The capital investment made by a company on plant and machinery installed in two units cannot be clubbed together for the purpose of exemption under Notification No. 176/77-C.E. dated 18-6-1977, if the two commodities manufactured by the company do not fall under Tariff Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944.

JUDGMENT :

J.K. Mohanty, J. - The petitioner company, M/s. Mamta Drinks and Industries Limited, carries on business at Rourkela and has installed a factory for manufacturing aerated water. The company also manufactures ice in the same factory premises. It is not disputed that aerated water is covered under Tariff Item No. ID of the Central Excise Tariff whereas ice falls under Tariff Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (for short 'the Act'). It is also not disputed that both the items manufactured by the petitioner are classified under two different Tariffs of the First Schedule to the Act. The company submitted classification list No. 6/ID/78 with effect from 18-6-1977 for their excisable goods falling under T.I. ID on 10-2-1978. They incorporated ice against Item No. 5, i.e., under the heading 'particulars of other goods produced or manufactured and intended to be removed by the assessee'. As such, they did not treat ice as excisable. They also cleared the ice produced without payment of duty and without observance of the procedure under Chapter VII of the Central Excise Rules, 1944. The petitioner claimed exemption on the basis of Annexure-4, the Notification dated 18-6-1977 of the Government of India, Department of Revenue and Banking. The relevant portion of the said notification is as follows :-

"In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempt goods falling under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) and cleared for home consumption on or after the first day of April in any financial year, by or on behalf of manufacturer from one or more factories from the whole of the duty of excise leviable thereon, if an officer not below the rank of an Assistant Collector of Central Excise is satisfied that the sum total of the value of the capital investment made from time to time on plant and machinery installed in the industrial unit in which the goods under clearance are manufactured is not more than rupees ten lakhs :

Provided that this exemption shall not be 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 thirty lakhs."

The above claim of the petitioner was rejected by the Assistant Collector, Central Excise, Rourkela as per his order in Annexure-10. He held that the petitioner's contention that ice is not excisable is not tenable inasmuch as under Notification No. 176/77-C.E., dated 18-6-1977 as amended, their capital investment on plant and machinery exceeds ten lakhs. The clearance value of all excisable goods including Gold Spot, Limca, Kismet, Soda cleared on behalf of the manufacturers of the above products under franchise agreement with M/s. Parle Bottling Co. (Private) Ltd./Parle Exports Private Limited exceeds Rs. 30 lakhs. He directed that proper action be initiated under law for breach of the Central Excises and Salt Act, 1944 and the rules made thereunder and separate classification lists from 18-6-1977 and 1-3-1978 must be filed for ice. Against this order the petitioners have come up to this Court with a prayer to quash the order.

2. Learned counsel for the petitioners has contended before us that since the two goods manufactured by the petitioner-company (ice and aerated water) do not fall under Tariff Item No. 68 of the First Schedule to the Act, the total investment made by the petitioner on plant and machinery installed in the two units cannot be clubbed together for grant of exemption as contemplated in the notification (Annexure-4). On the other hand, learned Standing Counsel (Central) submitted that the manufacturing of both the items is done in the same premises. They are not two units as claimed by the petitioners. It is a single unit manufacturing both the items.

3. The condition precedent for invoking the authority under the notifi