GANESH METAL PROCESSING INDUSTRIES Vs. UNION OF INDIA

JUDGEMENT

(1.) The Petitioners in all these petitions under Article 226 of the Constitution are making a common prayer for directing the respondents to give them the benefit of exemption in respect of their re-rolled products falling under Chapter 72 of the Schedule to the Central Excise Tariff Act, 1985, under Notification No. 1/93-C.E., dated 28.9.1993, and/or for quashing the impugned Order No. TS/36/94-TRU, dated 1.3.1994 of the 1st respondent, or in the alternative, for quashing the Notification No. 1/93 itself on the ground of infringement of Article 14 of the Constitution. In W.P. No. 13614/94, a further prayer for quashing the adjudication Order No. 35/94 (C. No. V/72/3/54/94 VAL), dated 15.7.1994 made by the 3rd respondent has been made; whereas in W.P. No. 9663/94, an application (W.P. M.P. No. 15660/94) has been filed on 10.7.1994 with a prayer for permission to amend the prayer clause of the main petition on the basis of subsequent events, so as to include an additional prayer for quashing the adjudication order No. 30/94, passed on 30.5.1994 by the 3rd respondent during the pendency of the petition.

(2.) Facts are not very much in dispute. The petitioners in all the petitions are small scale units, engaged in the business of manufacturing re-rolled products falling under Chapter 72 of the Schedule to the Central Excise Tariff Act, 1985. These products were exempt from duty by virtue of SSI exemption Notification No. 202/88, dated 20.5.1988, provided no credit of the duty paid on the inputs was taken under Rule 56A or Rule 57A of the Central Excise Rules, 1944, (in short, the "Rules"). This Notification No. 202/88 was issued under Rule 8(1) of the Rules. The petitioners used to take credits under the Modvat Scheme (under Rule 56A or Rule 57A) for the duty paid on their inputs and to debit the same for payment of duty on their final products. This is how they were not getting or claiming exemption from payment of duty on their inputs under the Notification No. 202/88, which was superseded by subsequent SSI exemption Notification No. 1/93, dated 28.2.1993. It was provided in paragraph 3 of the later notification that : "3. Nothing contained in this notification shall apply, - (a) if the aggregate value of clearances of all excisable goods for home consumption, - (i) by a manufacturer, from one or more factories, or (ii) from any factory, by one or more manufacturers, had exceeded rupees two hundred lakhs in the preceding financial year, and (b) to a factory registered with Directorate General of Technical Development under the provisions of the Industries (Development and Regulation) Act, 1951 (65 of 1951)." Explanation II added to the said notification is also relevant. In runs as follows : "Explanation-II.-For the purpose of computing the aggregate value of clearances under this notification, the clearances of any excisable goods, which are chargeable to nil rate of duty or, which are exempted from the whole of duty of excise leviable thereon by any other notification (not being a notification where exemption from the whole of duty of excise leviable thereon is granted based upon the value or quantity of clearances made in a financial year) issued under sub-rule (1) of Rule 8 of the said Rules or sub-section (1) of Section 5A of the said Act, shall not be taken into account." To sum up, the exemption under the subsequent Notification No. 1/93 is not available to a manufacturer whose aggregate value of clearances of all excisable goods for home consumption exceeded rupees two hundred lakhs in the preceding financial year. And for the purpose of computing the aggregate value of clearances under the notification, it is provided that "the clearances of any excisable goods, which are chargeable to nil rate of duty or, which are exempted from the whole of duty of excise leviable thereon by any other notification....issued under sub-rule (1) of Rule 8 of the said Rules or sub-section (1) of Section 5A of the said Act, shall not be taken into account." Now, therefore, the dispute is about the manner of computing the aggregate value of clearances under the Notification No. 1/1993. It is not in dispute that the earlier Notification No. 202/88-CE. was issued under Rule 8(1) of the said Rules and that it gave total exemption from payment of duty on final products falling within Chapter 72 of the Schedule to the Central Excise Tariff Act. It is also not in dispute that the final products of the petitioners fell within Chapter 72 of the Schedule to the Act and that but for their opting for modvat scheme, they would have been entitled to claim exemption under the Notification No. 202/88 in respect of their final products, falling under Chapter 72 of the Schedule to the Act. According to the Department, as the petitioners has availed of the modvat scheme and given up their claim for exemption under the earlier Notification No. 202/88, they cannot be allowed exemption under the Notification No. 1/93 by computing the aggregate value after excluding from consideration their clearances of such final products in respect of which credits were taken under the modvat scheme. On the contrary, according to the petitioners, they were entitled to deduct the value of clearances in respect of which credits of the duty paid on the inputs were taken under Rule 56A or 57A. In the alternative, their case was that the Notification No. 1/93 itself was liable to be quashed, as it made unreasonable classification of manufacturers; one of those who availed of the benefit of exemption and second of those who availed of the modvat scheme under the earlier Notification No. 202/88.

(3.) Before we proceed to consider the case on merits, we propose to dispose of the objection about maintainability of the petition on the ground of availability of an alternative remedy of appeal, raised on behalf of the respondents.