Custom, Excise & Service Tax Tribunal
Gurudevan Match Works vs Tirunelveli on 19 November, 2019
customs, EXCISE AND SERVICE TAXAPPELLATE TRIBUNAL
= 7 CHENNAI ©
. Regional Bench - Court No. HI |
Excise Appeal No. 40658 of 2013.
(Arising out of Order- in- Appeal . No. 4141/2012 dt. 21. 12.2012 passed by the
Commissioner, of. Central Excise (Appeals), Madurai) ;
M/s. Sri Ganapathy Packaging oO : Appellant
-139-A/6-Ganeshpuram
Manthithoppu
Kovilpatti. -
VERSUS
The Commissioner of GST & Central Excise ==: Respondent
'Tractor Road, NGO "A'Colony » co
ce Tirunelveli,
| WITH
Gi) Excise. Appeal No. 40661/2013. (M/s. Gurudevan Match .Works) ©
(Arising out. of . Order-in-Appeal No. 115/2012 'dt. 21.12. 2012 passed by the
Commissioner of. Central. Excise (Appeals), Madurai) oe
diy Excise - Appeal | No. 40662/2013 (M/s. Sasi Match Works)
(Arising out of Order-in- "Appeal. No.113/2012 - dt. 21, 12. 2012 passed. . by the
Commissioner of Central Excise (Appeals), Madurai)
. ii) Excise Appeal. No. 40663/2013 (M/s. Selvam Match Works)
(Arising out of Order-in- Appeal No.114/2012. dt. 21. 12.2012 - passed by the
Commissioner of Central. Excise (Appeals), Madurai).
(ivy Excise: Appeal No. 40664/2013 (M/s. Vinayaga. Match Works)
7 (Arising. out. of Order-in-Appeal- No.112/2012 dt. 24.12.2012 passed by the
Commissioner of Central Excise (Appeals), Madurai). -
(v) Excise Appeal Nos. 40692/2013 (M/s.Jayakannan Matches Pvt.
'Ltd.)
«rising. out of Order-in- -Appeal No.286/2012 dt. 20. 12.2012 passed by the
_ Commissioner of Central Excise (Appeals), Madurai)
(vi) Excise Appeal No. 40698/2013 (M/s. 'Sri Madan Match Works)
(Arising out of Order-in- -Appeal -No.116/2012 © dt. 21. 12. 2012. _ Passed | 'by 'the
Commissioner of Central Excise (Appeals), Madurai)
. (vii) Excise Appeal No. 40699/2013(M/s. Sri Jothi Pathirakaliamman _
: . Match Works) 3
(Arising out of. Order-in- -Appeal No.117/2012 dt. 21:12.2012 passed by the
Commissioner of 'Central Excise (Appeals), Madurai) :
. (viii) Excise Appeal No. 40788/2013(M/s. Thangammal Match
Works)
(Arising out~of Order-in- -Appeal _ No,.33/2013 dt. 31.01.2013 "passed by the
. Commissioner of Central Excise (Appeals), Madurai)
. \
J
~ Commissioner of Central Excise. (Appeals), Madurai.
_ Works)
2.
(ix) Excise Appeal No.40789/2013 (M/s-Iswarya Match Works)
(Arising out of Order-in-Appeal No.26/2013 dt. 31.01.2013 passed by the
Commissioner of Central Excise (Appeals), Madurai)
9) Excise Appeal No.40790/2013 (M/s.Balasubramanian Match
. Works) -
{Arising out. of Order-in-Appeal No.32/2013_ dt. 31.01.2013 passed by the.
