Judgment :- The Order of the Court is as follows :- M/s. Chemical Construction Company (P) Limited and O.V. Nambiar, its Managing Director were convicted for the offence under Section 9(1)(i) of the Central Excise and Salt Act and sentenced to pay a fine of Rs. 7, 500/- each, in default to undergo rigorous imprisonment for 21 months, in E.O.C. No. 51 of 1982 on the file of Additional Chief Metropolitan Magistrate Court (E.O.1)., Egmore, Madras. The said conviction and sentence were confirmed in the appeal in C.A. No. 125 of 1992 on the file of Principal Sessions Judge, Madras. Hence, this Revision. 2.The short facts leading to the filing of this Revision are as follows :- "The petitioner No. 1 - Company is engaged in the manufacture of machinery for Solvent Extraction Plants, Vanaspathy Plants, etc. On 2-5-1979, the Superintendent of Central Excise, Preventive Group, Madras IV Division inspected the premises and found that there were 69 workers along with 3 technical Personnel engaged in the manufacture of the said machinery without licence under Rule 174 of Central Excise Rules, 1944. On 17-9-1979, the Superintendent of Central Excise sent a show cause notice to the Company. On 15-2-1980, the reply was sent on behalf of the Company. On 30-6-1980, as requested by the Company, opportunity of personal hearing was given to the Representative of the Company. The statements and reply obtained from the persons on behalf of the Company would consistently show that the company was not aware of the provisions of taking out a licence, however, the quantum of duty liability was disputed. After considering the statements and submission made on behalf of the company, ultimately the Collector of Central Excise passed orders imposing penalty on the Company. Subsequently, the respondent herein filed a private complaint against the petitioners. Though initially two charges were framed, since the respondent did not press in respect of the second charge, the trial court discharged the petitioners in respect of the said charge and convicted the petitioners in respect of the first charge, as stated above. On being aggrieved over the judgment of the trial court, the petitioners filed an appeal before the lower appellate Court and the same was dismissed. Therefore, the petitioners are before this Court.' 3.Mr. On being aggrieved over the judgment of the trial court, the petitioners filed an appeal before the lower appellate Court and the same was dismissed. Therefore, the petitioners are before this Court.' 3.Mr. G. Krishnan, the learned Senior Counsel for the petitioners raised several grounds challenging the impugned judgments and contended that both the Courts below have committed serious illegality in convicting the petitioners, as the said conviction was illegal and unsustainable in law. 4.The whole submissions revolve round the point which could be summarised as follows :-" The offence alleged is contravention of Rule 174 and Section 6 read with 9(1)(b)(b) of the Central Excise and Salt Act, 1944 punishable under Section 9(1)(i) of the said Act. The accusation is manufacturing and clearing of excisable goods without licence. Rule 174 requires a licence to be taken. Under Ex. P 5 if the goods are cleared for home consumption exceeding the value of 30 lakhs, then alone the duty would be liable to be levied on those goods. As such, the goods of this Company is exempted from whole of excise duty upto the value of clearance of Rs. 30 lakhs for home consumption. The clearance of the goods of this company has not exceeded Rs. 30 lakhs for home consumption. Therefore, no licence is needed at all. If excisable goods are exempt from excise duty, they ceased to be excisable goods. Therefore, licence is not required for the goods exempted from excise duty. Consequently, the petitioners cannot be compelled to obtain licence as contemplated under Rule 174 of the Rules. "5.Arguing contra, Mr. Rajamanickam, the learned Special Public Prosecutor appearing for the respondent, would submit the following :" Though, under various notifications, the goods which are specified in the first Schedule, are exempted from levy of excise duty by the Central Government, it cannot effect the provisions relating to the taking of licence for the manufacture of the goods which are excisable. The excisable goods do not become non-excisable goods by reason of exemption given under those notifications. Once excisable goods are manufactured, there is a statutory liability to take out a licence under Rule 174. "6.In support of their respective contentions, the learned Counsel for both parties would cite several authorities which we shall see later. 7.Before embarking on the discussion with reference to the question referred to above, we shall now go into the factual aspects. Once excisable goods are manufactured, there is a statutory liability to take out a licence under Rule 174. "6.In support of their respective contentions, the learned Counsel for both parties would cite several authorities which we shall see later. 7.Before embarking on the discussion with reference to the question referred to above, we shall now go into the factual aspects. 