Custom, Excise & Service Tax Tribunal
M/S Green Brilliance Energy Pvt.Ltd vs Commissioner, Central Excise & Service ... on 8 September, 2015
In The Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
Appeal No.E/10026,10027/2014
[Arising out of OIO No.VAD-EXCUS-001-COM-13-14-13-14, dt.08/10/2013, passed by Commissioner of Central Excise & Service Tax, Vadodara-I]
M/s Green Brilliance Energy Pvt.Ltd. Appellants
Vs
Commissioner, Central Excise & Service Tax,
Vadodara-I Respondent
Represented by:
For Appellant: Shri S.R. Dixit, Ms.Anoni Patwa - Advocates For Respondent: Dr. J. Nagori, Authorised Representative For approval and signature:
Honble Mr. P.K. Das, Member (Judicial) Honble Mr. H.K. Thakur, Member (Technical) Honble Mr. P.M. Saleem, Member (Technical)
1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen the order?
4. Whether order is to be circulated to the Departmental Yes authorities?
CORAM:
HONBLE MR. P.K. DAS, MEMBER (JUDICIAL) HONBLE MR. H.K. THAKUR, MEMBER (TECHNICAL) HONBLE MR. P.M. SALEEM, MEMBER (TECHNICAL) Date of Hearing :12.08.2015 Date of Decision: 08.09.2015 Order No.A/11277-11278/2015, dt.08.09.2015 Per: H.K. Thakur This Larger Bench was constituted in terms of Referral Order No.M/13697-13698/2014, dt.21.07.2014, passed by Division Bench of CESTAT Ahmedabad. Appellant is a 100% EOU and procured inputs by importation or by locally purchasing under Notification No.22/2003-CE, dt.31.03.2013 and No.52/2003-Cus, dt.31.03.2013, for the manufacture of their finished goods Solar Panels. Appellant cleared finished goods by export and also by making DTA clearances. Solar Panels are cleared at fully exempted rate as per Sr.No.84 List 5 (Item No.11) of Notification No. 6/2006-CE, dt.01.03.2006. Similarly, under the Customs Tariff Act, no Customs duty/CVD is payable if such Solar Panels are imported. There is a second proviso to Clause 6 of Exemption Notification No.22/2003-CE, dt.31.03.2003, which reads as follows:-
Provided further that where such articles (including rejects, waste, scrap and remnants) are either non-excisable or such articles (including rejects, waste, scrap and remnants), if imported, are leviable to nil rate of duty of customs specified under first Schedule to the Customs Tariff Act, 1975 (51 of 1975) and nil additional duty leviable under Section 3 of the said Customs Tariff Act, read with exemption notification in this regard, if any, no exemption in respect of inputs utilized for the purpose of processing, manufacture, production or packaging of such articles (including rejects, waste, scrap and remnants) shall be available under this notification. Proviso to Clause-3 of Notification No.52/2003-Cus, dt.31.03.2003 is as follows:-
Provided further that where such finished goods (including rejects, waste, scrap and remnants) are either non-excisable or such finished goods (including rejects, waste, scrap and remnants), if imported, are leviable to nil rate of duty of customs specified under first Schedule to the Customs Tariff Act, 1975 (51 of 1975) and nil additional duty leviable under Section 3 of the said Customs Tariff Act, read with exemption notification in this regard, if any, no exemption in respect of inputs utilized for the purpose of manufacturing of such finished goods (including rejects, waste, scrap, remnants and by products) shall be available under this notification.
2. During passing of the referral order, it was argued before the Division Bench that there are following judgments which give conflicting view on the interpretation of the above proviso:-
i) Synergies-Doorway Automative Ltd & Ors [2008 (226) ELT 529 (Tri-Bang)]
ii) Indira Printers Vs CCE Delhi-II [2010 (262) ELT 940 (Tri-Del)]
3. Shri S.R. Dixit (Advocate) and Ms.Anoli Patwa (Advocate) appeared on behalf of the Appellant. Shri S.R. Dixit argued during the course of proceedings before the Larger Bench, as well as through written submissions, that as per the second proviso to Clause 6 of Notification No. 22/2003-CE, the finished goods should be non-excisable and if imported, should attract Nil rate of duty of Customs or Nil Additional duty of Customs. It was his case that Solar Panels manufactured by the Appellant, if imported, would attract free rate of duty and not Nil/Exempted rate and will not be hit by the second proviso to Clause 6 of Notification No.22/2003-CE. To support his argument that free rate can not be equated with Nil/Exempted rate of duty, learned Advocate relied upon the case law of Geetanjali Woolens Pvt.Ltd. Vs CCE Vadodara [2007 (218) ELT 512 (Tri-Ahmd)]. That CESTAT in this case was interpreting the proviso to Para 3 to Notification No.52/2003-Cus. That since Solar Panels are classifiable under the Central Excise Tariff, therefore, the same are excisable as per Section 2(d) of the Central Excise Act, 1944 and not hit by the above proviso.
