COMMISSIONER OF CENTRAL EXCISE, AHMEDABADversusJALARAM WOOD CRAFTS (P) LTD.

       COMl\1'ISSIONER OF CENTRAL EXCISE, AHMEDABAD                                A
                                      v.
                  JALARAM WOOD CRAFTS (P) LTD.

                             MARCH 12, 2003

    [SYED SHAH MOHAMMED QUADRI AND ASHOK BHAN, JJ.]                                B


      Central Excise Rules, 1944:

      Notifica1ion No.217186 dated 2.4.1986-Exemplion under-Assessee an            C
SS! unil emitled to benefit of Notification No.175186 dated 1.3.1986-
Manufacturing final products and inputs for use in such final products-Both,
inputs and final products being specified good.~-Computation of aggregate
value for levy of excise duty-Notice to assessee proposing not lo allow him
benefit ofNotification No.217186 and demanding excise duty as its final products
were cleared underfi1/I exemption-Claim of assessee that as per Explanation        D
lll of Notification No.175186, clearance value of inputs used in manufacture
offinal products not to be taken into account for computing aggregate value-
Held, the point raised in these appeals is squarely covered by Mis. Universal
Electrical Industries' case*-For purposes of computing aggregare value,
both Explanations II and III of Notification No.175186 have to be read together
and clearance value of the inputs will have to be excluded-Though Notification
                                                                                   E
No.2 I 7186 applies to inputs used in manufacture offinal products which are
nol entitled to any exemption under Central Excise Act, that question would
become irrelevant if inputs are entitled to exemption under Notification No.1751
86-However, if under Notification No.175 clearance value of inputs was
already excluded in arriving al aggregate value of Rs.20 lakh and claim for        F
exemption of inputs under Notification No. 217186 relates to different final
products which are exempt under a different Notification, then assessee will
be liable to pay duty in demand.

      Universal Electrical Industries v. C.C.E., (1994) 70 ELT 279 upheld.         G

      Collector of Cemral Excise, New Delhi v. Mis. Universal Electrical
Industries and Anr., (decided on 11.3.2003), relied on.

     CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 2358-2359
of 2000.                                                                           H
                           1047
    1048                   SUPREME COURT REPORTS                  (2003] 2 S.C.R.

A        From the Judgment and Order dated 5.8.1999 of the Central Excise
    Customs, and Gold (Control) Appellate Tribunal, New Delhi in A. No.
    F.R.O.A. 141/99-D, E/A. No. 4559 and 4460/94-D in F.O. Nos. 718-719 of
    1999-D.

           Anup Chaudhary, J. Chandan and Rajiv Shakdhar, for the Appellant.
B
           V. Lakshmikumaran (A.C.) and Alok Yadav for the Respondent.

           The following Order of the Cou1t was delivered :

        SYED SHAH MOHAMMED QUADRI, J. These two appeals relate
C to the same assessee and arise from the common Final Order Nos. 718-719/
  99-D of the Customs, Excise and Gold (Control ) Appellate Tribunal, New
  Delhi (for short, the Tribunal) in Appeal Nos. E/ A 4559/94-D and 4460/94-
  D, dated August 5, 1999.

D         When these appeals came up for admission on March 3, 2000, they
    were directed to be tagged with Civil Appeal Nos. 11441-11442/95. This was
    obviously for the reason that the question which was involved in those appeals
    was pressed into service in these appeals also. Be that as it may, Mr. Anoop
    Chaudhary, the learned senior counsel appearing for the Revenue, opened his ·
    case disputing that these appeals are covered by the decision in Civil Appeals
E   No. 11441-11442/95, (Collector of Central Excise. New Delhi v. Universal
    Electrical Industries and Anr., dated March 11, 2003.

           We may note a few relevant facts of this case.

F       The assessee is manufacturing plywood veneer, panel flush door, panel
  doors, veneer timber board and block boards. It is also manufacturing glue,
  UF resins and wood veneer, which are used as inputs for the manufacture of
  the afore-mentioned final products. Admittedly, the assessee is a SSI Unit.
  Under Notification No, 175/86, dated 1.3.1986, it is entitled to exemption for
  clearance of the goods upto a limit of Rs.20 lakhs. The assessee enjoyed that
G benefit. On February 25, 1992 and on September 23. 1992, the Assistant
  Collector. Central Excise, Division Gandhinagar Vidhyalaya. issued a notice
  to the assessee to show cause as to why the benefit of notification No.217/
  86, dated April 2, 1986, should not be denied to it as its final products were
  cleared under full exemption and why the central excise duty amounting to
H Rs. 93, 147 and Rs. 32,607 should not be demanded. The assessee, in reply,
      COMMN. OF CENT. EXCISE v. JALARAM WOODCRAFTS(P) LTD. [QUADRI, J.] 1049