8.On 2-5-1979, the prosecuting officers went and inspected the premises and the machineries and found 69 persons were engaging in the manufacture of the machineries which were intended for Solvent Extraction Plants, Vanaspathi Plants, etc. On the date of inspection, the second petitioner, the Managing Director of the Company gave a written statement stating that the manufacture, supply, transport and erect on turnkey basis Solvent Extraction Plants, Fatty Acid Splitting and Glycerine Recovery Plants etc., that the value of Bills for the period 1977-78 was Rs. 1, 36, 42, 195/- and the value of the goods for the period 1978-79 was Rs. 43, 92, 036/-, that since they were not aware of the fact that they should take out the licence, as the turn over exceeded Rs. 30 lakhs and that they have since applied for the necessary licence and declared to abide by the Central Excise Rules. This is Ex. P 1. 9.Even in the show cause notice Ex. P 6 sent on 17-11-1979 it was stated by the respondent that the Company contravened the provisions of Rule 174 read with Section 6 of the Central Excise and Salt Act, 1944 without taking out a Central Excise licence. In the reply Ex. P 7 dated 15-2-1980, the Company through its Representative would specifically state as follows :-" While we do not dispute that the activities of erecting these plants should have been only under a Central Excise licence and that duty paid wherever payable on the appropriate amount chargeable to duty, we do not agree to the value vis-a-vis the duty shown in the show cause notice for the reason set out below. We submit that we have been manufacturing these goods and erecting them without obtaining a Central Excise licence for which we pray that we may be leniently dealt with. "10.In the final order passed by the Collector of Central Excise, Ex. We submit that we have been manufacturing these goods and erecting them without obtaining a Central Excise licence for which we pray that we may be leniently dealt with. "10.In the final order passed by the Collector of Central Excise, Ex. P 8 dated 4-8-1990, it is referred in para 20 that the first petitioner-Company had manufactured excisable goods under Tariff Item No. 68 without taking a licence and removed the same without payment of duty in contravention of the Rule 174 read with Section 6 of the Central Excise and Salt Act, 1944. In the said paragraph, it is stated as follows :-" In the reply to the show cause notice as well as during personal hearing the consultant admitted that his client had failed to take a licence and to observe the requirements of Central Excise law. He ascribed this to lack of co-ordination between their factories at Madras and at Faridabad, Haryana. The consultant requested for a lenient treatment. "11.The above documents would show that the petitioners admitted that the goods manufactured by them are excisable goods under Tariff Item No. 68 and that licence for the same is required under the Act. The only request made before the authorities in these documents as well as Ex. P1, the order of the appellate authority is to take a lenient view and impose a moderate duty, as the non-payment of duty was an unintentional one. 12.It is in this context to note, as admitted by the learned Senior Counsel for the petitioners, that till date no licence has been applied for and obtained. The reason for the same, as pointed out by the learned Senior Counsel, is that under Ex. P 5, the notification issued by the Central Government, the Company is exempted from payment of excise duty, when those excisable goods falling under Tariff Item No. 68 of the First Schedule are cleared for home consumption, the value of which had not exceeded Rs. 30 lakhs. 13.In elaboration of this submission, the learned Senior Counsel for the petitioners, would submit that P.W. 1 did not state that the excisable goods worth more than Rs. 30 lakhs were cleared for home consumption. 30 lakhs. 13.In elaboration of this submission, the learned Senior Counsel for the petitioners, would submit that P.W. 1 did not state that the excisable goods worth more than Rs. 30 lakhs were cleared for home consumption. He would point out that P.W. 1 would merely state that the turn over for the year 1976-77 was over 30 lakhs and as such unless it is proved that it is not exempted from duty as the clearance of the goods exceeding 30 lakhs for home consumption, it cannot be contended that the petitioners have committed an offence of not taking out a licence. 14.In other words, he would contend that unless it is established that it is not exempted from the payment of excise duty, the petitioners cannot be prosecuted for failure to obtain the licence under Rule 174. 15.In support of the said submission, the learned Senior Counsel has cited the following authorities. (1)Sulekh Ram and Sonsv.Union of India[1978 (2)E.L.T.(J 525) (Del. High Court)]; and (2) E. Septon and Company v. Superintendent of Central Excise. 16.In the judgment of the Allahabad High Court reported in (Septon'scase), the decision of the Delhi High Court inSulekh Ram'scase reported in 1978 (2)E.L.T.(J 525) has been referred to. In the said decision it is observed as follows :-" Once it is exempted from excise duty, the same shall be deemed to have been taken out of the First Schedule to the Act and the petitioner cannot be compelled to obtain a licence as contemplated under Rule 174 of the Rules. In this view of the matter it must be held that the petitioner is not required to obtain a licence for manufacturing the ice in the Ice Factory. "17.Contrary to the said view, Mr. Rajamanickam, the learned Counsel for the respondent would cite the following authorities. 