Harish Chander, Member (J)

1. Collector of Central Excise, Pune, has filed an appeal being aggrieved from order-in-appeal No. M-1437/PN-96/84, dated 25.6.1984 passed by the Collector of Central Excise (Appeals), Bombay.

2. Briefly the facts of the case are that the respondent is manufacturer of filters and filter elements falling under Tariff Item 68 of the Central Excise Tariff. In addition, the respondent is also carrying on job work. The respondent was availing of the benefit of notification No.105/80 dated 19th June, 1980 for the year 1981-82 on the ground that value of the clearances during the preceding financial year i.e. 1st April, 1980 to 31st March, 1981 were well below the limit of Rs. 30,00,000/- (rupees thirty lacs). The Superintendent of Central Excise, Pune Range I, Pune IV Division, observed that if the cost of raw material is added to job work charges charged by M/s. Hiper, from the customers and if this is added to the value of clearances of Tariff Item 68 goods manufactured and cleared by the party, the value of total clearances exceeded Rs. 30,00,000/- during the period from 1st April,1980 to 31st March, 1981. The Range Superintendent issued the following show cause notices desiring the respondent to show cause as to why the amount demanded from them should not be recovered under Section 11A of the Central Excise Rules, 1944:-

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3. The assessee replied to the show cause notices vide their letters dated 23.10.1981, 5.4.1982 and 30.8.1982 and stated that the clearances during the financial year 1979-80 were at Rs. 24,70,760.91 as the assessee was entitled to exemption under notification No. 120/75 dated 30.4.1975 and was paying duty on the basis of invoice value and had also referred to Government of India's letter No. 350/66/79 dated 22.6.1979 in which it was clarified that in cases where manufacturers had opted for assessment under notification No. 120/75, the expression "value" shall mean the invoice price as set out in the said notification and as such, the cost of raw material supplied by the customers could not be taken into account for computing the value of clearances for home consumption for the purpose of notification No. 105/80 and the value of clearances without taking into account the cost of raw material supplied by the customers for the purpose of job work during the financial year 1980-81 comes to Rs. 27,64,059.37 only. It was also contended that the respondent was also manufacturing panel/air handling filter falling under Tariff Item 68 in their factory without the aid of power and these were exempt from duty under notification No. 179/77 dated 18th June, 1977 and, therefore, in terms of explanation II of notification No. 105/80, the value of clearances of these filters cannot be taken into account for computing the value of clearances for the purpose of notification No. 105/80 and the value of clearances during the year 1980-81 was of the order of Rs. 2,58,856.50.

4. The learned Assistant Collector took the view that in Notifications No. 89/79 and 105/80 exemption is to be computed with reference to the value of clearances and the value of clearances would be the value as ascertainable under Section 4 of the Central Excises and Salt Act, 1944, and as such, the invoice value would be irrelevant. As regards the applicability of Notification No. 119/75, he was of the view that the purpose and scope of the notification was entirely different. It restricted the value to the extent of job charges for that limited purpose of assessment, but it does not say that the value of the said goods would be held as such for all purposes and as regards the manufacture of panel/air handling filter under Tariff Item 68 in their factory without the aid of power, and as per respondent's version these were exempted from duty under Notification No. 179/77 dated 18.6.1977. He had further observed that since the assessee had not claimed exemption in their classification list at the relevant time, this issue could n