Holding

The respondent is not entitled to exemption because both goods are specified goods and fall under paragraph 2(i), which disqualifies them once the Rs 15 lakhs limit is exceeded.

Summary

The respondent, a manufacturer of trailers and steel furniture, sought a refund of excise duty on the ground that the aggregate value of clearances of both items in the preceding financial year was below Rs 20 lakhs, invoking paragraph 2(ii) of Notification No. 80/80. The Assistant Collector rejected the claim because the aggregate value exceeded Rs 15 lakhs, the limit under paragraph 2(i) for specified goods. The Appellate Collector and the Tribunal reversed that decision, holding that paragraph 2(ii) applied. On appeal, the Supreme Court held that both items are "specified goods" and therefore fall within paragraph 2(i); since the Rs 15 lakhs limit was exceeded, the exemption under paragraph 2(ii) could not be invoked. Consequently, the appeal was allowed and the refund claim dismissed.

Issues considered

Whether paragraph 2(ii) of Notification No. 80/80 can be invoked for exemption when the goods involved are "specified goods" whose aggregate clearance value exceeds Rs 15 lakhs but is below Rs 20 lakhs.
Whether the provisions of paragraph 2(i) and 2(ii) of the Notification are to be read together or operate independently.
How the terms "specified goods" and "excisable goods" should be interpreted for the purpose of granting exemption.

Legislation cited

Central Excises and Salt Act, 1944

Subjects

excise dutyexemptionspecified goodsaggregate valueNotification interpretationCentral Exciserefundtariff items

Judgment

I

\f
COLLECTOR OF CENTRAL EXCISE, MADRAS A
v.
MIS. ARESON AND COMPANY

MARCH 20, 1997

[AM. AHMADI, 01. AND S.P. KURDUKAR, J.) · B

Ce11tral Excises a11d Salt Act, 1944-S-5-A, Items 34(iii) and 40/Notifica-
tio11 No. 71178-C.E. dt. 1.3.1978 as amended by Notificati01i No. 80/80 C.E.
dt. 19.6.1980-Clause 2( 1)(ii)--Eligibility for exemption---Assessee claiming
exemption under para 2(ii) of the Notification as the aggregate value of C
clearance of both the excisable items did not exceed Rs. 20 lakhs duri11g the
previous fi11ancial year as set out i11 the said paragraph-field: Both the goods
bei11g 'specified goods', the assessee's case would be covered by paragraph
2(i}-Value of one of the items exceeding maximum limit of Rs. 15 lak/is as
set out i11 para 2(1), the assessee is not entitled for exemption.
D
The respondent nsed to manufacture Trailers and Steel Furniture
liable to payment of excise duty under Tariff item No. 34(iii) and 40 of the
Central Excises and Salt Act, 1944. He claimed refund of the duty paid
during the period from April 1, 1980 to September 30, 1980 claiming
exemption on the basis of paragraph 2(ii) of the Notification dated June E
' 19, 1980 on the ground that the aggregate value of clearances of both the
excisable items did not exceed Rs. 20 lakhs during the previous financial
year, as set out in the said paragraph. The Assistant Collector rejected the
claim for refund holding that since the maximum limit of Rs. 15 lakhs set
out in paragraph 2(i) was crossed in the previous year, there was no
question of granting refund to the assessee. On appeal, the Appellate F
Collector reversed the view of the Assistant Collector and held that as the
aggregate value did not exceed Rs. 20 lakhs, the assessee was entitled to
•. the benefit of exemption under the aforemention~d Notification. The
·Tribunal also affirmed this view. Revenue filed the pn!lient appeal against
the order of the Tribunal. G
Dismissing the appeal, this Court

HELD : 1. The respondent is not entitled for the exemption claimed
under paragraph 2(ii) of the Notification as both the goods are "specified
goods" and fall within paragraph 2(i). Paragraph 2(i) speaks of aggregate H
111
112 SUPREME COURT REPORTS [1997] 3 S.C.R.

A value of clearances of "each serial number of the specified goods" whereas
paragraph 2(ii) speaks of "excisable goods" falling under more than one
item. It is thus that clauses (i) is confined to 'specified goods' whereas
clause (ii) refers to "excisable goods". All specified goods may be excisable
too, but if clause (ii) is read as independent of clause (i) it would create
B an anomalous situation, in that, a manufacturer who is not eligible for
exemption under clause (i) as the aggregate value exceeds Rs. 15 Iakhs can
still hop on to clause (ii) and contend that since aggregate value of the
specified goods which are excisable does not exceed Rs. 20 lakhs, he would
still.be entitled to exemption. Such an interpretation would render clause
(i) redundant. As both the goods fall within the expression "specified
C goods", the case would be covered by clause (i) and not clause (ii). There-
fore the orders of the authorities below holding that the case falls under
clause (ii) are set aside. [113-F-G; 114-D-F]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4171 of
1986. ,.,
D
From the Judgment and Order dated 8.7.86 of the Customs Excise
and Gold (Control) Appellate Tribunal, New Delhi in A. No.
ED/SB(T)/1079/81-BI Order No. 416 of 1986-BI.

M.S. Usgaonkar, Additional Solicitor General, (Y.P. Mahajan,
E Hemant Sharma for Ms. Sushma Suri for the Appellant.

