Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs The Sirpur Paper Mills Limited on 18 February, 1987
Equivalent citations: 1987(11)ECR393(TRI.-DELHI)
ORDER K.L. Rekhi, Member (T)
1. The respondents have, by their letter dated 3.2.1987, waived the right of personal hearing. We have, accordingly, heard the learned Joint Chief Departmental Representative, perused the record and carefully considered the matter.
2. The subject revision show cause notice issued by the Central Government seeks to deny the benefit of exemption notification No. 201/79-CE dated 4.6.1979 to the respondents on the ground that the goods, namely, "45 plain diagonal all bronze metal clothes" received by the respondents were used by them as spare parts of the paper making machinery and not as input or raw material in the manufacture of paper. We reproduce below the relevant portions of the exemption notification, as then in force:
Set-off of Duty on use of Duty Paid Goods Falling Under Item 68 (Tariff Items 1 to 68) Notification No. 201/79-CE dated 4.6.1979.
In exercise of the powers conferred by Sub-rule (1) of rule 8 of the Central Excise Rules, 1944, and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 178/77-Central Excises, dated the 18th June, 1977, the Central Government hereby exempts all excisable goods (hereinafter referred as "the said goods"), on which the duty of excise is leviable and in the manufacture of which any goods falling under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) (hereinafter referred as "the inputs") have been used, from so much of the duty of excise leviable thereon as is equivalent to the duty of excise already paid on the inputs:
Provided that the procedure set out in the Appendix to this notification is followed:
Provided further that nothing contained in this notification shall apply to the said goods which are exempted from the whole of the duty of excise leviable thereon or are chargeable to nil rate of duty.
APPENDIX
1. A manufacturer of the said goods shall give a declaration to the Superintendent of Central Excise having jurisdiction over his factory, indicating the full description of the said goods intended to be manufactured in his factory and the full description of the inputs intended to be used in the manufacture of each of the said goods.
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7. Any waste, arising from the process of manufacture to which the inputs in respect of which credit has been taken may be subjected in the manufacturer's factory shall,-
(a) be removed on payment of duty; or
(b) where it belongs to such class or category of waste as the Central Government may, from time to time, by order specify for the purpose, be removed from the said factory without payment of duty, for being used in the manufacture of the class or category of goods as may be specified in the said order, subject to the procedure under Chapter X of the Central Excise Rules, 1944, being followed, or
(c) an application by the manufacturer and if found unfit for further use or not worth the duty payable thereon, be destroyed in the presence of the proper officer, the duty payable thereon being remitted:
Provided that such waste may be destroyed by the manufacturer governed by Chapter VII-A of the Central Excise Rules, 1944 after informing the proper officer in writing regarding the quantity of such waste and the date on which the proposes to destroy it at least seven days in advance and after observing all such conditions as may be prescribed by the Collector of Central Excise by general or special order with regard to the manner of disposal of such waste.
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3. We observe that the crucial words in the notification which described the goods for which the duty paid was to be given as a set-off were "any goods falling under Item No. 68...(hereinafter referred to as 'the inputs')". In the notification, as then in force, there was no restriction that such goods must be in the nature of raw materials or component parts. Such a restriction came to be introduced in the notification for the first time by the amending notification No. 105/82-CE dated 28.2.1982 when the crucial words were amended to read as "any goods falling under Item No. 68...have been used as raw materials or component parts (hereinafter referred to as 'the in-puts')". The amending notification was not retrospective and hence we are not concerned with it for the material period before us, which was prior to the amendment.
4. The learned Joint Chief Departmental Representative urged that we should read the original notification in between the lines and that would make the intention clear that by "in-puts" it was meant to cover only those goods which were in the nature of raw materials or component parts and which got consumed in the course of manufacture in such a manner that there was co-relation between the in-puts and the out-put. Otherwise, she argued, the provision made in paragraph 7 of the Appendix annexed to the notification for disposal of any waste arising from the process of manufacture would become meaningless. We do not agree with her. We have to interpret the notification as it read at the material time. The notification clearly granted exemption in respect of all goods falling under Item No. 68. Such goods were collectively given the name "the in-puts" for convenience of reference so that the elaborate description "any goods falling under Item No. 68...(1 of 1944)" had not to be repeated again and again. It is just a co-incidence that the reference name "in-put" was chosen; it could be any other name also and that would have served the purpose equally well. What really matters is that the exemption was in respect of any goods falling under Item No. 68 and it was not restricted to those goods falling under Item No. 68 which were used as raw materials or component parts. Such a restriction came about only on 28.2.1982 and was prospective in effect. The fact that the Appendix which prescribed the procedure for grant of the exemption under the notification made a provision for disposal of the process waste also, does not mean that if any goods falling under Item No. 68, during their use for further manufacture, did not result into process waste, they were de-barred from the benefit of the notification. There was nothing in the original notification to indicate that the use to which "the in-puts" were put must be such as cannot be repeated or that it must be such as results in loss of further utility as such article. Indian Hume Pipe Company Limited and Anr. v. Union of India and Ors., paragraph 11 on the meaning of "use" in exemption notification No. 118/75-CE dated 30.4.1975 under Item 68 of the Tariff.]
5. In the circumstances, we hold that the respondents were entitled to the benefit of exemption notification No. 201/79-CE dated 4.6.1979 till the amendment of the notification on 28.2.1982. Consequential relief should be granted to the respondents. The cross objection of the respondents is disposed of in these terms. We discharge the revision show-cause notice and dismiss the appeal of the department.