G. Sankaran, Sr. Vice-President

1. This appeal is against Order-in-Original No. 25/88-C.E., dated 26-9-1988 passed by the Collector of Central Excise, Jaipur.

2. The facts of the case, briefly stated, are that M/s. Kharia Cement Works (hereinafter called the appellants), a division of M/s. Lohia Engineering Works Private Ltd., Kanpur, have a factory at Kanpur, manufacturing machines and a factory in Jodhpur District, manufacturing cement. Based on certain investigations, the Collector issued a show cause notice to the appellants alleging that since the aggregate value of clearances of all excisable goods (save for certain exclusions) manufactured and cleared by the factories at Kharia and Kanpur during the financial years 1984-85 and 1985-86 had exceeded the prescribed ceiling of Rs. 1.5 crores, they were not entitled to the benefit of duty exemption under Central Excise Notification No. 175/86, dated 1-3-1986. It was further alleged that since the Kanpur unit had, during 1987-88, availed itself of MOD-VAT credit of duty paid on inputs, the Kharia cement unit was not entitled to full exemption from duty on first clearances upto Rs. 15 lakhs under Clause (1)(a)(ii) of Notificati