D.C. Mandal, Member (T)

1. The facts of the case are that the appellants M/s. Khambhatwala are the manufacturers of goods falling under Item 14F of the Central Excise Tariff under a Central Excise licence obtained for the purpose. The total clearance of the said goods during the year 1980-81 amounted to Rs. 14,88,268.00. In addition, they were also manufacturing goods falling under Tariff Item 68 in their factory and were availing of the exemption from duty and licensing control under Notification No. 105/80-C.E. , dated 19-6-1980 by virtue of the plant and machinery being less than Rs. 10 lakhs and value of clearance in respect of the goods falling under Item 68 being less than 80% of the exemption limit. Value of the goods falling under Tariff Item 68 cleared in 1980-81 amounted to Rs. 3,21,605.00. Besides, they were getting Agarbatti, amlapodi and dhup etc. falling under T.I. 68 manufactured on their behalf without the aid of power in the premises, other than their factory premises, and the total of such goods manufactured from outside during the year 1980-81 was to the extent of Rs. 26,25,754.00. In the classification list No. 1/81, dated 22-6-1981 effective from 13-4-1981 filed under T.I. 14F the appellants claimed exemption for the first clearance of Rs. 7.5 lakhs under Notification No. 80/80-C.E., dated 19-6-1980 for the year 1981-82. As value of total clearance of goods falling under Item 14F and those manufactured from outside the factory on their behalf without the aid of power during 1980-81 exceeded Rs. 20 lakhs, the Superintendent of Central Excise issued a show cause notice on 29-5-1981 asking them to explain why the exemption claimed by them under Notification No. 80/80-C.E. in respect of T.I. 14F goods should not be disallowed. The Assistant Collector of Central Excise, Ahmedabad, Div. V, vide his order No. MP/5/82, dated 5-3-1982, withdrew the above show cause notice on the ground that the clearance of all excisable goods did not exceed Rs. 20 lakhs in 1980-81 as the value of the agarbatti etc. manufactured on their behalf in premises other than their factory premises were not to be included in the value of total clearance. The order of the Assistant Collector was reviewed by the Collector of Central Excise, Baroda under Section 35-A(2) of the Central Excises and Salt Act and a notice dated 5-8-1982 proposing to set aside the Assistant Collector's order on the ground that the same was not correct, legal and proper as the Assistant Collector did not correctly interpret Sub-clause (ii) of Clause (2) of Notification No. 80/80-C.E., dated 19-6-1980 with regard to factories. After considering the reply to show cause notice, the Collector set aside the order of the Assistant Collector holding that the word "factory" used in para 2(ii) of the Notification 80/80-C.E. should be construed as a "factory" as defined in Section 2(e) of the Central Excises and Salt Act and that the appellants were the manufacturers in respect of the agarbattis etc. manufactured in the premises of house-hold ladies on behalf of the appellants and without the aid of power and the value of the Said goods falling under T.I. 68 should be added to the value of the goods cleared under T.I. 14F during 1980-81 for the purpose of total clearance value of Rs. 20 lakhs under Notification No. 80/80-C.E., dated 19-6-1980. As the total value of clearances of goods falling under Item 14F and the goods falling under T.I. 68 including those manufactured from outside their factory exceeded Rs. 20 lakhs, the Collector held that the appellants were not entitled to exemption from duty in respect of first clearance of Rs. 7.5 lakhs of the goods falling under Tariff Item 14F during 1981-82. Collector, therefore, directed the appellants to pay duty on cosmetics and toilet preparations falling under T.I. 14F as demanded by the Superintendent of Central Excise in his show cause notice dated 29-5-1981. The present appeal is against the said review order of the Co