Commissioner of Central Excise (Appeals), Madurai) . a
(xi) Excise Appeal No.40820/2013 (M/s.Subburaj Match Works)
(Arising out of Order-in-Appeal No.41/2013. dt. 31.01.2013 passed. by 'the
| 'Commissioner of Central Excise (Appeals), Madurai)
(xii) Excise Appeal No. 40821/2013 (M/s.Nivas Match Works) __
. (Arising out of. Order-in-Appeal No.27/2013 -dt. 31.01.2013 passed by the
. Commissioner of Central. Excise (Appeals), Madurai)
(xiii) Excise Appeal No. 40822/2013 (M/s.Parasakthi Match Works) _
(Arising out. of _Order-in-Appéal No.43/2013 dt. 31.01.2013 passed by the
Commissioner of Central Excise (Appeals), Madurai)
_ (xiv). Excise Appeal No. 40823/2013 (M/s.Meenatchi Match Works)
(Arising out of Order-in-Appeal No.22/2013. dt. 31.01.2013 passed by the
~ Commissioner of Central Excise (Appeals), Madurai)
(xv) Excise Appeal No. 40824/2013 ((M/s.Rajiv Match Works)
(Arising out of Order-in-Appeal. No.37/2013 dt. 31.01.2013 passed by the
i Commissioner of Central Excise: (Appeals), Madurai) .
(xvi) Excise Appeal No. 40825/2013. (M/s.Kaliswari Match Works) --
(Arising out of Order-in-Appeal No.39/2013. dt. °31.01.2013 passed by the
_ Commissioner of Centrai Excise (Appeals), Madurai)
_ (wii) Excise Appeal No. 40826/2013 (M/s.Manikandan Match
-. Works) - : oo :
(Arising out of Order-in-Appeal No.42/2013° dt. 31.01.2013. passed by the .
Commissioner of Central Excise (Appeals), Madurai)
- (xviii) Excise Appeal No. 40827/ 2013 (M/s.Sithivinayagar Match
- Works) : | ee |
'(Arising out of Order-in-Appeal No.40/2013° dt.31.01.2013: passed by the
(xix) Excise Appeal No. -40828/2013 (M/s.Pasumpon Match
Works) © a .
{Arising out. of Order-in-Appeal No.25/2013. dt. 31.01.2013 passed by the
'Commissioner of Central Excise (Appeals), Madurai)
(xx) Excise Appeal No. 40829/2013 -- (M/s.Sridevi Match
(Arising out of Order-in-Appeal No.23/2013 dt. 31.01.2013 passed by the
Commissioner of Central Excise (Appeals), Madurai)
Qc) Excise Appeal No. 40830/2013 (M/s.Thangavel. Match
Works) es oo oe
(Arising out-of Order-in-Appeal .No.28/2013 dt, 31.01.2013 passed by the
' Commissioner of Central Excise (Appeals), Madurai) ° |
(odi) Excise Appeal No. 40831/2013 . (M/s.Sangareswari Match
Works) Po -, : - -
ye
af
(Arising out. of Order-in-Appeal No.24/2013 dt. 31.01.2013 passed by the
Commissioner of Central Excise (Appeals), Madurai)
: Cxxiit), Excise Appeal: No. 40832/2013 (M/s:Arun . Match ©
Works)
. (Arising out of Order-in-Appeal 'No.29/2013 dt. 31.01.2013: passed by the ~
Commissioner of Central Excise (Appeals), Madurai)
(xxiv) Excise Appeal No. 40833/2013 (M/s.Savithri Match
Works). | oe a
(Arising out. of 'Order-i in- Appeal No.30/2013 dt. 31.01.2013 passed by the
Commissioner of Central Excise (Appeals), Madurai)
Gav) Excise Appeal. No. 40834/2013 | (M/s.Kalidevi Match
. Works)
(Arising 'out of Order-in- \-Appeal No:31/2013 dt. 31.01.2013 passed. by the
Commissioner of Central Excise (Appeals), Madurai) ,
(xvi) 'Excise Appeal. No. 40835/2013 (M/s.Indira Match |
-Works) __ : Co
- (Arising out of Order-in- Appeal No.34/2013 dt. 31.01.2013 passed- by the
'Commissioner of Central Excise (Appeals), Madurai) .
