Jyoti Balasundaram, Member (J)

1. The issue for determination in the above appeal is the eligibility of aerated waters manufactured by the appellants to the benefit of exemption in terms of Notification 175/86 dated 1-3-1986.

2. The appellants are the manufacturers of aerated waters namely soda and flavour sweetened drinks falling under Heading Nos. 22.01 and 22.02 respectively of the Central Excise Tariff Act, 1985. The Government of India issued Notification No. 175/86-CE on 1-3-1986 (hereinafter referred to as "the said notification") giving certain exemptions to small scale industry based on value of their clearances and the aerated waters were covered under the said exemption. The appellant company was originally registered as a small scale unit with the Director of Industries and Mines, Government of Goa, Daman Diu vide Registration No. DI/Goa/491/70 dated 19-1-1970. As per this registration, the value of plant and machinery as per the norms fixed by the Directorate of Industries and Mines was not to exceed Rs. 7.5 lakhs. Subsequently, this limit of Rs. 7.5 lakhs was increased to Rs. 10 lakhs in 1975 and to Rs. 20 lakhs in 1980. When the value limit of plant and machinery of the appellant company exceeded the prescribed value limit of Rs. 20 lakhs, the appellant company applied to DGTD for registration as a medium scale unit. This registration was given to the appellant company on 19-1-1984. Some time in March 1985, the value limit for plant and machinery for SSI units was raised from Rs. 20 lakhs to Rs. 35 lakhs. Although the plant and machinery of the appellant company fell within the value limit of Rs. 35 lakhs in March 1985, the appellant company did not feel it necessary to apply for cancellation as medium scale unit and re-registration to the Directorate of Industries and Mines as SSI Unit, as no additional benefit accrued to the company on this account. Consequent on issue of Notification 175/86-C.E., dated 1-3-1986 a condition was laid down in the said notification as per para 4 thereof that the exemption contained in this notification shall be applicable only to a factory which is an undertaking registered with the Director of Industries. Therefore, in order to avail the benefit of this notification, it became necessary for the appellant company to get their registration with DGTD cancelled and to apply for re-registration with the Director of Industries and Mines, Goa. Accordingly, the appellant company requested the DGTD to cancel their registration as medium scale unit, as per their letter No. GB/53/1261 dated 10-3-1986. Simultaneously, a copy of this letter was endorsed to the Directorate of Industries and Mines, Goa stating that in view of this cancellation, the appellants' original registration vide No. DI/Goa/491/70 dated 19-1-1970 stands valid. When the appellant company approached the Directorate of Industries and Mines, Goa for re-registration as small scale industry unit, they were informed that their original registration dated 19-1-1970 had not been cancelled and still stands valid. Subsequently, the appellants received a communication No. Food/2 (221)/83/1722 dated 12-9-1986 cancelling the registration as medium scale unit. Thereafter, after verification, the Directorate of Industries and Mines, Goa issued Registration Certificate No. D1/REG/491 /PMT/SSI dated 5-11-1986, effective from 19-1-1970.

3. Soon after the 1985-86 budget, the appellants filed a classification list No. C-40/85-86 effective from 1-3-1986 in view of the changes in the tariff classification and changes in the 1986 budget, under the provisions of Rule 173B of the Central Excise Rules 1944. In this classification list the appellant company did not claim the benefit of exemption Notification No. 175/86-C.E., dated 1-3-1986 as the appellants had already crossed a turnover of Rs. 75 lakhs during 1985-86 upto 28th February 1986. However, since the appellants were entitled to exemption under the said notification with effect from