Customs, Excise and Gold Tribunal - Delhi
Dalmia Industries Ltd. vs Collector Of Central Excise on 20 July, 1995
Equivalent citations: 1995ECR239(TRI.-DELHI), 1995(79)ELT120(TRI-DEL)
ORDER Lajja Ram, Member (T)
1. M/s. Dalmia Industries Ltd., Bharatpur (Rajasthan) (hereinafter referred to as 'DIL'), being aggrieved with the order-in-original No. 153/92-Collector, dated 3-11-1992 passed by the Collector of Central Excise, Jaipur, have filed the present appeal praying for setting aside the impugned order.
2. M/s. DIL brought metal containers (other than those of aluminium), classifiable under sub-heading No. 7310.00 of the Schedule to the Central Excise Tariff, Act, 1985 (hereinafter referred to as the Tariff), from outside, during the period from September 1991 to Feb., 1992, without payment of Central Excise duty, under exemption Notification No. 181/88-C.E., dated 13-5-1988 (as amended by Notification No. 250/88-C.E., dated 1-9-1988), for packing of their product sweetened-vitaminised partially skimmed milk powder (SMP). It was alleged in the show cause notice, dated 2-4-1992 that the said metal containers used for packing of partially SMP were not eligible for exemption under Notification No. 181 /88-C.E. (as amended), and Central Excise duty amounting to Rs. 1,041,424/- was demanded from them under Rule 196 of the Central Excise Rules, 1944, (hereinafter referred to as the 'Rules'). Penal provisions under Rule 210 and Rule 173Q of the Rules were invoked. The Collector of Central Excise, Jaipur who adjudicated the matter noted that in view of the decision of the Punjab and Haryana High Court in the case of Food Specialities Ltd. v. Union of India, 1991 (51) E.L.T. 310, and of the Tribunal decision in the appellants' own case vide Order No. E/74/92-D, dated 14-2-1992, there was no dispute that the goods produced by the appellants was not SMP and that the said containers were not eligible for exemption under Notification No. 181 /88-C.E. He confirmed the duty demanded under Rule 196 of the Rules, read with proviso to Section 11A of the Central Excises and Salt Act, 1944 (hereinafter referred to as the 'Act').
3. The matter was posted for hearing on 3-1-1995 when Shri B.B. Julka, Advocate appeared for the appellants, Shri R.K. Kapoor, SDR represented the respondent.
4. Shri B.B. Julka, the learned Advocate narrated the background of the case and submitted that they had pleaded before the lower authorities that their goods were not SMP, but partially SMP. Departmental authorities forced them to classify the goods as SMP and they have to avail of the exemption with regard to metal containers under the circumstances. He submitted that in the show cause notice no duty had been demanded under Section 11A of the Act. He referred to the Punjab and Haryana High Court's decision in the case of Food Specialities Ltd. v. Union of India, 1991 (51) E.L.T. 310, and stated that they have not violated the provisions of Chapter X of the Rules, and that the order passed by the Collector of Central Excise, Jaipur was not maintainable.
5. Shri R.K. Kapoor, the ld. SDR replied that the appellants had sought permission under Chapter X Procedure of the Rules for SMP, whereas the goods produced by them were partially SMP, for which exemption under Notification No. 181/88-C.E. was not available. He submitted that it was a case of misdeclaration and that while applying for CT 2 certificate under Chapter X Procedure, correct description of the goods was not given. They had not submitted that their product was partially SMP for which no exemption was available. The Ld. SDR relied upon the Tribunal's decision in the case of Steel Authority of India v. Collector of Central Excise, 1989 (42) E.L.T. 686 (Tribunal).
6. In rejoinder, the Ld. Advocate stated that the citation relied upon by the Ld. SDR was about limitation only.
7. We have carefully gone through the facts and circumstances of the case, and have given our due thought and consideration to the submissions made by both the sides.