(Qoxvii) Excise Appeal. No. 40850/2013- (M/s.Veera Match. 1 Creators)
- (Arising out of Order-in-Appeal .No.35/2013 dt. 31. 01. 2013 .passed by the
Commissioner of Central Excise (Appeals), Madurai)
(xviii) Excise Appeal No. 40851/2013 (M/s.Renga Packages)
. _. {Arising out. 'of Order- in-Appeal No.36/2013 dt. 31.01.2013 passed by the
Commissioner of Central Excise (Appeals), Madurai) :
(Ocxix) Excise Appeal 'No. 40852/2013° (M/s. Ganesh Babu Match
| Works)
(Arising © out of. Order- in- Appeal No. 38/2013 dé. 31.01.2013 passed by the
Commissioner of Central Excise (Appeals), Madurai) . ,
(Coed), Excise Appeal No. 41084/2013 (M/s. Sharone Match Works)
(Arising out of Order- in-Appeal No.113/2013. dt. 22.03. 2013 passed. by the
~ Commissioner. of Central Excise (Appeals), Madurai)
'(oxxi) Excise Appeal No. 41107/2013 -(M/s.Rajkumar Match
Works) a on oo |
- (Arising out "of. Order-in- -Appeal No.17/2013 dt. 22.03.2013 passed by the
Commissioner of Central Excise (Appeals), Madurai) ° .
(Goodi) Excise. Appeal. No. 41138/2013 (M/s.Anbuselvi 'Match
Works) De
(Arising out of Order-in- "Appeal No,114/2013 dt. 22.03.2013 passed by the
Commissioner of Central Excise {Appeals}, Madurai} ,
"Qoodii) Excise. Appeal No. 41175/2013 (M/s. Saijai Match Works)
(Arising out of Order-in- -Appeal No.151/2013-dt. 18.04. 2013 passed by the
Commissioner of Central Excise (Appeals), Madurai)
_ APPEARANCE: |
Shri S. Renganathan, Advocate,
Shri S. Venkatachalam, Advocate and
-. Shri M. Kannan, Advocate for the Appellants.
Shri S. Govindarajan, AC (AR) and
Shri L. Nandakumar, AC. (AR) for the Respondents
a CORAM:
HON' BLE Ms. SULEKHA BEEVI C. S., | MEMBER (JUDICIAL)
| HON'BLE MR. P. VENKATA SUBBA RAO, MEMBER(TECHNICAL)
| [Beferion Nos. A008 7 -A o12xfooiq|
FINAL ORDER NOs. 44821-41864 /Ro19
_ DATE OF HEARING: 41. 06. 2019
DATE OF PRONOUNCEMENT: {Tue "2014
_ PER : MS. SULEKHA BEEVI C.S.
The issue involved in "all these appeals. being the same,
- they are 2 heard together and are disposed by this common order.
2. . Brief facts 2 are that t the appellants are engacée in packing
of duty paid machine. 'dipped. match splints. purchased . from
mechanised match - units. They avail the benefit of Notification --
' No.4/2006-CE dated 1.3.2006 (SI. No. 72 of the Table) and cleared
matches so manufactured by them without payment of duty during
the. material period | from -- September 2010 to August 2011. The
department was of the view that the appellants are not eligible for
. the benefit of Notification since the match splints purchased by them
: . have been manufactured using the aid of power, Show Cause Notices
were issued proposing to demand the. duty along' with interest and
also. for imposing penalties. After due process of law, the original
authority confirmed the demand, interest and imposed penalty. In
appeal, Commissioner (Appeals). upheld the demand, interest as well
"as penalties, however, directed to requantify the. duty and the penalty |
payable after extending cum- duty benefit as also" claim made for.
. CENVAT credit wherever applicable. Aggrieved by such order, the
appellants are now before the Tribunal.
3. On behalf of the 'appellants, Id. counsel S/Shri
Renganathan, S. "Venkatachalam and M. Kannan appeared and
--argued the. matter. It is submitted 'that 'the appellants' were
. purchasing machine dipped match "splints from other match
manufacturers. on which excise duty was paid by them, The duty on
: 'the dipped match splints is determined on kilogram basis. The dipped -
match splints procured by the appellants are packed in boxes of |
which the sides are painted | with red phosphorous. These boxes are
"subsequently bundled and sold without payment of duty as per
| Notification 4/2006- CE. dated 1.3.2006. as per the said. notification,
when the- process in relation to manufacture of matches is
| undertaken without the aid - of power, the exemption as per the : :
"notification is available, The appellants did not use power for packing
or bundling and hence are eligible for exemption. of duty as -~per
Notification. . |
3.1 The id. counsel referred to Note. 3 of Chapter 36 and
submitted . that the 'said Note gives an inclusive definition. The.
