SATISH CHANDRA,J. - (1.) PETITIONER No. 1, the sale propreieitor of the firm M/s. T. M. Industries, Varanasi manufacturers aluminium conductors and cables. The firm was registered under the Small Scale Industries Scheme because its initial investment was below Rs. 7,50,000/-. On 1st June, 1970, the Central Government issued a notification under the Central Excise Act' 1944, laying down 4% advalorem excise duty on winding wires made of alumi­nium and 12% on all electric wires and cables, in cases where ' an officer not below the rank of Assistant Collector of Central Excise is satisfied that the capital investment on plant and machinery only installed therein, as on the date of the initial installation, is not more than 7,50,000/-. On 2-8-1970, the peti­tioner addressed a letter to the Assistant Collector, Varanasi, that petitioner's initial investment being much below Rs. 7,50,000/-, he was liable to pay duty at 4% and 12% ad valorem only under the notification dated 1-4-1970. He in order to satisfy the Assistant Collector, sent a certificate from a Chartered Accountant to the effect that the petitioner's initial investment was much below Rs. 7,50,000/-. On 4-11-1970, the Assistant Collector, Central Excise, replied that the petitioner should send a certificate to the Director of Industries, U. P. to show that the initial investment was below Rs. 7,50,000/- and that the peti­tioner's unit is registered under the Small Scale Industries Scheme. The peti­tioner complied with this and furnished the requisite certificate from the Direc­tor of Industries. On 12th May, 1971. however, the Assistant Collector in­formed the petitioner that the certificate issued by the Director of Industries was not properly worded and that he should submit another certificate. On 2-6-1971, the petitioner submitted the desired certificate. Thereupon, the Assistant Collector was satisfied that the petitioner's initial investment was below Rs. 7,50,000/- and that the petitioner's unit was registered under the Small Scale Industries Scheme.
(2.) THE Assistant Collector, however, permitted the petitioner to pay excise duty at the rate of 4 per cent and 12 per cent, ad valorem only since June, 1971. He took the view that since he was satisfied only on that date, the lower rate of duty was admissible from that date onwards. In paragraph 10 of the counter-affidavit, this stand has been reiterated. It has been stated, the peti­tioner claimed exemption on the ground that his investment was below Rs. 7,50,000/- but the relevant material in this regard was filed before the Assis­tant Collector only in June, 1971. The petitioner was, therefore, charged with excise duty at the rate of 5% and 15% upto May, 1971. On 6th April, 1972 the Excise of Department intimated to the petitioner that a sum of Rs. 9040.09 was due and payable by the petitioner as deficiency of excise duty. This shows that a sum of Rs. 5/- was due for the month of February, 1970 whereas diverse amounts were due from October, 1970 to May, 1971. The demand Rs. 5/- for the amount of February, 1970 may be kept apart it is apparent that the short fall for the period October, 1970 to May, 1971 was computed on the basis that the petitioner was liable to pay duty at the rate of 5% and 15% ad valorem. This shows that it was based on the view that the lower rat applicable only from the date of the satist action of the Assistant Collector. The lower rate, viz., 4% and 12% was applicable from the date of the notification, viz., 1st June, 1970. There is nothing in the notification indicating that the exemption will be applicable only from the date of the satisfaction o: the Assistant Collector. The taxable event contemplated by this notification was that on the date on the initial installation of the plant and the machinery, the capital investment is not more than Rs. 7 50.000/-. The Assistant Collector had to be satisfied that on the date of initial installation the capital invest­ment was below Rs. 7.50,000/- The date on which he was actually satisfied or the time which he takes in arriving at the satisfaction are wholly immaterial to the liability of the factory to excise duty. Once the satisfaction has beer reached the unit is liable to pay at the rate of 4% and 12% with from 1st June 1970. The respondents were in error in computing any s. fall.
(3.) THE petition hence succeeded and is allowed. The demand for the short fall for the period October, 1970, to May, 1971, computed on the tooting that for this period the petitioner was liable to pay at the rate of Rs. 5/- and 15% ad valorem is quashed. The petitioner would be entitled to costs.;