Customs, Excise and Gold Tribunal - Tamil Nadu
Campion Business Associates Pvt. Ltd. vs Commr. Of C. Ex. on 23 October, 1997
Equivalent citations: 1999(110)ELT684(TRI-CHENNAI)
ORDER
V.P. Gulati, Vice President
1. issue in the appeal relates to benefit of Notification 155/86 and the successor Notification 54/93 in respect of water filter intended for use on the kitchen top. The brief facts of the case set out in Para 2 of the impugned order are reproduced below :-
"2. The facts in brief are that the appellants who inter alia manufacture 'Water Purifier' falling under Heading 8421.00 of the schedule to the Central Excise Tariff Act, 1985 were found to have cleared the said goods at 'NIL' rate of duty in terms of Notification No. 155/86-CE., dated 1-3-1986 upto 28-2-1993 and in terms of Notification No. 54/93, dated 28-2-1993 thereafter. Upon consideration of their claim for exemption it was observed that the said two Notifications prescribed 'NIL' rate of duty only for 'Water Filters' of a capacity not exceeding 40 litres, and therefore, it was prima facie felt that 'on line water purifier' manufactured by the appellant would not qualify for the benefit. Therefore, the jurisdictional Range officer served 3 show cause notices dated 15-6-1993, 28-2-1993 and 18-7-1994 on the appellant proposing to reject their claim for 'NIL' rate of duty in terms of the said notification with consequential demands of duty aggregating to Rs. 3,19,698.17. After observing the due process of law and taking into account their eligibility for S.S.I, exemption/concession under Notification Nos. 175/86, dated 1-3-1986 and 1/93, dated 28-2-1993 the duty demand was revised and confirmed at Rs. 1,61,058/-relating to the period from December '92 to March 1994."
2. The learned lower appellate authority's findings denying the benefit of the Notifications in question as set out in Para 5 are as under :
"5. I have carefully considered the appeal records and the grounds urged by the appellant. The short point for my consideration is whether an 'on the line water purifier' would qualify for the benefit of exemption in terms of Notification Nos. 155/88 and 54/93 in the light of the fact that the 'description of the goods' according to the Notifications is "water filters of capacity not exceeding 40 litres". It is agreed that there is no dispute regarding the classification of the goods in question under Heading 8421.00 and in terms of the HSN Notes referred to by the appellant it makes no difference when an apparatus or machinery intended for purification of water or liquid is called a 'Filter' or a 'purifier' for the purpose of its classification. In this case admittedly water purifiermanufactured by the appellant is attached to the water pipe line as an on the line device for a continuous process of purification of water with an infinite capacity. But according to the Notification the exemption would be available only to these water filters of a specified capacity of not exceeding 40 litres. Therefore, in my considered view the said description would cover only those water filters with two containers one for holding the water to be purified and another for holding the purified filtered water. In view of the capacity of the water filter specifically prescribed in the notifications themselves, I am unable to accept the plea of the appellant that the product in question would qualify for the benefit on the ground that its capacity is 1 litre and that it is intended for domestic use only. As a matter of fact the domestic or commercial utility of the water filter is not the relevant consideration to determine its eligibility for the benefit under the Notifications in question."