. matches include a firework: in the form. of a match and where a match
_ stick. has. more heads than one capable of being ignited by striking,
| each such head will be deemed 'to be a match. Therefore, it is clear,
. that each head is match and. stick with single head is also match.
3.2 In the HSN, it is clarified as. follows:-
_ "This heading covers matches producing a flame on being --
rubbed on a rough, surface (sometimes specially prepared
for that purpose). 'They generally consist of a stem of
: wood, 'cardboard textile yarn impregnated - with' stearin .
wax, paraffin wax etc. (wax matches or vestas) and of a |
head made of various inflammable chemical products".
3.3 o AS: per Chapter Note 3. of Chapter ; 36, each matchstick ~
capable of being ignited by striking should be deemed to be a match.
So the matchsticks purchased are finished and excisable goods and
has suffered appropriate duty at the hands of the manufacturer. The
allegation of the department is that the processes undertaken |
by the appellant in packing the matches in boxes painted with -
red phosphorous, though. done without aid of power is. not
eligible for exemption | as per Notification No. 4/ 2006-CE
because the raw materials, dipped match splints were
manufactured by using aid of power. Admittedly, no power was --
- used in the. factory of the appellant. Only if power is used in the.
factory of the appellant in any one of the six processes mentioned in
the notification, the appellant have to pay duty on the goods cleared
by them. Since no power: is used in the packing of matchsticks in the
- appellant' s factory, the benefit of the notification cannot be denied.
3.4 . In this regard, the appellant relied on the Board Circular
No.1/93-CX-4 dated 2.12. 1993. Though the said circular is with
= regard to 'manufacture of footwear falling under Chapter heading
~ 6401. which is 'entitled for. exemption from duty under Notification No.
49/86- CE, the above said 'circular is squarely applicable to the
present case. The Board clarified that when parts of footwear
| manufactured. _using aid of power 'is purchased - and used for |
manufacture of footwear, without the aid of power, the benefit of
. exemption: would be eligible to the manufacturer. Notification 1 49/86
"is 3 similar to Notification 4/2006. |
3.5 °° The Notification 4/2006 states that the exemption 'would
be eligible. if none of the specified processes have been carried. out
- with the aid of power. The department does not have a case that the |
appellants: have carried out any processes in their factory with the aid
of power. Though the units of the appellants have purchased the.
dipped 'match splints which. have used power to manufacture the..-
same, the appellant having paid duty -on such dipped match. splints
and: then, used. for manufacture of matches (packing, bundling etc.)
| without the aid of Power, | the exemption is eligible.
L
3.6 The Id. Counsel relied upon the following decisions to
argue that if power is not used in the manufacture, then exemption
would be available even 1 if power is used in manufacturing bought- out
components. etc.: -.
a CCE Vs. Scientific Compounds & Processes P. Ltd. - 2003 (156)
ELT 1025 (Tri. Chennai)
'by "Omega Packaging P. Ltd. Vs. CCE - 2000 ) (421) ELT. 390 (Tri ),
Waxpol Industries Ltd. Vs. 'CCE. -- 2000 (126) ELT 1001 (Tri)
DCCE Vs. Kishan Biri Mfg. Co. - 2016 (339) ELT 16 (Cal.)
~ affirrned by Hon''ble Supreme Court reported in 2018 8 (360) ELT
A121 (SC).
3.7. The id. Commissioner (Appeals) in the impugned order.
has dealt with evolution of safety matches based on the material
found in the internet. and concluded that the process undertaken in
the . factory of the. appellants amount to manufacture' which is
erroneous.