3.1 Learned Advocate further argued that the case law of Madras High Court Century Flour Mills Vs UoI [2014 (301) ELT 73 (Mad.)] (Para 15 & 21), relied upon by the learned Authorised Representative, is actually in support of the Appellant in as much as it was held by Madras High Court that free and Nil rate of duty are different rates of duty for raising the rate of duty from one rate to another. That as per the law laid down by Apex Court in the case of Shabina Abraham & Ors Vs UoI [2015-TIOL-159-SC-PX] (Para 26, 31 to 33) also the issue goes in favour of the Appellant.
3.2 It was also the case of the learned Advocate appearing on behalf of the Appellant that word or used in the relevant proviso to Notification No.22/2003-CE and No.52/2003 should be used conjunctively and not dis-conjunctively. That if the word or is not read conjunctively then such reading will lead to following serious and absurd situations:-
(a) That finished products with Nil rate of Customs duties or exempted from Customs duties as non-excisable products which will be directly a contradiction to the definition of excisable goods given in Section 2(d) of the Central Excise Act, 1944.
(b) That such deeming fiction to treat Nil rated or exempted finished goods as non-excisable goods has come about by virtue of Para 6.8 (j) of the Foreign Trade Policy. That a provision under the Foreign Trade Policy cannot create a deeming fiction under Central Excise Act, 1944 which is an altogether a separate independent enactment.
(c) That the above said proviso will render infructuous in cases one where EOU supplies finished products to another EOU. The reading of the proviso as per Indira Printers (supra) will render all such transactions quite meaningless. The same will also be contrary to the Larger Bench decision in the case of Ghodela Impex [2013 (294) ELT 223 (Tri-LB).
(d) That the proviso does not take into consideration the ground reality in cases where both DTA manufacturer and EOU manufacturer are at par in terms of the duty aspects. That solar panel manufacturer in DTA enjoy the exemption from payment of duty on the finished products as well as from payment of duty from all its raw materials (under different exemption notifications). These are the very same benefits that an EOU solar panel manufacturer enjoys. That by recovering the duty on inputs, in terms of the above proviso, used by an EOU solar panel manufacturer, the Revenue would be placing such manufacturers at a disadvantage in comparison to DTA solar panel manufacturers. That this is an absurd proposition which needs to be struck down.
(e) That Certain issues such as even if exemption is denied to the Appellant under Notification No.22/2003-CE, the duty should be demanded from supplier and not the 100% EOU, or that the Appellant is already covered under other Paras of Notification No.22/2003-CE, and Notification No.52/2003-Cus, and hence, exemption cannot be denied to them;
3.3 That in view of the above arguments, the word or used in the above provisos of exemption notifications have to be read as and for a harmonious interpretation. That accordingly law laid down by CESTAT in the case of Synergies-Doorway Automotive Ltd Vs CC&CE Vishakhapatnam-I (supra) was the correct interpretation of provisions that the finished goods should be excisable for getting the benefit on DTA clearances under the said notifications. Learned Advocate relied upon the use of expressions free, Nil or exempted rates of duties mentioned in Notification No.21/2012-Cus, dt.17.03.2012.