18.The first authority isVishal Andhra Industriesv.Union of India. This judgment of the Division Bench of the Delhi High Court over ruled the earlier judgment of the Delhi High Court reported in 1978 (2)E.L.T.(J 525) (supra), which was followed by the Allahabad High Court in the decision reported in. The relevant observation is as follows :-" It will be seen that Rule 8 grants exemption from payment of duty on excisable goods. Thus, Rule 8 itself postulates that the goods on which exemption has been granted are excisable. The relevant observation is as follows :-" It will be seen that Rule 8 grants exemption from payment of duty on excisable goods. Thus, Rule 8 itself postulates that the goods on which exemption has been granted are excisable. By issue of a notification goods do not cease to be excisable goods. They remain excisable goods so far as any item in the Schedule includes them. .., What happens by issue of a notification under Rule 8 is that a manufacturer becomes entitled to claim exemption and not that the goods cease to be excisable goods. The condition precedent to the applicability of Rule 8 is the existence of excisable goods. Exemption from payment of duty is different from goods being excisable or not... The learned Judge in the judgment reported in 1978 (2)E.L.T.(J 525) was inclined to hold that by issue of a notification it would mean that the goods had been taken out of the First Schedule and, therefore, ceased to be excisable goods. In our view this obiter could not be accepted as laying down that the Notification issued under Rule 8 has the effect of taking the item out of First Schedule. As a matter of fact, notification is issued under Rule 8 precisely because the goods are covered by the First Schedule. .... Notification exempts payment from the total duty subject to certain conditions does not mean that the goods have ceased to be excisable. "19.The next decision isKarnataka Cement Pipe Factoryv.Superintendent of Central Excise. In this decision it is specifically mentioned that the decision inSulekh Ram'scase [1978 (2)E.L.T.(J 525)] was overruled by the Division Bench of the Delhi High Court inVishal Andhra Industriesv.Union of India. This decision referred aboutSepton'scase 1984, also without agreeing the view of the Allahabad High Court. The relevant observation is as follows :-" The character of a product, as excisable goods, does not depend upon the actual levy of duty, but depends on the description as `excisable goods' as contained in the First Schedule to the Act. `Excisable goods' is defined in Section 2(d) of the Act. `Excisable goods', means, goods specified in the First Schedule as being subjected to a duty of excise, and includes salt. Under the charging Section 3 of the Act, duty as specified in the First Schedule is levied on all excisable goods. `Excisable goods' is defined in Section 2(d) of the Act. `Excisable goods', means, goods specified in the First Schedule as being subjected to a duty of excise, and includes salt. Under the charging Section 3 of the Act, duty as specified in the First Schedule is levied on all excisable goods. The First Schedule to the Act gives description of goods, which are excisable and the rate of duty. It is significant to note that in respect of some of the goods given in the schedule, the duty is `nil'. The submissions made on behalf of the petitioner that the moment a manufacturer is allowed exemption in respect of any goods by virtue of a notification, it ceases to be `excisable goods' for all other purposes under the Act, has to be rejected.' 20.While rendering the above judgment, the Karnataka High Court took support of the observations made by the Division Bench of this Court in the judgment reported in 1978 (2)E.L.T.(J 57) and earlier referred. 21.InTamil Nadu (Madras State) Handloom Weavers Co-operative Society Ltd.v.Assistant Collector of Central Excise, Erode[1978 (2)E.L.T.(J 57)], the Division Bench of this Court, while considering the above question, has observed as follows :- "The Notification proceeds on the assumption that the handloom fabrics are excisable goods. If the Handloom fabrics are not excisable goods, there was no need or occasion for exempting the same from the levy of excise duty. We are unable to agree with the learned Counsel for the petitioner that once the handloom fabrics are exempted from excise duty, they cease to be excisable goods. As we have already pointed out, the character as excisable goods does not depend on the actual levy of duty, but on the description as excisable goods in the First Schedule to the Act." 22.The view expressed by the Division Bench of this Court in 1978 (2)E.L.T.(J 57) and that of the Karnataka High Court in have been endorsed by the Apex Court inWallace Flour Mills Company Ltd.v.Collector of Central Excise. The relevant observation is this :- "In this connection, reference may be made to the decision of the Karnataka High Court inKarnataka Cement Pipe Factoryv.Superintendent of Central Excise, where it was decided that the words `as being subject to a duty of excise' appearing in Section 2(d) of the Act are only descriptive of the goods and not to the actual levy." Excisable goods', it was held, do not become non-excisable goods merely by the reason of the exemption given under a notification. This view was also taken by the Madras High Court inTamil Nadu (Madras State) Handloom Weavers Co-operative Society Ltd.v.Assistant Collector of Central Excise[1978 (2)E.L.T.(J 57)].' 