3.8 | 'The Id. Commissioner (Appeals) has also erred in relying
'upon the decision of the Hon'ble Supreme Court in the case of
Standard Fireworks Industries Vs. CCE - 1987 (28) ELT.56 (SC). In
that case, the assessee therein were purchasing in bulk all materials
7 required for their manufacturing operation and send the steel wires to
different people to cut them to sizes. So also paper was made over to
other units. for being shredded into small 'Strips for. the purpose: of
-manufacture of fireworks. After steel wires were cut to sizes and the
paper was processed, the same were being returned to the factories
of the assessee. In the present case, 'the appellants were purchasing
duty paid match. splints. from) various sources and packing it and...
removing the same. as matches. The raw materials used by them
were 'not sent outside for further processing. with the aid of power. --
The Tribunal, in the. case of Omega Packaging P. Ltd. (supra) had --
_ occasion to consider a similar issue and has distinguished the facts in
Standard Fireworks Industries. (supra).
L
3.9. -- "The Id. 'Counsel Shri S. "Venkatachalam also argued 'that
. the process of packing the matchsticks in the boxes does not amount
to. manufacture. After referring to Note 3 of Chapter 36, he submitted
"that. in the Chapter Note. there is no: mention to the effect . that
packing of matchsticks in the match boxes amount to manufacture.
. No new: product has emerged in the factory of the appellant and no
"manufacturing activity is carried out in the unit so as to attract levy
Of. excise duty. Only if power is used in any one of these processes
| mentioned in Notification. 4/2006, the appellant has to' pay duty. 'In
oe the. instant case, 'the appellants are purchasing duty paid match -
~ splints. and using | them for packing in boxes. The suppliers are
discharging duty on the dipped splints treating them as matches. If
| dipped splints are 'matches, then there cannot be further manufacture
of matches. taking place i in the appellants' factory.
3.10 After omission of Rule 14 of Central Excise Rules, 2002 _
with effect from-1.4.2003 by Notification No. 12/2003-CE (NT) dated
1.3.2003, there is no restriction in packing duty paid matchsticks and |
. there is no requirement that 'duty should be paid at the packing stage .
by way of. affixing, central excise stamps.on the match boxes. Prior to.
the omission of Rule 14 of Central Excise Rules, 2002, the Notification --
No. 50/2001- CE (NT). dated 28.6. 2001 was applicable. As. per the said
notification, "duty has to be paid on the matches cleared for home
consumption by way. of affixing central excise stamps. Now Rule 14 of
'Central Excise Rules, 2002 is omitted and the payment of duty is on
matchsticks and not at the stage of packing | in boxes and duty is
collected on matchsticks on, kilogram basis. If duty is on match
boxes, it would have been per item / per 'box and not on kilogram . :
- basis. . . .
3.11» He contended that the appellants are not doing any a
oe activity of manufacture by packing the duty paid match splints in the
boxes. Such | packing. activity does not fall under the ambit of
| manufacture. The duty paid matches remains as matches even after
packing also. No new product. emerges after packing: in boxes. In the |
° 'absence of deeming provision in the Chapter Note to the effect that
op
a packing of matches in the boxes amount to manufacture, it cannot be
concluded that the appeltants have manufactured new product and
required to pay duty again. The Id. Counsel relied upon the following.
a decisions: -
a. Shyam il Cake Lid. Vs. CCE - 2004 (174) ELT 145 (sc).
- b. CCEVs. S. R. Tissues Pvt. Ltd. - 2005 (186) ELT 385 (SC)
| - C. * Union of India Vs. Ahmedabad Electricity Co. Ltd. -- 2003 (G58)
"BLT 3 (SC) - oe | |
: d. Dalmia Cements (Bharat) Ltd. VS. CCE. - 2008 (224) ELT 484
| (Tri. Chennai)
3.12 . cs | "With regard to the eligibility _of exemption, he further
/ explained that the concept of completion of process of manufacture of .
a product will attract: only if the entire process of manufacture of.
matches is carried out in a Single factory. It is not applicable when >
the duty paid matchsticks are packed because the finished matches
already have come into being at the factory of another manufacturer OS
and 'suffered duty. The appellants therefore prayed that. the
confirmation of duty demand, Interest and penalty amounts may be
Do set aside.
