Clearances of inputs for further manufacture of specified goods within the factory of production of inputs should be taken into account for calculating the aggregate value of clearances under Notification No. 80/80-C. E. dated 19th June, 1980, unless the inputs and finished products fall under the same item of the First Schedule to the Central Excises and Salt Act, 1944.

Pathak, C. J.—This appeal is directed against the judgment and order of the Customs, Excise and Gold Control Appellate Tribunal on the question whether the appellant is disentitled to the concession granted by Notification No. 80/80-C. E dated 19th June, 1980 to small scale manufacturers in the matter of Central Excise duty.

2. The appellant is a private limited company. It has its registered office and factory in the State of Gujarat. It is engaged in the business of manufacturing and selling electric motors,

3. In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government issued Notification No. 80/80-C. E. dated 19th June, 1980, which, as it stood during the relevant period, exempted from duty excisable goods falling under certain Item Numbers of the First Schedule to the Central Excises and Salt Act, 1944 as specified in the Table annexed to the Notification and of the particular description set forth in that Table. But paragraph 2 of the Notification declared: "Nothing contained in this notification shall apply to a manufacturer,— (i) if the aggregate value of clearances of all excisable goods by him or on his behalf, for home consumption, from one or more factories, during the preceding financial year, had exceeded rupees twenty lakhs, (ii) if the aggregate value of clearances of the specified goods by him or on his behalf, for home consumption, from one or more factories during the preceding financial year, had exceeded rupees fifteen lakhs."

4. The appellant availed of exemption under the Notification for the periods 1 April, 19«0 to 30 November, 1980 and 1 April, 1981 to 30 September, 1981 claiming that the clearances during the preceding years were confined to the stipulated limit. The Excise Authority, in the belief that the appellant had wrongly availed of exemption as its clearances exceeded the limit of 15 lakhs, issued notice to the appellant to show cause against an assessment of the differential duty for those periods. The appellant attempted to show cause, but the Assistant Collector of Excise did not accept the case set up by the appellant and imposed the demand. On appeal the Collector of Central Excise (Appeals) set aside the demand for the period 1 April, 1980 to 30 November, 1980, but he upheld the demand for the period t April 1981, to 30 September, 1981. In the further appeal before the Customs, Excise and Gold Control Appellate Tribunal the entire question was whether the appellant had exceeded the limit of Rs. 15 lakhs when effecting clearances during the financial year 1980-81 and was, therefore, not entitled to exemption for the period 1 April, 1981 to 30 September, 1981.

5. For the financial year 1 April, 1980 to 31 March, 1981 the appellant had disclosed a clearance value of Rs, 13,43,443.55 on account of electric motors for home consumption and a clearance value of Rs. 6,51,138,50 on account of electric motors “for captive consumption" in the manufacture of monoblock pumps. It was contended by the appellant that the electric motors used for making monoblock pumps could not be taken into consideration when calculating the clearances eligible under the Notification. According to the appellant the captive consumption did not amount to clearance. The claim was disputed by the Department, which relied on Explanation V to the aforesaid Notification dated 19 June, 1980. The Explanation declared: "Explanation F—Where any specified goods (hereinafter referred to as inputs) are used for further manufacture of specified goods (hereinafter referred to as finished goods) within the factory of production of inputs and where such inputs and finished goods fall under the same item of the said First Schedule to the said Act, the clearances of such inputs for such use shall not be taken into account for the purposes of calculating the aggregate value of clearances under this notification,"

6. The Appellate Tribunal observed that in terms of the Explanat