8. The appellants were engaged in the manufacture of various milk products. Under exemption Notification No. 181/88-C.E., dated 13-5-1988 (issued in exercise of the powers conferred on the Central Government by Sub-rule (1) of Rule 8 of the Rules), amongst others, the metal containers (other than those of aluminium) falling under Heading No. 73.10 of the Tariff, were exempt from the whole of the Central Excise duty leviable thereon, if they were intended to be used for packing the goods specified in that notification. One of the goods specified was the skimmed milk powder (SMP). The exemption when such use was elsewhere that in the factory of production of the said metal containers, was subject to the condition that the procedure set out in Chapter X of the Rules, was followed. It is seen that the intended use for packing, covered SMP. There was no exemption with regard to the packing of partially SMP. Under Rule 192, the person wishing to obtain remission of duty on the notified goods is required to declare that such notified goods will be used for the purpose specified in the applicable notification. The declaration has to be a correct declaration [refer Union of India v. Haim Agha Jan, AIR 1968 Bom. 366; K. Hargovind Das and Company (Exports) Pvt. Ltd. v. Union of India, 1992 (57) E.L.T. 43 (Bom.); ITC Ltd. v. Union of India, 1991 (53) E.L.T. 234 (Cal.)]. Under Rule 196, if any excisable goods obtained under Rule 192 are not duly accounted for as having been used for the purpose and in the manner stated in the application in Form AL 6, then the duty leviable on the notified goods is payable by the applicant, that is L6 licensee. As held by the Tribunal in the case of Hindustan Insecticides Ltd., v. Collector of Central Excise, Cochin, 1988 (33) E.L.T. 575 (Tribunal), mere intention can never be a basis for claim of exemption and that actual use must follow intention to earn exemption.
9. The appellants for the purpose of claiming exemption under Notification No. 181/88-C.E., and for complying with the formalities under Chapter X Procedure, declared their product as SMP. In the B8 Bond, dated 13-3-1989, executed by them, they declared that the metal containers will be used for packing of, among others, SMP. There was no reference to partially SMP. They had also declared that the said metal containers will not be used for any purpose other than that stated in their application. They undertook to pay within 10 days of the date of demand, all dues demandable with regard to the goods obtained without payment of Central Excise duty. They had also filed an affidavit to the same effect. A declaration dated 13-3-1989 was also made in the above terms for claiming exemption under Notification No. 181/88-C.E. On the basis of these declarations, affidavit, bond etc., they obtained CT 2 certificates for receipt of metal containers without payment of Central Excise duty for use in the packing of SMP. Nowhere for the purpose of exemption under Notification No. 181 /88-C.E. they declared that the product to be packed in the said metal containers was not to be the SMP but the partially SMP. At the same time, it is seen that when it came to classification for the purpose of levying Central Excise duty, they claimed that their product was not the SMP. a dutiable product, but was other than SMP which carried a nil fate of Central Excise duty. They had contested the matter in departmental proceedings, and during the course of the departmental proceedings, had filed a writ petition in the Rajasthan High Court, and had taken the matter to the Supreme Court by way of SLP No. 4482/91 against the order of the High Court (through writ petition No. 732/90) after their writ petition was dismissed on 3-1-1991 on grounds of alternative remedy. In all these proceedings, their contention was that their product was not SMP and was partially SMP which was a product different and distinct from SMP. Thus while for the purpose of levy of Central Excise duty they claimed their product to be other than SMP, for the purpose of remission of duty they continued to claim their product as SMP and continued to enjoy the benefit under Notification No. 181/88-C.E., which was available only for packing of SMP. The departmental adjudication was completed on 30-4-1991. On 16-5-1991, the Hon. Supreme Court gave liberty to the appellants to appear before the statutory authority. The Collector of Central Excise (Appeals), New Delhi for grant of relief. It is seen that yet another CWP No. 1826/91 was filed by the appellants in Delhi High Court. The Delhi High Court disposed of the matter with certain directions to the Collector of Central Excise (Appeals), New Delhi.