AL - oo Ld. AR Shri S. _ Govindarajan supported the: findings i inthe ~
: impugned order. He réferred to Notification 4/2006 and 'submitted:
that in Sl. No. 72, it is stated that to avail the benefit of. notification
~- none. of the following processes is to be carried out with the aid of -
: power. The various. processes are:-.
a... frame filling © oe |
b. dipping of splints in: the composition for match heads
co filling of boxes with matches :
d. posting of labels on 1 match boxes, veneers or -cardboards
e. packaging. |
41... Thus any 'process which is done in relation to. the --
manufacture of matches, 'if done with the aid of power, notification
_ benefit will not be applicable. In the present case, the appellants oe
have purchased duty paid match splints and used. for packing
L
10
them in boxes. Though the appellants have not used any
power -for packing and > 'painting the boxes with. red
phosphorous, the 'match 'splints used for packing have been.
_manufactured using the aid of power. The notification 'clearly
specifies that none of the specified processes should be carried out
~ with the aid of power and without circumscribing the. use of power to
any specified premises or factory. The claim of the appellant that no.
power was 'used within the factory is not acceptable. With reference .
to manufacture of matches, which IS. cleared by the appellant, aid of
: 'power has been used for manufacture of dipped splints. He much.
stressed on the decision of the Hon'ble Supreme Court in the case of
Standard Fireworks Industries (supra). In the said case, it was held
that when: cutting of steel wires or treatment of' paper is a process of
manufacture for fireworks and therefore if power is used in such
process, even if «such usage of power is. outside the factory of
/ manufacture, it amounts. to usage of power in the manufacture of
_ fireworks. In the. instant case, dipping. 'of splints has been carried out
with the aid of power. This is one of an important process in the .
manufacture 'of safety matches. When power has been used in
manufacture of safety matches, even though the appellants have not
. used power -in 'their factory for giving the sides of match boxes red. |
phosphorous coating and packing of machine made dipped splints in
"such boxes, they are not. entitled to: the benefit of Notification -
4/2006.
"4.2 In 'the manufacture of. safety "matches, the process of
manufacture of match heads and the process. of packing the. dipped
. splints in boxes side coated with red 'phosphorous are integrated and --
integral process. 'These. processes have been artificially split by
me adopting the colourable. device of manufacture of dipped splints in
one factory and packing of such dipped splints in match boxes side
~ coated with red phosphorous in another factory with a view to claim
| exemption under notification 4/2006-CE. The authorities below have
rightly considered the facts as 'well as the notification in the: correct
~ perspective and-confirmed the duty demand.
AL
11
| x . Heard both sides... -
. 6. The issue involved in these appeals. is whether the -
appellants are eligible for the benefit of Notification No. 4/2006. For
better appreciation, the said Notification is. reproduced as under:-
72 3605 00 10 Matches, in or in relation to the Nil --
tor | _ |-manufacture -of which none. of the
| 36050090 | following processes is. ordinarily
- .. | carried on with 'the aid of power,
namely -
(i) frame filling - - -
(ii), dipping. of splints. in - the
composition for match heads
(iii) filling of boxes with matches
(iv) pasting of labels. on match
boxes, veneers or. cardboards,
(v) packaging
6.1 'It is not disputed that the appellants are not using power
7 within their factory for 'painting the. boxes with red phosphorous,
packing, bundling etc. To be more specific, the processes undertaken |
by the appellants are confined to the activity of making / painting the
| boxes, packing, labelling etc. They clear the entire boxes containing
the dipped match splints without | payment of duty by availing the
. exemption of the above: notification. 'The case. of the department is
_ that Since the dipped splints packed in the boxes is manufactured by |
using the 'aid. of power, the. exemption as per the notification is not:
available to. them. The notification | does not. say that the entire.
| . _ Processes mentioned therein from sub- clause (i) to (v)} have. to be
done by a 'single manufacturer. 'SO also it does not say that all these -
processes have to. be carried out. in a single factory. Whenever a
notification is interpreted it has to be taken into consideration in.
