Customs, Excise and Gold Tribunal - Tamil Nadu
Mira Textiles And Industries (I) Ltd. vs Cce, Chennai And Cce, Pondicherry on 12 December, 2003
Equivalent citations: 2004(92)ECC724, 2004(165)ELT240(TRI-CHENNAI)
ORDER S.L. Peeran, Member (T)
1. Both the appeals raise a common question of law and facts and hence are taken up together for disposal as per law.
2. The question that arises for consideration is as to whether the appellants are required to add the value of clearances of intermediate products, which are captively consumed while manufacturing the final products, namely, cotton boxes to claim the benefit of the Notification No 67/95 dated 16.3.95. The appellants are engaged in the manufacture of Kraft paper, corrugated paper board and cartons. They manufacture Kraft paper from waste paper pulp. It is the case of the appellants that Kraft paper is not cleared on payment of duty but is captively consumed. It their case that in terms of Notification No. 67/95 dated 13.395, they are not required to add the value of clearances as clarified of the intermediate product while computing the total clearances in terms of Notification No. 6/2000-CE dated 19.10.2000 as amended from time to time. They claimed that their quantity of clearances of Kraft paper was less than 3,500 per MTs. It is their contention that while arriving at the total quantity of 3500 MTs of kraft paper, they are not required to take into account the quantity of kraft paper used captively in the manufacture of paper board.
3. The department did not agree with their contention and in both the appeals, the Commissioner (Appeals) and the Commissioner of Central Excise have confirmed the duties on the kraft paper for the purpose of value of clearances and have held that the value of clearances of kraft paper captively consumed is also required to be taken into consideration to arrive at the total value of clearances. It is held that they had crossed the limit of 3500 MTs under Notification No. 6/2003-CE 19.10.2000, which has now been clarified by Notification 6/2000 dt. 1.3.2000 as amended by 6/2002 dated 1.3.2002 and on that plea the demands have been confirmed.
4. We have heard Ld. Counsel Shri A. Jaikumar and Ld. SDR, Smt. R. Bhagya Devi
5. It was pointed out that the explanation to Notification No. 6/2002 in Condition No. 14 was introduced which clearly stated as follows:
'Explanation _ For removal of doubts, it is hereby clarified that the first clearances of an aggregate quantity not exceeding 3500 metric tonnes shall not include clearances of any paper and paper board or articles made there from which attract nil rate of duty or are exempt from the whole of excise duty under any other notification.'
6. It is stated that from the above explanation, it is now made clear that the quantum of any clearance which attracted NIL rate of duty or are exempt from whole of excise duty under any other notification has not been taken into account, while determining the quantum of exemption i.e. 3500 MTs under Notification No. 6/2002.
7. It is stated that the explanation has clarified the doubt which was in existence and the explanation is not a new or amending notification but has got retrospective effect. In this regard, the judgement is relied rendered by CBEC in the case of BHARAT METAL INDUSTRIES as reported in 1981 (8) ELT 503 (CBEC). Further reliance is placed on the following judgements:
1) SHREE HANUMAN METAL INDUSTRIES v. CCE Delhi _ 1984 (18) ELT 652 (T)
2) CINE SUPER & PRIVATE LTD. v. UOI _ 1994 (72) ELT 20 (Bom)
3) OMKAR TEXTILE MILLS PVT. LTD v. CCE _ 1993 (63) ELT 580 and
4) SULOCHANA AMMA v. NARAYANAN NAIR are reported in 1995 (88) ELT 785 (SC)
8. It is submitted that in these judgements, it has been clearly held that where an explanation is introduced into a notification, it is only to make the provisions of the notification plain or clear if something is obscure and will relate back to the date of notification.
9. Ld SDR submitted that the in Order-in-Original No. 12/2003 dated 10.7.2003, there was also an issue pertaining to clearances of 529.581 MTs of cartons on which duty had not been paid and that required to be taken into account while computing the exemption limit of 3500 MTs.
10. In a rejoinder, Ld.Counsel submitted that even in terms of annexures to show cause notice, this quantity of 529.581 of MTs is referred to clearances over and above the exemption limit of 3500 MTs which was cleared by paying duty. It is submitted that he has no objection for verification on this aspect of the matter.
11. On a careful consideration of the submissions, we notice that explanation to Notification No. 6/2002 dated 1.3.2002 clearly states that for the purpose of removing doubts, the explanation has been added to clarify that the first clearance of an aggregate quantity not exceeding 3500 MTs shall not include clearances of any paper and paper board or articles made there from which attract nil rate of duty or are exempt from the whole of excise duty under any other notification. The appellants are manufacturing corrugated board by captively using kraft paper which was manufactured from the paper pulp. The objection raised by Revenue is that the clearances of captive consumption of kraft paper is also required to be taken into consideration while computing the value of clearance of corrugated boards. The explanation which has been added is very explicit and clear and it is to clarify that captive consumption of paper and paper board or articles made there from which attract nil rate of duty or are exempt from the whole of excise duty under any other notification is not to be added to arrive at the first clearance and aggregate quantity not exceeding 3500 MTs. It is not the case of the revenue that the kraft paper which are consumed attracted duty. The appellants also have stated that they have not cleared kraft paper outside their factory and its clearance were consumed, on which point alone is differed by both the Commissioners i.e. its value has to be added while computing the value of final clearances. On a careful consideration, we are not in a position to accept the plea of revenue as the explanation is only to clarify the doubt. The judgements relied also support the view of the arguments raised by the Ld.Counsel that explanation relates back to the date of the notification. In fact, the CBEC in the case of BHARAT METAL INDUSTRIES (supra) have clearly laid down that the value of goods manufactured and consumed within the factory of production in the further manufacture of other excisable goods, will not be taken into account while computing the value of clearances otherwise it will amount to duplication in accounting. In the case of SHREE HANUMAN METAL INDUSTRIES v. CCE Delhi (supra) also it has been laid down that the value of goods used in the captive consumption is excludible while arriving at the value of first clearances of goods produced in small units. In the case of OMKAR TEXTILE MILLS PVT. LTD v. CCE (supra) it has been held that explanation interested by amending Notification is only clarificatory in nature and it will relate back to the original notification. Likewise, in the case of SULOCHANA AMMA v. NARAYANAN NAIR (supra) it is held that it is a settled law that explanation to a section is not a substantive provision by itself. It is further held that it is entitled to explain the meaning of the words contained in the section or clarify certain ambiguities or clear to them up. It is held that it becomes a part and parcel of the enactment, its meaning must depend upon its terms, sometime, it would be added to include something within it or to exclude from the ambit of the main provision or condition or some words occurring in it. Therefore, it is held that the explanation normally should be so read as to harmonies with and to clear up any ambiguity in the same section.
12. In view of these judgements, we set aside the impugned orders and allow the appeal. However, as regards the plea taken by revenue in Appeal No. E/548/2003 in Order-in-Original No. 12/2003 dated 10.7.2003 a quantum of 529.581 MTs of cartons had been cleared without payment of duty. This fact is required to be verified as the appellants contend that the had suffered duty and it pertains to a quantum which is beyond the limit of 3500 MTs , while computing the value of clearances arrived at without adding the value of intermediate goods. This short point may be verified by the original authority in the concerned Appeal E/548/2003. This point is sent back for reconsideration while the aspect pertaining to merits is upheld as argued by the appellants and in the light of judgements by allowing the appeals.