10. The matter before us is the remission of duty. In so far as the classification for levy of duty is concerned, we may only refer that although the order, dated 30-4-1991, of the Assistant Collector of Central Excise, Kota was confirmed by the Collector of Central Excise (Appeals), New Delhi under order dated 13-6-1991, the Tribunal had decided the matter in favour of the appellants, relying upon the decision of the Punjab and Haryana High Court in the case of Food Specialities Ltd. v. Union of India, 1991 (51) E.L.T. 310 (P & H). Although it is reported that the respondents have approached the Supreme Court in Civil Appeal No. 4572 of 1992, and that the matter is sub judice before the Supreme Court, as at present there is ah order of this Tribunal that the goods produced by DIL are partially SMP. Accordingly, the exemption under Notification No. 181/88-C.E. was not applicable to the containers used in the packing of such product i.e. partially SMP. As held by the High Court of Punjab and Haryana, partially SMP is a different product from the SMP. The appellants cannot claim that for the purpose of levying excise duty, their product is not dutiable being partially SMP, but for availing of the remission of duty under Notification No. 181 /88-C.E., read with Chapter X Procedure of the Rules, their product is SMP.
11. Exemption notifications have to be construed strictly as per the plain language used therein. There is no room for intendment, while deciding upon the availability or non-availability of the exemption as provided by the Central Government in exercise of the powers conferred on them by the legislature. In para 2 of their judgment in the case of Union of India v. Wood Papers Ltd., 1990 (47) E.L.T. 500 (SC), the Hon. Supreme Court have held as under :-
"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 or progressive approach of fiscal provisions intended to augment State revenue"
Under exemption Notification No. 181 /88-C.E., dated 13-5-1988 (as amended), the exemption was available to only those metal containers which were intended to be used for packing of the SMP (among various other products with which we are not concerned). No exemption was available to the metal containers which were intended to be used for packing of the partially SMP. In the case of Food Specialities Ltd. v. Union of India, referred to above, the Hon. High Court of Punjab and Haryana had held that partly SMP is a separate marketable commodity known in the commercial world, and is different from SMP. Thus, on the express language of exemption Notification No. 181/88-C.E., DIL were not eligible for exemption in respect of metal containers used for packing the partially SMP. produced by them. In the case of Novopan India Ltd. v. Collector of Central Excise, Hyderabad, 1994 (73) E.L.T. 769 (SC). the Hon. Supreme Court have discussed their earlier judgments on the issue of interpretation of exemption notifications, and held that exemption being in the nature of exception has to be construed strictly at the stage of determination whether assessee falls within its terms or not. This judgment has been followed by the Hon. Supreme Court in the case of Liberty Oil Mills Pvt. Ltd. v. Collector of Central Excise, Bombay, 1995 (6) RLT 121 (SC). Exemption under Notification No. 181 /88-C.E. was not absolute. It was subject to the intended use, or the conditions as laid down in the Table annexed to the notification. Further, the exemption was subject to the condition that the procedure set out in Chapter X of the Rules, was followed. Under Chapter X, the liability in case of misuse of concession is cast on the user - L6 licencee. As the exemption from Central Excise duty was conditional, it is for the person who seeks to earn such an exemption to establish that the conditions subject to which the exemption was available have been fulfilled. (Refer Supreme Court's decision in the case of Bombay Oil Industries Pvt. Ltd. v. Union of India, 1994 AIR SCW 5192).
12. Metal containers were received under Chapter X Procedure of the Central Excise Rules, on the declaration of the appellants that the said metal containers were intended to be used for packing of the SMP. They were, however, put to the actual use of packing the partially SMP which was not covered by the applicable exemption notification. The appellants have pleaded that if any Central Excise duty is to be demanded, then it should be demanded from the manufacturer of the metal containers, and not from them. Under the scheme of Chapter X of the Rules, the liability in case of misuse of the concession is cast on the L6 licencee who uses the goods, and not the manufacturer of the said goods. The Tribunal in the case of Hindustan Insecticides Ltd. v. Collector of Central Excise, Cochin, 1988 (33) E.L.T. 575 (Tribunal) had held (in the context of Notification No. 34/73-C.E., where Chapter X Procedure was required to be followed for exemption in favour of Benezene) in para 6 as under :-
"6. The intention under Notification No. 34/73-C.E. must be understood only as a legal device to allow clearance under concession because when it (concession) is being taken (at the time of clearance), actual use is obviously a physical impossibility. But mere intention can never be a basis for such a concession, notwithstanding the appellant's claim, because then no concession-goods need be really used as intended, once the intention is declared at the time of clearance, an absurd state of matters. We hold that actual use must follow intention if the concession is to be earned, unless the intention is frustrated by the intervention of events such as natural causes or unavoidable accidents".