4. Shri J. Nagori (AR) appearing on behalf of the Revenue argued that the words either/or used in the relevant provisos of the impugned notifications cannot be used in the relevant provisos cannot be read as and. That Honble Apex Court in the case of UoI Vs Ind-Swift Laboratories Ltd [2011 (265) ELT 3 (S.C.)] held that the word or appearing in Rule 14 of the CENVAT Credit Rules 2004 should not be read as and. That Delhi High Court in the case of Grasim Industries Vs UoI [2010 (256) ELT 553 (Del)] also held that word or used in Rule 18 of the Central Excise Rules, 2002 cannot be read as and. It was strongly argued by learned Authorised Representative that both Nil and Free rate of duty denote same zero resultant effect which was so held by Madras High Court in the case of Century Flour Mills Ltd Vs UoI [2014 (301) ELT 73 (Mad.)] and that the intention behind the word non-excisable was to understand those finished goods where resultant duty is zero % whether by being Nil/Free rated or fully exempted under a notification.
4.1 Learned Authorised Representative further argued that as per CBEC Circular No.54/2004-Cus, dt.13.10.2004, that Nil rated goods (either tariff rate or effective rate) will be treated in the same manner as non-excisable goods. That this clarification provide the intention of the legislature to recover the duty foregone on inputs procured by a 100% EOU and used in the manufacture of finished goods which is cleared in DTA either at Nil rate of duty or exempted rate of duty.
4.2 That in the case of State Vs Parmeshwaran Surbamani [2009 (242) ELT 162 (SC), it has been held that intention of legislation has to be interpreted by the plain reading of the language of the provision and that Court cannot re-write the legislation by adding words to a statute or read words into it which are not existing therein.
4.3 That as per Apex Courts decision in the case of CCE Surat-I Vs Favourite Industries [2012 (278) ELT 145 (SC)] an exemption in a fiscal statute is an exception and is required to be constructed strictly. It is thus the case of the Revenue that CESTATs order in the case of Indira Printers Vs CCE Delhi-II [2010 (262) ELT 949 (Tri-Del)] is the correct interpretation of law.
5. Heard both sides and perused the case records as well as the written submissions made by rival sides. The conflicting judgments considered by the Division Bench, while making referral order dt.21.07.2014, are the following:-
i) Synergies-Doorway Automotive Pvt.Ltd.
Vs CC&CE Visakhapatnam-I [2008 (226) ELT 529 (Tri-Bang)]
ii) Indira Printers Vs CCE Delhi-II [2010 (262) ELT 949 (Tri-Del)] 5.1 Both the above case laws interpreted the provisos contained in Notification No.22/2003-CE, dt.31.03.2003 and Notification No.52/2003-Cus, dt.31.03.2003, which are before this Larger Bench, and are reproduced in the opening para of this order. Facts of the case before CESTAT in the case of Synergies-Doorway Automotive Ltd Vs CC&CE (supra) were that Appellant in that case was procuring duty free Aluminum Ingots for making Aluminum Alloy Wheels and Dross was also coming into existence during the manufacturing activity as a by product which was held to be non-excisable by a judgment of Honble Supreme Court. Following observations were passed by CESTAT Bangalore in this case in Para 5.1 and 5.2, to hold that excisability of Dross is not at all relevant when the main product Aluminum Wheels is excisable:-
5.1?A clear reading of the Notification reveals that the proviso will be applicable only when the finished goods are non-excisable. What happens when the finished goods are non-excisable? If duty free goods are imported and used in the manufacture of non-excisable goods, then, if they are exported, it is a different thing. But if they are cleared on DTA, then para 3 main section will not be applicable because para 3 main section will be applicable only when the finished goods are excisable because duty has to be paid under Section 3 of the Central Excise Act, 1944. To cover a situation where non-excisable goods are cleared to DTA, the legislature thought it fit to demand the Customs duty on the raw materials, which had gone into the finished goods, which includes rejects, waste, scrap, remnants and certain by-products. Therefore, in order to provide for such a situation, where the finished goods are non-excisable, there is a provision for demand of Customs Duty on the raw materials, which had gone into such finished products. Where the finished products are excisable, this proviso will not come into being. The Commissioner, while passing the impugned order against the assessees, has not appreciated or understood the Notification in its totality. She had taken out one paragraph of proviso of the Notification and started demanding Customs duty on the raw materials, which are relatable to the Aluminium Dross, which have been cleared to DTA on the ground that this Aluminium Dross is non-excisable. In order to hold that they are non-excisable, she had relied on the Honble Apex Courts decision. However, the Commissioner, Shri Ramprakash who passed the first order dated 29-7-2005, has correctly interpreted the Notification and has held that the proviso will be applicable only to a situation where finished goods are non-excisable. In this case, the finished goods are Aluminium Wheels. They are very much excisable so that this proviso need not be invoked The question of excisability Aluminium Dross etc. are not at all relevant where the finished products are excisable. We also find that where the assessees have imported goods and manufactured them in the production of final products, which are exported, and when there is no question of DTA clearance, the invocation of para 3 and especially proviso does not arise at all. Therefore, we do not find any merit in the Revenues stand. The order dated 29-7-2005 is legal.
