Customs, Excise and Gold Tribunal - Delhi
Oudh Sugar Mills Ltd. vs Collector Of Central Excise on 15 October, 1987
Equivalent citations: 1990(47)ELT20(TRI-DEL)
ORDER P.C. Jain, Member (T)
1. Brief facts of the case are as follows :-
The appellants manufacture sugar, alcohol, fusel oil and ice in their factory. All the manufacturing processes involved in the production of these four commodities are carried on in the same factory premises covered by the same licence under the Factories Act. The appellants also hold valid Central Excise licence for sugar under C.E.T. Item 1 as well as other excisable goods not elsewhere specified falling under C.E.T. Item 68. In the process of production of sugar molasses are obtained and is used in the production of alcohol and fusel oil in the same premises. The appellants had been availing of the exemption contained in Notification No. 118/75 dated 30-4-1975 under which goods falling under Tariff Item 68 manufactured in a factory and intended for use in the factory in which they were manufactured or in any other factory of the same manufacturer were exempted from the whole of duty of excise leviable thereon. The appellants continued to avail of this exemption till 1979-80 Budget by which the tariff description in Tariff Item 68 was amended and the expression "factory" was then covered by the definition in Section 2(e) of the Central Excises and Salt Act, 1944 instead of as defined in Section 2(m) of the Factories Act prior to 1979-80 Budget.
2. This change in the definition of Tariff Item 68 in 1979 Budget led the department to raise demands of duty on molasses arising as a by-product in the manufacture of sugar and cleared for use in the manufacture of alcohol in the same factory because alcohol was not excisable goods in terms of the definition of GET Item 68. Various show cause notices were issued for that purpose i.e. (i) show cause notice dated 22-1-1980 for the period 1-3-1979 to 30-11-1979 (ii) show cause notice dated 19/20-5-1980 and (iii) show cause notice dated 3-3-1981.
3. The appellants had urged before the lower authorities as follows :-
(a) Molasses are waste product obtained in the process of manufacture of sugar and therefore, could not be held as excisable goods and no duty could be levied on it as under Tariff Item 68.
(b) Molasses were obtained in the same factory where other excisable goods were produced and hence they were entitled to the exemption under Notification No. 118/75.
(c) Even in the distillery which is a part and parcel of the same factory premises not only alcohol was produced which was not excisable under Central Excise Tariff but also fusel oil falling under Tariff Item 68 was manufactured and hence the appellants were fully entitled to the exemption under Notification 118/75.
4. The lower appellate authority in the impugned order, however, has repelled all the pleas of the appellants before it in the following manner :-
(a) Molasses cannot be treated as waste product because this is commercially different commodity and are used in the manufacture of other goods notably in the manufacture of alcohol. Therefore, its leviability to duty under Tariff Item 68 cannot be doubted.
(b) The factory referred to in Notification No. 118/75 cannot be taken as a factory producing any item but it must be taken to mean as a factory producing an excisable item is as much as "no concession concerning exemption from excise duty can be deemed to be relatable to an item which is not covered by the excise." The lower appellate authority has, therefore, found the department's contention to be correct that clearance of molasses for use in alcohol cannot get the benefit of exemption as contemplated in the said notification.
(c) The position does not change because the factory manufactures fusel oil classifiable under Tariff Item 68, as the clearance of molasses is not intended for use to make fusel oil.
5. Learned Advocate, Shri J. Banerjee has reiterated the pleas as set out above taken before the lower authorities. In particular, he has laid great emphasis on the fact that Notification No. 118/75 merely indicates that the goods falling under Item 68 are exempted from payment of duty as long as they are used in any factory. The exemption notification nowhere states that the use must be in the manufacture of excisable goods. Their factory is duly covered by the definition of factory under the Central Excises and Salt Act, 1944 inasmuch as that factory is producing excisable goods, namely sugar, fusel oil and ice.
6. The learned lower appellate authority, submits the learned advocate, appears to have been guided more by the earlier notifications, namely 58/75 dated 1-3-1975 which stipulated exemption on goods falling under Tariff Item 68 GET if they were used in the factory of production as intermediate goods or component parts of any goods falling under Tariff Item 68. There is no such stipulation in the relevant Notification 118/75 dated 30-4-1975. The emphasis is merely on the fact that goods falling under Tariff Item 68 should be used in a factory and there is no doubt that in the instant case the goods have been used in a factory as defined in Section 2(e) of the Central Excises and Salt Act, 1944.
7. We have heard learned JDR Mrs. J.K. Chander. She has reiterated the findings of the lower authorities.
8. We have carefully considered the pleas advanced on both sides. We observe that the following finding has been made, by the lower appellate authority :-
"It is evident that the sugar factory, the distillery, the fusel oil plant and the ice factory function under roof and operate under one industrial licence, though there are L-4 separately for sugar and for Item 68 commodities. That they are within the same premises is clear from the ground plan and layout of the factory produced for my perusal at the appeal stage."
It is apparent from the aforesaid finding that the factory of the appellants can be termed as a factory under Section 2(e) of the Central Excises and Salt Act, 1944 which defines the "factory" as meaning "any premises...wherein or in any part of which excisable goods other than salt are manufactured...." In view of this we find substantial force in the argument of the learned advocate for the appellants that the molasses have been used in the same factory of the manufacturer. The notification does not stipulate that the goods claimed to be given an exemption must be used in the manufacture of other excisable goods. Lower appellate authority's observation that "no concession concerning exemption from excise duty can be deemed to be relatable to an item which is not covered by the excise" does not appear to be borne out from the plain reading of the Notification No. 118/75. It is well settled that in order to interpret any statutory provisions one need not look for any intendment behind that provision so long as plain meaning can be given to such provision.
9. Accordingly, the impugned order is set aside and the appeals are allowed with consequential relief to the appellants.