23.In the light of these decisions, let us now go to the Section. 24.The term `excisable goods' is defined in Section 2(d) of the Act as follows :- "Excisable goods means goods specified in the First Schedule as being subject to a duty of excise and includes salt." 25.The words" as being subject to a duty of excise"in the definition of the term" excisable goods" are only nature of the goods specified in the First Schedule. It has no reference to the factum of their liability to duty. Therefore, the exemption granted by the Notification under Ex. P 5 only exempts the excisable goods from the levy of excisable duty only if the value of the goods cleared for home consumption which do not exceed 30 lakhs. Of course P.W 1 would merely state that turn over exceeded 30 lakhs, it is true that he did not refer home consumption. Taking advantage of this, the learned Senior Counsel for the petitioners would contend that the case of the defence is that all the goods were exported to foreign countries and not cleared for home consumption. This submission cannot have any substance because there is no material whatsoever that the goods were exempted under Rule 174(A), as they were exported to foreign countries with the permission of the Government. 26.In this context, the charge framed against the petitioners is quite relevant, which is as follows :- "That you A2 being the Director of A1 Company and representing A1 company as such failed to take out a Central Excise Licence for the period commencing from 27-1-1976 and have manufactured and cleared excisable goods involving payment of duty to the tune of Rs. 7, 01, 382.65 without licence between the period 27-1-1976 and 4-5-1979 and have thereby contravened the provisions of Rule 174 of the Central Excise Rules, 1944 and Section 6 of the Central Excise and Salt Act 1984 (sic) read with Section 9(1)(b)(b) of the Central Excise and Salt Act punishable under Section 9(1)(i) of the said Act and within my cognizance." The reading of the charge would go to show that the petitioner were accused of having not obtained licence for having manufactured and cleared excisable goods. 27.Therefore, whether they manufactured the goods worth exceeding Rs. 30 lakhs for home consumption or not is not the question here. But, the actual question is, whether the excisable goods which are subject to duty are manufactured and cleared or not. 28.If there are materials to establish that the goods manufactured by the petitioners and cleared for home consumption, which did not exceed 30 lakhs, then, at the most the petitioners could very well request the authority concerned to make exemption from payment of duty. Exemption cannot be for taking out licence. As admitted by the petitioners, from the beginning they have not obtained licence even though they have manufactured the excisable goods. 29.The excisable goods get exemption from the payment of duty by virtue of the Notification under which the Government chooses to grant exemption from the whole or part of the duty. Thus, the "excisable goods" do not become non-excisable goods merely by the reason of the exemption given under Notification. Of course, no excise duty is payable on some of the items in the First Schedule. But, that cannot be the ground to say that the licence to manufacture such goods should be dispensed with under Section 6 of the Act, unless it comes under Rule 174A, which is not the case here. 30.The object of the Act is to raise revenue of the State. In order to control effectively the raising of the revenue, the licensing has become necessary in terms of Section 6. Therefore, I do not see how exemption from payment of excise duty to the excisable goods, has anything to do with the dispensation of obtaining the licence. 30.The object of the Act is to raise revenue of the State. In order to control effectively the raising of the revenue, the licensing has become necessary in terms of Section 6. Therefore, I do not see how exemption from payment of excise duty to the excisable goods, has anything to do with the dispensation of obtaining the licence. 31.In such circumstance, once the goods manufactured by the petitioners are to be found in the First Schedule, the mere exemption from payment of excise duty by various notifications issued by the Central Government from time to time would not save the petitioners for prosecution from having not obtained the licence. 32.In the instant case, as indicated earlier, the petitioners consistently claimed before authorities that they were ignorant of law. It is now seen that the petitioners want to be ignorant throughout. Therefore, I do not see any reason to interfere with the findings of both the courts below to impose conviction on the petitioners. 33.Though some of the reasons given by the Courts below may not be germane to the issue raised, as discussed above, the prosecution, in my view, has proved that the petitioners have manufactured the excisable goods irrespective of the fact whether those goods are exempted by Notification Ex. P 5, without obtaining licence as provided under Rule 174 of the Act. 34.However, as requested by the learned Senior Counsel for the petitioners regarding the question of sentence, I deem it appropriate to reduce the fine from Rs. 7, 500/- to Rs. 1, 500/- each and accordingly reduced. The balance fine amount is directed to be refunded to the petitioners. 35.With the above modification in the sentence, the revision is dismissed.