5.2?Summing up, we hold that in terms of the said Notification, as long as the finished goods are excisable, the proviso will not have any application. Whether the Aluminium Dross is excisable or not, it is immaterial because the Aluminium Dross is not a final product. The assessees are importing Aluminium Ingots to manufacture Aluminium Wheels, which are final products and not Aluminium Dross, which is just a by-product. Therefore, the question of excisability of Aluminium Dross as far as the present notification and appeals are concerned is a non-issue. No duty can be demanded on the imported Aluminium ingots relatable to the Aluminium Dross generated as all ingots have been used in the manufacture of final products (Aluminium Wheels), which have been exported. We do not find any infirmity on the stand taken by the Commissioner in his order dated 29-7-2005. Consequently, the view taken by the Commissioner in the order dated 9-2-2007 is not at all correct. The duty demanded cannot be sustained. There is no justification for imposing any penalty. In fine, Revenues appeal is dismissed and the assessees appeals are allowed. 5.2 On the other hand, in the case of Indira Printers Vs CCE Delhi-II, (supra) following order was passed by CESTAT Delhi:-
Heard both sides. The appellants have procured duty free paper and PVC resin under Notification No. 22/2003 dated 31-3-2003 being an EOU. They have produced books which are neither dutiable under the Customs Law nor under the Excise law, some of which have been cleared in the DTA with the approval from the Development Commissioner. The period in question is from April 2003 to June 2005. The issue involves interpretation of second proviso to para 6 of the cited Notification. This paragraph has undergone an amendment w.e.f. 6-9-2004. Prior to that date the duty on inputs was payable if the finished goods sold in the DTA were non-excisable. After that date, input duty is payable if the finished goods are either not excisable or are exempted or charged to nil rate of duty.
2.?Admittedly, the finished goods are excisable but were exempted or charged to nil rate of duty. Hence, we are of the view that for the period prior to 6-9-2004, the appellants are not required to pay the input duty. However, the same is payable on and after 6-9-2004. We take note of the fact that the appellants have paid the duty for the subsequent period from 6-9-2004. Since the issue involves interpretation of the Notification and also the assessments in respect of the EOU is provisional, we are of the view that there is no case of imposition of penalty on the appellants. Accordingly, we modify the impugned order in the above terms and allow the appeal partly. Though in this case law, CESTAT has not passed an elaborate order, but it has been held that finished goods, though excisable but exempted or charged to Nil rate of duty, will be liable to pay input duty for the period after 06.09.2004.
6. No question of law was framed in the referral order dt.21.07.2014 passed by the Division Bench, therefore, both sides were asked to help the Bench in framing the question of law. Appellant framed the following point of law:-
Whether proviso to Para 3 to Notification No.52/2003-CE and second Proviso to Para 6 of Notification No.22/2003-CE is correctly interpreted in the case of Synergies to the effect that proviso will be applicable only when finished goods are non-excisable or in the case of Indira, wherein it is held that proviso is applicable even to excisable goods which are exempted from or chargeable to Nil rte of duty. On the other hand, Revenue proposed the following question of law before the Bench:-
Whether an 100% EOU is entitled for duty exemption on inputs used in the manufacture of finished goods which are neither non-excisable or can be imported at Nil rate of duty in terms of the First Proviso of Para 3 of Notification No.52/2003-Cus?
7. In view of the facts available on record and the conflicting judgments on the issue, following question of law is framed by this Bench for consideration:-
Whether a 100% EOU is entitled to exemption on inputs used in the manufacture of finished goods, which are either non-excisable or if imported, are chargeable to Nil or exempted rates, in view of second Proviso to Clause 6 of Notification No.22/2003-CE, dt.31.03.2003 or Proviso to Clause 3 of Notification No.52/2003-Cus, dt.31.03.2003.