    stated that as per Explanation-Ill of Notification No.175/86, the clearance         A
    value of inputs that were used in the manufacture of final products, was not
    to be taken into account while computing the aggregate value of the final
    products. In. his order dated December 30, 1992, the Assistant Collector
    noted that the assessee had availed the benefit of Notification No.217 /86 for
    the inputs-glue, UF resin and wood veneer-used for the manufacture of their         B
    final products-plywood, veneer, panel flush door, panel doors, etc. It was
    also noted that the assessee had availed SS! exemption under Notification
    No.175/86 and cleared the goods under full exemption for first clearance of
    Rs.20 lakhs. In regard to the defence of the assessee in reply to the show
    cause notices, it is interesting to notice the following comment of the Assistant
    Collector:                                                                          C
                "The point raised by the assessee in their defence reply regarding
            Explanation-III of the Notification No. 175/85 is not understandable.
            The said explanation is for computing aggregate value of clearances
            of final product for the purpose of Notification No.175/86 which is
            not at all the point of dispute in this case."                              D
          Thus expressing, the Assistant Collector confirmed the demand. On
    appeal to the Collector, Central Excise and Customs (Appeals), by the assessee,
    it was pointed out that the exemption under Notification No. 217/86 for the
    intermediate products manufactured by the assessee, namely, glue, UF resin
    and wood veneer etc. used in the manufacture of final products, namely,             E
    plywood, veneer, panel flush doors etc., is not available to the assessee as the
    final products were exempted under Notification No. 175/86. In regard to the
    defence of the assessee, the Appellate Collector noted.

                "The disputed issue is regarding the availability of the benefit of     F
            the Notification No. 217/86. Hence the appellants reference to
            explanation lII under notification 175/86 is simply not relevant."


-         The assessee carried the matter in further appeals to the Tribunal. By
    the impugned order, the Tribunal allowed the appeals holding that the dispute
    was covered by its earlier order in the case of Universal Electrical Industries     G
    v. C.C.E., (1994) 70 ELT 279.

          In as much as the respondent did not enter appearance inspite of service
    of notice, we requested Mr. V. Lakshmi Kumaran, Advocate, to assist us as
    amicus curiae in this case. We record our appreciation for the valuable service
                                                                                        H
    1050                    SUPREME COURT REPORTS                    [2003] 2 S.C.R.

A he has rendered in putting up the case of the unrepresented respondent to
    assist the Court.

           In the light of the contentions of the learned counsel, after giving our
    anxious consideration, we are of the view that the point raised in these appeals
    is squarely covered by the decision of this Cou1t in C.A.Nos.11441-11442/
B   95, dated March 11, 2003. The assessee is a SS! unit and is entitled to
    exemption under Notification No. 175/86. It is not in dispute that both the
    inputs as well as the final products are specified goods as they have been
    mentioned in the annexure to the notification. For purposes of computing the
    aggregate value, both Explanation II and Explanation III have to be read
C   together and the clearance value of the inputs will have to be excluded. This
    is what the assessee stated in its reply which was not appreciated either by
    the Assistant Collector or the Collector (Appeals ). Even if the claim of
    exemption by the assessee in regard to the inputs is based on Notification No.
    217 /86 and it is not eatitled to the same, it hardly makes any difference as
    the inputs fall within the meaning of 'specified goods' in Notification No.
D   175/86. Therefore, their clearance value ought to have been excluded while
    arriving at the aggregate value for the purposes of Notification No. 175/86.

           It is true that, read by itself, Notification No. 217/86 applies only to
    such inputs which are used in the manufacture of final products which are not
E   entitled to any exemption under the Central Excise Act. 1944. But that question
    would become irrelevant if the inputs are entitled to exemption under
    Notification No. 175/86 itself.

        However, Mr. Chaudhary submitted that it is not clear from the record
  as to whether the same inputs in regard to which exemption under Notification
p No. 217/86 was claimed by the assessee had gone into the manufacture of
  final products which are said to have been cleared upto a limit of Rs. 20
  lakhs. It will suffice to observe that we leave it open to the Excise authorities
  to verify the said fact. If the claim of exemption under Notification No. 217I
  86 is in regard to inputs which have gone into manufacture of the final
  products which were cleared under Notification No. 175/86, there can be no
G further demand of excise duty, even though the assessee claimed exemption
  under Notification No. 217/86. But, if under Notification No.175/86 the
  clearance value of the inputs was already excluded in arriving at the aggregate
  value of Rs. 20 lakhs and claim for exemption of inputs under Notification
  No. 217/86 relates to different final products which are exempt under a
H different Notification, then the assessee will be liable to pay the duty in
       COMMN. OF CENT. EXCISE v. JALARAM WOOD CRAFTS (P) LTD. [QUADRI, J] J051

     demand.                                                                       A
           Accordingly, following the decision in Civil Appeal Nos. 11441-11442/
     95, dated March 11, 2003, we confinn the order of the Tribunal and dismiss
,-   these appeals.

            There shall be no order as to costs.                                   B

     R.P.                                                    Appeals dismissed.




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