K. Ram Kumar, Ms. Asha Nair, Y.S. Rao and C. Balasubramaniam
·-
for the Respondent.

The Judgment of the Court was delivered by
F
AHMADI, CJI. This appeal by the Collector Central Excise, Madras,
is directed against the judgment and order of the Customs, Excise and
Gold (Control) Appellate Tribunal ('the Tribunal' for short) July 8, 1986,
whereby it affirmed the order dated August 1, 1981 of the Appellant
G Collector of Central Excise, Madras granting refund of excise duty to the
respondent -assessee in reversal of the order passed by the Assistant -Col-
-
lector of Central Excise, Tirunelveli on February 27, 1981. Briefly stated fill
the facts are as under; ~
The respondent manufactured Trailers and Steel Furniture liable to
H payment of excise duty under Tariff Item No. 34(iii) and Tariff Item No.
•
COLLECTOR OF CENTRAL EXCISE v. ARESON AND CO. [AHMADI, CJ.] 113

40 respectively. The respondent was clearing the goods after payment of A
duty without claiming exemption under Notification dated March 1, 1978
as amended subsequently by Notification No. 80/80 dated June 19, 1980.
Paragraph 2 of the said Notification which is relevant for our purpose reads
thus:

"(2) Nothing contained in this Notification shall apply to a B
manufacturer -

(i) if the aggregate value of clearances of each serial no.
of the specified goods, if any by him or on his behalf
for home consumption from one or more factories, C
during the preceding financial year, had exceeded
rupees fifteen lakhs.

(ii) who manufactures excisable goods falling under more
than one Item number of the said first schedule and the
aggregate value of clearances of all excisable goods by D
him or on his behalf for home consumption, from one
or more factories, during the preceding financial year,
had exceeded rupees twenty lakhs."

The respondent claimed refund of duty paid during the period from April, E
1, 1980 to September 30, 1980 amounting to Rs. 65,285.68 on the plea that
the aggregate value of the clearances of both the excisable items did not
excee<;I Rs. 20 lakhs during the preVious financial year. The Assistant
Collectbr found that during the year ' 1979-80, the assessee had cleared
Trailers worth Rs. 19 ,32,960 and Steel Furniture worth Rs. 1032 aggregat-
ing Rs. 19,33,992 i.e., less than Rs. 20 lakhs. Since the aggregate value F
exceeded Rs. 15 lakhs, in view of the proviso to paragraph 2(i) of the
Notification, the Assistant Collector held that the assessee was not eligible
for exemption and rejected the claim for refund. The assessee preferred
an appeal. The Appellate Collector reversed the view of the Assistant
Collector and held that as the aggregate value did not exceed Rs. 20 lakhs,
the assessee was entitled to the benefit of exemption under the afore-men- G
tioned Notification and ordered refund. The Tribunal affirmed this view in
the Revenue's appeal to that body. Hence the appeal.

Paragraph 1 of the Notification refers tospecified goods i.e. goods
specified in column 3 of the table annexed to the Notification. Paragraph H
114 SUPREME COURT REPORTS [1997] 3 S.C.R.

A 2 extracted earlier sets out the conditions for the grant of the exemption.
Both the Trailers and Steel Furniture being specified goods, the assessee
contends that as the value of the Trailers and the Steel furniture did not
exceed Rs: 2-0 lakhs, sub-paragraph (ii) of paragraph 2 of the Notification
was attracted and hence he was entitled for refund. The Revenue's con-
B tention is that since the maximum limit of Rs. 15 lakhs set out in sub-para-
graph (i) o( paragraph 2 was crossed in the previous year, there was no
question of granting refund to the assessee. It was contended before he
Tribunal that sub-paragraphs (i) and (ii) had to be read together but the
Tribunal felt that even if they were so read, it is clear that sub-paragraph
(i) fixes the limit of Rs. 15 lakhs for one single item of specified goods
C while sub-paragraph (ii) fixes the limit of Rs. 20 lakhs where the clearance
is for both specified and unspecified goods. This is the controversy.

Paragraph 2(i) speaks of aggregate value of clearances of 'each serial
number of the specified goods' whereas paragraph 2(ii) speaks of 'excisable
goods' falling under more than one item. It is thus clear that clause (i) is
D confined to 'specified goods' whereas clause (ii) refers to 'excisable goods'.
Now all specified goods may be excisable too, but if one were to read clause
(ii) as independent of clause (i) it would create an anomalous situation,
in that, a manufacturer who is not eligible for exemption under clause (i)
as the aggregate value exceeds Rs. 15 lakhs can still hop· on to clause (ii)
E and contend that since the aggregate value of the specified goods which
are excisable does not exceed Rs. 20 lakhs, he would still be entitled to --...
exemption. Such an interpretation would render clause (i) redundant. We
are, therefore, of. the opinion that if the. goods, i.e. all items fall within the
expression 'specified goods' the case would be covered by clause (i), as in
the present case, and not clause (ii).
F
Accordingly, the appeal is allowed and the impugned orders of the
authorities below holding that the case falls in clause (ii) are set aside .
.There will be no order as to costs.

HK Appeal allowed.