8. It is the case of the Appellant that finished goods (Solar Panels) are excisable goods by being mentioned in the Central Excise Tariff as per the definition of Excisable goods given in Section 2(d) of the Central Excise Act, 1944 and are not hit by the above provisions of Notification No.22/2003-CE or No.52/2003-Cus. It was also strongly argued by the learned Advocate appearing on behalf of the Appellant that holding the exempted/Nil rated goods as non-excisable will lead to various anomalies and will place the 100% EOUs at a disadvantage vis-`-vis DTA units by asking them to pay duty with respect to inputs when such inputs are also exempted under various Central Excise notifications. On the other hand, learned Authorised Representative relied upon CBEC Circular No.54/2004-Cus, dt.13.10.2007 to indicate the intention of the legislature behind issue of Notification No.22/2003-CE, dt.31.03.2003 and Notification No.52/2003-Cus, dt.31.03.2003. The apprehension of the learned Advocate appearing on behalf of the Appellant is not well founded because the whole idea of the CBEC Circular dt.13.10.2007, relied upon by the Revenue, is only to take care of the duties foregone on the duty free inputs procured on the understanding that resultant finished goods manufactured by the Appellant will be exported. But, if the inputs procured by the Appellant are unconditionally exempted under an exemption notification or are chargeable to Nil or free rate of duty, under the tariffs then there is no question of duty foregone on procurement of such inputs. The provisos for our consideration only denies exemption to inputs procured under Notification No.22/2003-CE or Notification No.52/2003-Cus, but do not prohibit that benefit of all other applicable exemption notifications with respect to inputs procured stand denied. The concept contained under the second proviso to Clause 6 of Notification No.22/2003-CE and Proviso to Clause 3 of Notification No.52/2003-Cus is the same what is applicable to intermediate goods which come into existence in a manufacturers factory when finished goods are exempted or chargeable to Nil or Free rate of duty. In such a situation also, a DTA unit has to pay duty on the intermediate inputs/ finished goods used captively unless exempted or chargeable to Nil/Free rates of duty. On that account, apparently there is no discrimination between a DTA unit and a 100% EOU clearing goods in DTA clearance when the end product is exempted/chargeable to Nil or Free rate of duty.
9. Main argument of the Appellant is that their finished goods Solar Panels are excisable as the same are classifiable under the Central Excise Tariff by virtue of definition of excisable products given in Section-2(d) of the Central Excise Act, 1944. In this regard, we are of the considered view that a definition given in the Central Excise Act, 1944 cannot be considered as the applicable definition for the interpretation of an exemption notification, when such definition has not been specifically made applicable to Notification No.22/2003-CE, dt.31.03.2003 or Notification No.52/2003-Cus, dt.31.03.2003. It is now well accepted legal proposition that a notification has to be read on the basis of the plain meaning and language contained in an exemption notification and also that an exemption notification has to be interpreted strictly. The words used in the relevant provisos of the notifications under consideration are non-excisable or Nil rate of duty/Exempted rate of duty of Customs with respect to the finished goods. The words either non-excisable used in these provisions do not highlight that the finished goods should be non-excisable as per the definition contained in Section 2(d) of the Central Excise Act, 1944. The word non-excisable used in the relevant provisions, alongwith the company of words Nil rate of duty and exempted rate of Customs/Additional duty, will have to be interpreted to mean those finished goods where effective rate of duty payment is zero. Such a Zero rate could be due to Nil / Free rates mentioned in the respective tariffs or a rate fully exempted by way of an exemption notification. The intention behind the impugned notifications read with the relevant provisos is to discharge duty payable on inputs when the finished goods do not discharge any duty by being either fully exempted or tariff rate being Nil or Free. There is no discrimination to 100% EOU Vs DTA units as both the categories of manufacturers have to discharge duty on intermediate stage/input stage when end product is either fully exempted or Nil/Zero rate under the tariffs or no rate is mentioned against a tariff entry. Similarly, the language and words used in another exemption notification cannot be made applicable