JUDGMENT

K. Venkataswami, J.-This appeal is preferred against the order of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (hereinafter referred to as the CEGAT) dated 27-7-87.

2. The short point that arises for our consideration in this appeal is whether the appellant was right in treating the respondents as manufacturers of agarbatti, amlapodi and dhup etc. even though they were manufactured in various premises of the household ladies outside the factory of the respondents.

3. Briefly the facts are as follows :

During the year 1980-81 the respondents were manufacturers of goods falling under erstwhile Tariff Item 14F of the Central Excise Tariff under a Central Excise Licence obtained for the purpose. The total clearances of such goods during the said year amounted to Rs. 14,88,268.00. In addition they were also manufacturing goods falling under Tariff Item 68 in their own factory and were availing of the exemption from duty and licencing control under Notification No. 105/80-CE dated 19.6.80. The value of such goods during the relevant year manufactured amounted to Rs. 3,21,605.00. Apart from the above two items, respondents were getting agarbatti, amlapodi and dhup etc. falling under Tariff Item 68 manufactured on their behalf without the aid of power in the premises, other than their factory premises. The total of such goods manufactured from outside during the relevant year amounted to Rs. 26,754.00.

4. In the classification list No.1/81 dated 22.6.81 effective from 13.4.1981 filed under Tariff Item 14F the respondents claimed exemption for the first clearance of Rs. 7.5 lakhs under Notification No. 80/80-CE dated 19.6.80 for the year 1981-82. As the value of total clearances of goods falling under 14F and those manufactured from outside the factory on their bahalf without the aid of power as mentioned above during the previous year namely 1980-81 exceeded Rs. 20 lakhs, the Superintendent of Central Excise issued a Show Cause Notice on 29.5.81 calling upon the respondents to explain why the exemption claimed by them under Notification No. 80/80-CE in respect of Tariff Item 14F goods should not be disallowed. After considering the explanation, the Assistant Collector of Central Excise, Ahmedabad by order dated 5.3.82 withdrew the above Show Cause Notice on the ground that the clearances of all excisable goods did not exceed Rs. 20 lakhs in the previous year namely 1980-81. This view was taken on the footing that the value of agarbatti, amlapodi and dhup etc. manufactured on behalf of the respondents in premises other than their factory premises were not to be included in the value of total clearances.

5. That order of the Assistant Collector was taken up for review by the Collector of Central Excise, Baroda under Section 35A of the Central Excises and Salt Act and a notice dated 5.8.82 proposing to set aside the Assistant Collector Order was given. After considering the reply to the Show Cause Notice, the Collector set aside the order of the Assistant Collector holding inter alia that the total clearance of goods falling under Item 14F and the goods falling under Tariff Item 68 including those manufactured from outside the factory exceeded Rs.20 lakhs and consequently the respondents were not entitle to exemption from duty in the respect of first clearance of Rs. 7.5 lakhs of the goods falling under Tariff Item 14F during the year 1981-82. Aggrieved by that, the respondents preferred an appeal to the CEGAT and the CEGAT after considering the submissions placed before it by the Departmental Representative and the counsel for the assessee and after verifying the records came to the conclusion that the decision reached by the Collector while reviewing the order of the Assistant Collector was not correct and, therefore, set aside the Collector s order and restored the order of the Assistant Collector.

6. Aggrived by that the present appeal has been filed by the revenue.

The learned counsel appearing f