NARENDRA ENGINEERING WORKS Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners manufacture at Kolhapur connecting rods for diesel engines and tractors. They also engage in job work by processing forgings supplied to them into connecting rods, of sizes required by the suppliers, recovering in that behalf only labour charges. Their total investment on plant and machinery is Rs. 1,61,000/-; they are, therefore, a small scale industry.

(2.) In 1975 item 68 was introduced into the First Schedule of the Central Excises and Salt Act, 1944. Under the terms thereof all goods not elsewhere specified, manufactured in a factory, subject to some stated exceptions, became liable to excise. At the time of introduction of the said item the rate of the excise payable was 1%, it is now 8%.

(3.) On 18th June, 1977 a notification was issued under the Central Excise Rules whereby goods falling under item 68 cleared for home consumption on or after the first day of April in any financial year by or on behalf of a manufacturer from one or more factories were exempted from the payment of excise duty leviable thereon, provided that the total of the value of capital investment made from time to time on plant and machinery installed in the industrial unit in which the goods were manufactured was not more than Rupees 10 lakhs; that this exemption was not 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 30 lakhs; and that the exemption applied only to the first clearance for home consumption upto a value not exceeding Rupees 30 lakhs during a financial year subsequent to 1977-78. The notification explained that in determining the value of such clearances the value of goods cleared for captive consumption within the factory was not to be taken into account.