- (1.) The appellant Addison & Company Ltd. manufactures cutting tools which fall under Tariff Item 51A. The cutting tools manufactured by Addison & Company were not exigible to duty before 1-3-l974. There is no dispute that they were manufacturing cutting tools even before this date. A Notification was issued by Finance (Revenue) Department of Government of India, No. 198/76-C.E., dated 16-6-1976 by which exemption was granted to the extent of 25% of the excise duty on excess clearance of certain specified excisable goods. The excess clearances had to be calculated with reference to the base clearance to be determined in respect of each manufacturer in the manner prescribed in the Notification.
(2.) The relevant portion of the Notification is as under : (2) After comparing the clearances of specified goods under sub-paragraph (1), the base period and base clearances, in relation to a factory, shall be determind as under : (a) Where the specified goods were or are cleared from a factory for the first time on or after the 1st day of April 1976, the base period shall be the year 1975-76, and the base clearances shall be nil; (b) where the specified goods were cleared from a factory for the first time on or after the 31st day of April 1973, but not later than the 31st day of March 1976, the base period shall be the three financial years, namely, 1973-74, 1974-75 and 1975-76 and the base clearances shall be the one-third of the aggregate of the clearances of such goods during such base period; (c) where the specified goods were cleared from the factory for the first time earlier than 1st day of April 1973, the base period shall be the year in which the aggregate of the clearances of such goods during any of the financial years 1973-74, 1974-75 and 1975-76 was the highest and the clearance during such base period shall be the base clearances.
(3.) Initially the excise authority was of the view that the base clearances will be calculated on the basis of Clause (b) of Paragraph (2) of the Notification. The appellant was informed accordingly. But later on the excise authorities changed their view and a show cause notice was issued to the assessee and after hearing him it was decided to calculate the base clearances in terms of Clause (c) of Paragraph (2).;