- : respect of the particular assessee / manufacturer. who avails the
| benefit of notification. Ifa manufacturer does not use power in the
| _. process 'carried 'out by him, which results in the production of the
. . goods cleared: by him, the benefit of notification ought not to be .
| denied. The dipped match 'splints procured by the appellants. from |
other. manufacturers have suffered excise duty. It is not the case of
the department that, the suppliers who manufactured the dipped
4
12,
~ splints using the power have also availed the benefit of notification.
- So also there is no allegation that the appellants herein are in any .
"way connected to the manufacturers / suppliers of machine made
dipped splints. There is no. allegation -that there is cash flow or any --
such hidden financial transactions between the appellants and the
suppliers of dipped splints. Such suppliers of aipped s splints are totally
unconnected with the appellants herein.
6.2 The authorities below: have placed reliance. on the
'decision of: the Hon'ble Supreme Court in the case of Standard
- Fireworks Industries (supra) to hold that when the dipped splints are.
processed by using aid of power, the appellants who put further use
of: such dipped splints to manufacture matches is not eligible for the.
exemption. On perusal 'of the facts in- Standard: Fireworks Industries
(supra), it can be seen. that the assessee therein. was purchasing in --
bulk: materials: required for their manufacturing operation. These
materials including. stee| wires and papers were given to different . .
unconnected people to be cut to sizes and for shredding into small
strips. The steel wires were cut to sizes and the. _papers were
. shredded into. small strips outside the factory by use of power. Such
- cut to 'size steel wires and shredded paper strips were - thereafter
returned to. the factory of the assessee, which was put to use in the |
- 'manufacture of fireworks without the use of power. The Hon'ble Court
held that the cutting of the steel wires and the treatment of the paper
was done using the aid of power, though done outside. the factory,
the' exemption. as per Notification No. 179/77 dated 18. 6,1977 is not
= : eligible. The facts of the case in Standard Fireworks Industries 7
(supra) doés not show. that the cut to size steel wires and- paper
- strips have suffered any excise duty. Further, the assessee therein
7 : has procured the steel wires and paper in: bulk and send it outside to
have it processed with the use of power. These processes | were
| carried out on behalf of the assessee therein itself. In the present
case, the facts are entirely 'different. The appellants have purchased
Taw materials (dipped splints) which . have' suffered excise duty' and
used. them in the process of painting. the boxes, packing etc. The
appellants" have not sent any of their raw materials outside their
13
factory | to be processed using the aid of power. When. the raw:
materials (dipped 'splints) manufactured using the aid of power has.
suffered duty, the appellants cannot be. denied. the exemption: alleging
~ that the raw materials have been manufactured with the aid of
: "power. The facts. as narrated in Standard Fireworks Industries (supra) |
me are not analogous or identical to the facts of the present appeals. and
therefore distinguishable.
6. 3 The Tribunal | in the case of Omega Packing P P, 'Ltd. (supra)
| had. occasion. to consider. a similar situation wherein the exemption LS
o under. Notifications No. 71/83- -CE; 153/86- CE | and 102/88 were:
. analysed. It was held that when metal containers were manufactured
by the assessee without the use of power in his factory using bought
o out: tops. and bottoms, the 'benefit . of . notification is eligible. The
discussion of the Tribunal in para 5 of the said decision is noteworthy
and | reproduced 2 as below:- ~ |
-"5. We have considered. the. submission of 'both the 'sides.
Notification . 71/83- CE dated 1-3-1983 provides Nil rate of duty
. in-.respect .of metal containers if such: containers are produced
_ . without aid of power' from sheets which had~ been tinned,
_ printed, coated. as lacqured by others with the aid of power.
_ Similar exemption. was provided by Notifications 153/86 and |
-. 102/88 dated 1-3-1988, It is not_the case.of the Department
that the Tops and Bottoms of:the metal container were being
got manufactured' by the 'appellants on. job: work- basis. It is.
undisputed | fact that the appellants have not used power in their. .