to the exemption notifications under consideration when the intentions behind both the exemption notifications are different. For example, reliance on the wordings of Sr.No.1 of Notification No.21/2012-Cus dt.17.03.2012 for exemption of CVD on goods when imported, cannot be used for interpreting the impugned notifications for DTA clearances by 100% EOU. Secondly, the word non-excisable is not used in both the notifications compared by the Appellant. Further, to take a view that all goods defined as per Section 2(d) of the Central Excise Act, 1944 has to be treated as excisable goods for the purpose of interpreting Notification No.22/2003-CE dt.31.03.2003 or Notification No.52/2003-Cus, dt.31.03.2003, will defeat the very purpose of charging duty from 100% EOU when the finished goods are chargeable to Nil / Free rate of duty or Fully exempted or no rate is specified in the tariff. In view of the above observations, we are of the opinion that words non-excisable used in second proviso to Clause 6 of Notification No.22/2003-CE, dt.31.03.2003 and Proviso to Clause 3 of Notification No.52/2003-Cus, dt.31.03.2003 will include all those categories of finished goods where the end rate applicable is Zero as the definition of excisable goods under Section 2(d) of the Central Excise Act, 1944 has not been invoked in these exemption notifications. This view is fortified by the observations made by Madras High Court in the case of Century Flour Mills Ltd Vs UoI [2014 (301) ELT 73 (Mad.)] where in Para 20 of this case law, it is held that definition of dutiable goods given in Section 2(14) of the Customs Act, 1962 is not required to be looked into when Section 8A of the Customs Tariff Act states that Government has the authority to increase the rate of input duty. On the same analogy, the plain reading and interpretation behind issue of Notification No.22/2003-CE and No.52/2003-Cus are required to be interpreted without going into the definition of Section 2(d) of the Central Excise Act, 1944. If this strict interpretation is not followed, then the provisos under consideration can never be made applicable for the recovery of input duty where finished goods are cleared at Nil, Exempted or free rates because all of them will be excisable as per the definition of excisable goods under Section 2(d) of the Central Excise Act, 1944. Such an interpretation will be discriminating to DTA units as all such inputs could be routed through 100% EOU to claim full exemption when similar clearances by DTA units will affect duty at intermediate stage.
9.1 On strict interpretation of an exemption notification, Apex Court in the case of Balwant Singh Vs Jagdish Singh [2010 (262) ELT 50 (SC)], relied upon by the learned Authorised Representative, have made the following citations in Para 14 to 17 of this judgment.
14.?Before we deal with the contentions canvassed by the learned counsel for the parties to the lis, we deem it appropriate to notice the observations made by the Constitution Bench of this Court in the case of Commissioner of Central Excise, New Delhi v. Hari Chand Shri Gopal & Ors., (2011) 1 SCC 236 = 2010 (260) E.L.T. 3 (S.C.), insofar as the mechanism and interpretation of an exemption notification issued under a fiscal enactment. This Court has observed in the said decision:
A provision especially a fiscal statute providing for an exemption, concession or exception has to be construed strictly. An exemption notification has to be interpreted in the light of the words employed by it and not on any other basis. A person who claims exemption or concession must establish clearly that he is covered by the provision(s) concerned and, in case of doubt or ambiguity, the benefit of it must go to the State.
15.?The observations made by the Constitution Bench of this Court are binding on us.
16.?Furthermore, this Court in Associated Cement Companies Ltd. v. State of Bihar & Ors., (2004) 7 SCC 642, while explaining the nature of the exemption notification and also the manner in which it should be interpreted has held :
12. Literally exemption is freedom from liability, tax or duty. Fiscally it may assume varying shapes, specially, in a growing economy. In fact, an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burden of progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes applicable no rule or principle requires it to be construed strictly. Truly speaking, liberal and strict construction of an exemption provision is to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in the nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction. (See Union of India v. Wood Papers Ltd. and Mangalore Chemicals and Fertilisers Ltd. v. Dy. Commr. of Commercial Taxes to which reference has been made earlier.)