3. Shri R. Krishnan, learned Counsel for the appellants has pleaded that no doubt the Notification provides for the exemption only in respect of such of those water filters which had certain specific capacity as set out in the Notification i.e. less than 40 litres, and the appellants' goods are not of the type where the filtered water could be stored but the item in question does filter the water and is described as water purifier which is fitted on to the tap and water enters at the inlet end of the filter and after filteration therein, the purified water is collected from the outlet end. The water gets filtered on continuous basis depending upon the flow of water and is collected from the outlet on a continuous basis. Referring to the catalogue, he has pleaded that the filtering capacity was maximum to the extent of 6.5 litres per minute. He has pleaded that for the reason of absence of storage capacity in the filter the appellants could not be denied the benefit of the exemption Notifications. In this connection he cited the case of Commissioner of Sales Tax v. Agarwal & Co. reported in 1983 E.L.T. 166 (Bom.). He has pleaded that in that case the question that arose was whether the milk could include milk powder and the Hon'ble Bombay High Court held that powdered milk will be covered by the term milk. He has pleaded that the appellants' water purifier continues to be a water filter and therefore, the benefit of exemption should be allowed. He has pleaded that the appellants' water filter was an improved version of water filter technology. At the time when the Notification was issued, the concession was given only to such of those known type of filters having water storage facility. He has pleaded that the object was to extend the benefit to all sorts of filters which are used for domestic purposes. In this connection he has cited the judgment of the Hon'ble Supreme Court in the case of Union of India v. Wood Papers Ltd. reported in 1990 (47) E.L.T. 500 (S.C.). He has pleaded that the Hon'ble Supreme Court in that case has held as under:
"In fact an exemption provision is like an exception and on normal principle of interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burden or progressive approach of fiscal provisions intended to augment state revenue. But once exception or exemption becomes applicable no rule of principle requires it to be construed strictly. Liberal and strict construction of an exemption provision are 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 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 has to be given to it and it calls for a wider and liberal construction. A Notification has to be read in its entirety and construed as a whole. But a construction which results in inequitable results and is incongruous is to be avoided."
He has pleaded that in the light of this judgment, what has to be first seen is whether the appellants' item is a water filter alone and then what should have been the object and intent of the Notification should be seen and in this case since the purpose was to extend the benefit to water filters used by ordinary people and since the appellants' product was also for that purpose and therefore, the benefit should have been given to the appellants.
4. Shri S. Arulsamy, the learned DR for the department has pleaded that exemption has been given with reference to the storage capacity of the water filter and therefore exemption can be taken to be available in respect of storage type water filter only where water can be put in the filter and the filtered water can be stored and drawn at convenience. He has pleaded that the appellants' item was a continuous flow type filter which has no storage facility at all. Therefore, based on the judgment of the Hon'ble Supreme Court cited by the learned Counsel the item of the appellants cannot be covered by the wording of the Notification and question of extending the benefit of the Notifications does not arise. He also cited the decision in the case of AP Industrial Components Ltd. v. CCE, reported in 1993 (68) E.L.T. 357. The Tribunal in that case has held that the benefit of exemption Notification 155/86 would not be available to Aqua-guard water filter which combines the filteration action with other method of purification of water. He has pleaded that in that case also, the water filter was not of storage type.
5. We have considered the pleas made by both the sides. There is no dispute that the benefit of the Notifications has been extended only to such of those water filters which are of capacity of 40 litres and less. The framers of the Notification have identified a particular category of water filters for the purpose of the benefit of exemption. These are such of those water filters which are of storage type with definite capacity to hold certain quantum of water and these filters obviously answer to a particular configuration that is storage of the water to be filtered and thereafter the filtered water gets collected for being drawn from the receptacle which form part of the filter. Once the product to be exempted has been identified by a particular parameters, those parameters cannot be departed from and benefit has to be given only with reference to those parameters. In the case of the appellants, their water purifier is a type which continuously filters the water and has no holding capacity and the maximum capacity, and the charcoal powder which is an impregnated silver is the filtering medium. It is not the appellants' case that the carbon which is used for filtering the water is the same type as the storage type filter to bring their product near the storage type filter. Further the capacity of the appellants' product is being maximum 6.5 litres per minute the parameter of the capacity in the Notification cannot be satisfied by very nature of the filtering methodology adopted for filteration. The judgment of the Hon'ble Supreme Court cited by the appellants cannot help them inasmuch the appellants at the threshold stand excluded by the nature of filter being different from what is envisaged in the Notification. Likewise, the judgment of the Hon'ble Bombay High Court also does not come to their help as the basic parameter in the Notification is the filtering capacity by reason of the storage which means filter of a particular type which are simple in nature and do not employ complex technology alone covered by the Notification. In this view of the matter, we hold that there is no force in the plea of the appellants. We, therefore, dismiss the appeal.