In the case of Aarati Paints and Chemicals Industries, Bombay v. Collector of Central Excise, Bombay, 1984 (15) E.L.T. 206 (Tribunal), the declaration filed by the appellants was found to be correct but the permission given by the Central Excise authorities was found to be wrong. In the case of Shri Synthetics Ltd. v. Collector of Central Excise, Indore, 1988 (35) E.L.T. 539 (Tri.) the appellants had disclosed all the material particulars in their application and had installed the air conditioners in the places shown in the ground plan. In the case of Rajasthan Navsagar Chemical Works Dhule v. Collector of Central Excise, Pune, 1987 (30) E.L.T. 969 (Tri.) a clear declaration had been made by the appellants in their application for L6 licence and the goods were used for the purpose declared by them. The Tribunal had held that as the concession was wrongly extended by the department, the department was entitled to recover duty only for a period of 6 months under Rule 10(1) of the Rules.
13. In the show cause notice, the Central Excise duty has been demanded under Rule 196 of the Rules while the Collector of Central Excise, Jaipur who adjudicated the matter has confirmed the demand under Rule 196 read with proviso to Section 11A of the Act. This non-mentioning of Section 11A of the Act in the show cause notice will not vitiate the proceedings and the demand. In this connection, reference may be made to the Tribunal's decisions in the cases of (i) A. Nazi Mutheen v. Collector of Central Excise, Madras, 1988 (35) E.L.T. 519 (Tribunal), (ii) Borivli Hosiery Mills v. Collector of Customs, 1991 (56) E.L.T. 76. (Tribunal) and (iii) Shally Thapar v. Collector of Customs, 1993 (64) E.L.T. 31 (Tribunal).
14. Their assessments were provisional and the goods under consideration were being cleared in terms of Rule 9B of the Rules subject to execution of bond and bank guarantee (refer page 49 of the paper book; para 4 of the Assistant Collector's order dated 30-4-1991; and page 76 of the paper book para 2 of the Tribunal's order No. E/74/92-D.). In the case of Collector of Central Excise v. PMT Machine Tools, 1991 (55) E.L.T. 592 (Tribunal) it has been held by the Tribunal that once the assessment is provisional, it is provisional for all purposes. The Tribunal while coming to this decision had relied upon.the Supreme Court's decision in the case of Samrat International Pvt. Ltd. v. Collector of Central Excise, Hyderabad, 1992 (58) 1991 (31) ECC 207 (SC) wherein the Hon. Supreme Court had held that limitation starts from the date of final assessment in case of payment under provisional assessment. In the case of Art Plywood Industries Ltd. v. Collector of Central Excise, 1991 (56) E.L.T. 496 (Tri.), the Tribunal had observed that the provisional assessment was an integral process and that the limitation was to account from the date of adjustment of duty after final assessment thereof irrespective of whether assessment was provisional for reason of classification or of valuation, and that the wording of the bond was no constraint. In that case, the Tribunal had relied upon their earlier decision in the case of Castrol Ltd. v. Collector of Central Excise, 1985 (20) E.L.T. 102 (Tribunal). Further, the Tribunal in the case of Steel Authority of India Ltd. v. Collector of Central Excise, 1989 (42) E.L.T. 686 (Tribunal), relying upon their earlier decisions (refer Bajaj Tempo Ltd. v. Collector of Central Excise, Pune, 1984 (17) E.L.T.205 (Tri.); Fertilizers Corporation of India Ltd., v. Collector of Central Excise, Patna,1987 (31) E.L.T. 411 (Tribunal); Bajaj Auto Ltd., Pune v. Collector of Central Excise, Pune, 1987 (31) E.L.T. 970 (Tri.),) had held that the demand for duty under Rule 196 of the Rules read with B-8 bond was not subject to anytime limit In the present case, in spite of assessments being provisional, show cause notice has been issued and personal hearing has been given. Thus, the requirements as laid down by the Hon. Supreme Court in the case of Collector of Central Excise, Patna v. ITC Ltd., 1994 (71) E.L.T. 324 (SC) have been met.
15. Taking all the relevant considerations into account we find no merit in this appeal. The appeal is rejected.