S.D. Jha, Member (J)

1. The questions for decision in this appeal to the Tribunal are whether the appellants have exceeded the clearance limit of goods stipulated under Notification No. 176/77-CE, dated 18-6-1977 and whether the demand of duty of Rs. 1,60,382.97 and penalty of Rs. 80,000 from the appellants made by the Collector of Central Excise, Delhi by his Order-in-Original No. 44/1983, date 5-12-1983 is justified.

2. Appellants' factory situated at Jagadhari is engaged in the manufacture of Copper and Copper alloys falling under T.I. 26A of the Central Excise Tariff. They are also engaged in manufacture of Brass Utensils falling under T.I. 68 ibid. Appellants claim that after the introduction of Tariff Item 68 in the C.E. Tariff w.e.f. 1-3-1975, premises manufacturing utensils were segregated and this was within the knowledge of Excise Department. Excise Officers were regularly visiting appellants' factory and keeping a watch on utensil manufacturing section and the section manufacturing articles falling under T.I. 26A. The appellants further claim that they were receiving Gullies from other customers for rolling on job basis and the appellants charged only rolling charges of 40 paise per kg. from them. They also claimed that part of the manufacture is without the aid of power. After the introduction of T.I. 68 and issue of Notification No. 176/77-CE, date 18-6-1977, the Excise authorities required information about the value of appellants' clearances and this the appellants submitted to the authorities. They further claim that the value of their clearances was well within the limit stipulated under Notification No. 176/77-CE. The Assistant Collector of Central Excise issued show cause notice dated 1-10-1980 calling upon them to show cause to the Deputy Collector why not demand of duty be made from them as they were not entitled to benefit of concession under Notification No. 176/77-CE. It appears from the Order-in-Original passed by the learned Collector and the appellants' reply to the show cause notice that this show cause notice was subsequently amended requiring cause being shown to the Collector of Central Excise, New Delhi instead of Deputy Collector, Faridabad. The appellants filed reply dated 5-5-1983 denying the allegations and claiming that they were entitled to benefit of the notification (copy of the amendment proposed in the show cause notice requiring cause to be shown first to Deputy Collector and then to Collector of Central Excise, Delhi have not been filed). After following the usual procedure, the Collector called upon the appellants to pay duty amounting to Rs. 1,60,382.97 for the clearances made between 18-6-1977 to 31-3-1979 on the ground that in terms of Notification No. 176/77-CE, dated 18-6-1977, appellants clearances for the period 1976-77 exceeded the value of Rs. 30 lakhs. The Collector also imposed a penalty of Rs. 80,000 under Rule 173Q of the Rules for contravention of Rules 9A and 174 ibid. Aggrieved the appellants have filed the present appeal to the Tribunal.

3. At the hearing of the appeal, Sh. J.S. Kapil, learned Advocate for the appellants argued that the appellants are a small scale unit registered as such and their total investment on plants and machinery is not more than Rs. 10 lakhs. This part of the appellants' argument is not disputed by the other party. He further argued that prior to 1981, Brass Scrap was not excisable and that the Collector had not taken note of that fact. It was further submitted that the appellant had made 'Karahis' (utensils) without the aid of power and value of such hand-made Karahis would work out nearly to Rs. 5 lakhs and this ought to have been excluded under Notification No. 176/77-CE, dated 18-6-1977. He however admitted that factory in which goods falling under T.I. 26A and T.I. 68 are manufactured is one. He however submitted that in determining the value of clearances only job work value should have been taken into consideration and not the val