central Excise Notification No. 71/78 dated 1-3-1978. One of the condition laid down in the said notification was that the aggregate value of goods cleared for home consumption during the period 1-4-1977 to 28-2-1978 should not have exceeded Rs. 13.75 lakhs. Only if the manufacturer fulfilled this condition, would he be eligible to the benefit of the notification in the financial year to follow, namely, 1978-79. It is the claim of the appellants that certain goods which were cleared during the period 1-4-1977 to 28-2-1978 were returned by their customers, that they were received back in the factory, that the return of the goods was duly verified by the Central Excise authorities and that they had received the refund of duty on the said goods in terms of Rule 173-L of the Central Excise Rules. If the value of these goods were excluded from the aggregate K value of clearances for home consumption during the said period, the value of the aggregate clearances would be within the prescribed limit of Rs. 13.75 lakhs and, consequently, they would have been entitled to the benefit of the said notification in 1978-79. This claim was rejected by the lower authorities and hence this appeal.
3. During the course of hearing on 14-9-1983, Shri P.N. Menon, Consultant, appearing on behalf of the appellants, submitted that the notification in question did not define 'Home Consumption'. The goods which were initially cleared out of the factory and returned back to the factory as valued at Rs. 9,804.68 ; the first lot valued at Rs. 6,037.50 was received back within the period 1-4-1977 to 28-2-1978. The balance was received back in the factory during the period 1-3-1978 to 31-3-1979. These goods could not be said to have gone into home consumption since they were not consumed within the country. It was as if, on their return back into the factory and the duty paid thereon being refunded, they became non-duty paid. Therefore, the value of these goods should be excluded from the computation of the aggregate value of the goods cleared for home consumption. Another submission was that no sale had taken place since the goods were returned and, therefore their value could not be determined in terms of Explanation-I to the said notification.
4. Shri A.K. Jain, SDR, resisted the appeal on the ground that the goods were initially cleared for home consumption and that their return could not make any difference to this position. They had not been cleared on approval or provisional basis. Even if the value of the goods returned on 22-6-1977 were to be excluded, the aggregate value of goods cleared during the relevant period was in excess of Rs. 13.75 lakhs. He also submitted the that notification did not specifically provide for exclusion of returned goods nor was the sale or otherwise.
5. We have considered the submissions of both sides. The relevant portion of Notification No. 71/78 reads as follows :- "The excisable goods of the description specified in Column (3) of the Table hereto annexed (hereinafter referred to as the "specified goods") and falling under such Item Number of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), as is specified in the corresponding entry in column (2) of the said Table, in respect of the first clearances of such excisable goods for home consumption upto an aggregate value not exceeding rupees five lakhs and cleared on or after the 1st day of April in any financial year, by or on behalf of a manufacturer from one or more factories are exempt from the whole of the duty of excise leviable thereon, subject to the following conditions, namely :- (a) The exemption contained in this notification shall not be applicable to a manufacturer - (i) during the financial year 1978-79, if the aggregate value of the specified goods cleared, if any, by him or on his behalf, for home consumption, from one or more factories, during the period commencing on the 1st day of April, 1977 and ending on the 28th day of February, 197 bad exceeded Rs. 13.75 lakhs; The simple question, therefore, is whether the aggregate value of the specified goods, Sodium Silicate in the present case, cleared by the appellants for home consumption during the period 1-4-1977 to 28-2-1978 was within the limit of Rs. 13.75 lakhs. The appellants contended that the value of the returned goods should be excluded from computation of this aggregate value. Once the goods are cleared for home consumption after observance of the prescribed procedure and payment of duty, the goods should be deemed to have been taken into consuamption. In fact, even goods which are captively consumed are considered as having gone into home consumption; otherwise there would be no warrant for levy of excise duty on captively consumed goods. And the Law does envisage payment of duty on captively consumed goods vide Rules 9 and 49 of the Central Excises Rules read with Section-3 of the Central Excises and Salt Act. Therefore, to say that goods once cleared from the factory for home consumption should be deemed not to have been taken into consumption because they were returned by the customer for one reason or the other, does not, in our opinion, carry conviction. From the scheme of the notification, it is clear that out for certain specified exclusions in terms of Explanation-3, the only exclusion envisaged, by necessary implication, is the value of goods cleared for export. We do not therefore, see any force in the appellants contention that the value of the returned goods should be excluded. In the present case, even if the value of the returned goods were to be excluded, the situation does not improve in favour of the appellants. If, as the SDR has pointed out, the value of goods returned within the period 1-4-1977 to 28-2-1978 were excluded the aggregate value of Sodium Silicate cleared for home consumption during the said period would still be in excess of Rs.13.75 lakhs. This position was admitted in the course of the hearing by Shri Menon. However, his contention was that not only the value of this lot but the balance of the goods which were returned after 28-2-1978 should also be excluded because they were not taken into consumption. As we have said, there is no force in this contention.
6. Shri Menon's submission regarding the value of the goods in terms of Explanation-1 of the notification also loses force in view of our finding that the value of the returned goods could not be excluded.