ANKIT PACKAGING LTD. Vs. CCE

JUDGEMENT

(1.) The South Zonal Bench at Bangalore has referred the following issue to the Larger Bench:

(2.) The above issue came up while considering appeal No. E/1493/98 filed by M/s Ankit Packaging Ltd. The essential facts for considering the issue are that M/s Ankit Packaging Ltd. is a small scale unit engaged in the manufacture of Poly Coated Paper/Plastic Films. Such small scale manufacturers are entitled to exemption from central excise duty under Notification No. 1/93 dated 28.2.93. However that notification also contained a proviso which allowed a small scale unit to opt out of the exemption and to discharge duty on the goods manufactured by it at the normal rates. We extract that proviso below:

(3.) The basic condition for availing the exemption is that the aggregate value of the clearances made by the small scale unit during the preceding financial year should not have exceeded the quantitative limit prescribed under the notification. This limit was Rs.2 crores, prior to financial year 1995 -96. This was increased to Rs. 3 crores in that year M/s Ankit Packaging Ltd.were availing exemption during financial year 1994 -95. In the beginning of the financial year 1995 -96, M/s Ankit Packaging Ltd. cleared some goods on payment of central excise duty. This was because they required some time to compute the aggregate value of the clearances made by them during the financial year 1994 -95, in order to ascertain whether their clearances were within the value limit prescribed for availing the exemption. On 10.4.95 M/s Ankit Packaging Ltd, wrote to the jurisdictional Central Excise authority intimating that they would be clearing the goods in terms of the exemption notification. Central Excise authority objected to this, holding that once they had started paying duty on the goods cleared, they came within the mischief of the aforesaid proviso to Notification No. 1/93, and they were liable to pay duty on all subsequent clearance in the financial year. M/s Ankit Packaging Ltd. contested this finding before the lower authorities submitting that the bar under the proviso applied only to small scale units which opted out of the notification and not to units which had opted in. It was also pointed out that clearance of goods on payment of duty for a few days at the beginning of the financial year cannot be construed as opting out of the benefit of the notification. These submissions failed. Hence the appeal to the Tribunal. The Bangalore Bench has referred the issue to the Larger Bench because it was not noted that conflicting decisions [ (Prabhat Forging Works vs C.C.E., Chandigarh 2002 (139) ELT 720 and C.C.E., Coimbatore vs V.N.K Textiles & paper Mills (P) Ltd. 2002 (49) RLT 938 ] existed on the issue.