17.?In G.P. Ceramics Private Limited v. Commissioner, Trade Tax, Uttar Pradesh, (2009) 2 SCC 90, this Court has held :
29. It is now a well-established principle of law that whereas eligibility criteria laid down in an exemption notification are required to be construed strictly, once it is found that the applicant satisfies the same, the exemption notification should be construed liberally. [See CTT v. DSM Group of Industries (S.C.C. para 26); TISCO v. State of Jharkhand (SCC paras 42 to 45); State Level Committee v. Morgardshammar India Ltd.; Novopan India Ltd. v. C.C.E. & Customs; A.P. Steel Re-Rolling Mill Ltd. v. State of Kerala and Reiz Electrocontrols (P) Ltd. v. C.C.E.] 9.2 In the case of Jaipur Golden Transport Co. Pvt.Ltd. Vs CCE Surat [2007 (215) ELT 503 (Tri-LB)], Larger Bench, inter alia, held that purpose of a statute prevails over the material and passed the following observations in Para 14:-
14.?We have considered the submissions. We find that the wordings of proviso to Section 3(1) of the Central Excise Act and Notification 125/84 which we have been called upon to interpret are similar and the basic dispute is as to how the words allowed to be sold in India are to be interpreted. After going through the various submissions made by both sides, we find that 100% EOUs were allowed to be established with the sole purpose of exporting 100% of their production as is evident from the words 100% EOUs. However, on account of certain hardship faced in getting export order, sales in DTA up to 25% were permitted from the year 1984 but there was a clear intention to distinguish between such sales by the 100% EOU from the sales by domestic units other than 100% EOU and it was for this purpose that proviso to Section 3(1) and Notification 125/84 was introduced. Since there were only two modes of clearance in which the 100% EOUs could have cleared the goods i.e. one by export and the other by domestic sale after obtaining the permission of the Development Commissioner, in respect of domestic sales the words allowed to be sold in India were incorporated in both the provisos. The fact however remains that 100% EOUs were never treated at par with other domestic units and for all practical purpose they were considered as units located outside India and accordingly Central Excise duty equal to amount of duties of customs leviable on like or similar goods manufactured outside India when imported into India was made applicable. In fact a different procedure was carved out and a separate Chapter VA was inserted in Central Excise Rules relating to removal of goods from free trade zone and 100% EOU for home consumption and many provisions of the Central Excise Rules were made inapplicable. Even exemption notifications issued under Rule 8 were made inapplicable unless notification itself said so. The intention of the legislature and the purpose of introducing proviso to Section 3(l) and Notification 125/84 is therefore very evident that 100% EOUs are to be treated differently from other domestic units. We are therefore in agreement with the plea raised by the Revenue that no interpretation which would have the effect of defeating the very statutory provision shall be given. It has also been observed by Supreme Court in British Airway's case that while interpreting the statute, courts are required to keep in mind, the consequences which are likely to flow up on the intended interpretation that it is the duty of the court to give a harmonious construction of a statute and that such a construction shall suppress the mischief and advance the remedy. Further as observed by the Supreme Court in the case of Ispat Industries it is no where laid down by our constitution or any other law that only Maxwell's Principles of Interpretation can be used by the court. We can use any system of interpretation which helps us solve the difficulties like the mimansa of principle of interpretation which lay down that when there is the conflict between the purpose and the material, purpose is to prevail because in the absence of the prescribed material a substitute can be used, for the material is subordinate to the purpose. If a subordinate idea clashes with the principal idea, the former must be adjusted to the latter or must be disregarded altogether. Further when there is a conflict between the use and the substance, greater regard should be paid to the use. Following these principles, we find that the purpose all along has been to treat 100% EOUs differently from domestic units other than 100% EOU and therefore we hold that so long an hundred per cent EOU continues as an EOU, it will be within the proviso to Section 3(1) of the Central Excise Act and a mere violation of the permission in the matter of sale to DTA will not take it outside the proviso to Section 3(1) of the Central Excise Act and Notification 125/84-C.E. Any other interpretation will mean that while the law abiding assessee will be liable to pay duty on domestic clearances, others violating the law can conveniently escape duty liability and this would be against the principle of suppressing mischief and advancing remedy. 9.3 In view of the above observations and the settled proposition of law, it has to be held that non-excisable words used in second proviso to Clause 6 of Notification No.22/2003-CE, dt.31.03.2003 and Proviso to Clause 3 of Notification No. 52/2003-Cus, dt.31.03.2003 will embrace in its expression all zero rated finished goods where on account of full exemption, or Nil / Free rates, or where no rate is specified under the relevant tariffs.
10. Based on the observations made hereinabove, the question of law framed by us in Para 7 of this order is answered in favour of the Revenue and against the assessee.
(Pronounced in Court on 08.09.2015) (P.K. Das) Member (Judicial) (H.K. Thakur) Member (Technical) (P.M. Saleem) Member (Technical) cbb 18