_own factory where metal containers were being manufactured
by them. They have purchased the tops and bottoms "Of -
_ payment of duty from other manufacturers. The fact that the
M/s. Sterling Components were. using power will hot make the
use of power by the Appellants as Sterling Components is an.
independent entity. The facts of the-present.matter'are different .
. from the: decision of the Supreme Court in the case of Standard
' Fire Works as_well as the case.of Merchant Steel Industries: In.
Merchant Steel case the appellants therein were sending the. Tin
- sheets for: getting them printed and lacquered by M/s. Gujarat' _-
_. Metal Box. which were. using power. Similarly in 'Standard. Fire.
- Works case the appellants were sending steel wires. to different -
people' to be cut to" sizes and paper used to be made over for
being cut into smaif strips and to be given special treatment for
the purpose of manufacture of Fire Works and in _view_of these
facts both Gujarat High Court and Supreme Court respectively
hefd that the. power was used by the manufacturers claiming the
exemption. In the present matter the appellants are not sending
- any material for being processed on job work basis. They are .
purchasing the. components from the third parties on a principal:
_ to principal basis. Merely because close relatives of the Directors |
i
0)
14
were partners of Sterling Components will not make the dealing
'between two units not to. be on principal to principal basis. In...
fact there is no allegation by' the Department that M/s. Sterling .
Components and Abrama' Metal Components were, dummy units
of the appellants: Further the Tribunal has already held in their
own case, supra, that they were eligible for the exemption. In
view of these facts, the benefit of the notification was available
to the metal containers manufactured by appellants and --
accordingly: the- impugned Order is set aside. and appeal is
allowed.
6.4 ---. While interpreting and applying a notification, the same
has to be considered in respect of the assessee who has availed the 7
a benefit of notification. The said: aspect has been clarified by the Board
| In Circular No. 1/93- -CX- 4 dated 2.12.1993. The same is reproduced
as. under: -
"Power -- Use of power : _ One part. of footwear manufactured
with: the aid of power - -- Notification No. 49/86-C.E.
Circular No. 1/93- cx. 4, dated 2-12-1993
Government | of India
Central Board of Excise & Customs
New Delhi -
Subject: : Power. - Use. of power in 'manufacture of components.
-- Effect -- Footwear manufactured without the use of. power. but ~
out of parts manufactured with the aid of power eligible to
exemption under Notification No. 49/86-C. E.
'The matter "has: been examined and it is found: that the
instructions. of June, 1969 (F. No. 8/19/67- CX.2, dated 27-6-
1969) mentioned at Para 4 of your fetter were issued with
reference to the then existing Notification No, 94/67- C.E., of
May, 1967 and had to be read with reference to Tariff heading
existing then. This. Notification was for a factory where. both
_ footwear and parts thereof were manufactured and thereafter
'parts were used in the manufacture of footwéar in. the same
factory.. The reliance of CCE, Delhi, on the instructions issued in
1960 and 1969 for footwear are not really relevant as the
present Tariff 5 is different from the earlier Tariff.
- In the present case parts are manufactured by a manufacturer
with the aid of power. Such parts manufactured with the aid of --
power are purchased by another. manufacturer of footwear who
used such parts for manufacture of footwear without the aid of
power. So. long, 'the second manufacturer . does not use any
power, in or in relation:to manufacture of footwear either in his
factory or _in_the factory of 'his job workers, it. cannot be
construed that power has been used in. manufacture of footwear
only because. the taw_materials bought and used by: him had
been manufactured with the aid_of power. This case is squarely
governed. by Circular No, 487- C.E., dated _19-6- 1987 (F._No,
4
LL
15
--13/1/87-CX.1), ~
In view of the above, footwear falling under Chapter heading.
6401.19 will be entitled to exemption. from duty under
_ Notification No. 49/86-C.E., if they are made out of parts which
have been manufactured with the aid of power."
6. 5 "Though the' above circular is with regard to use of | power. :
in manufacture of footwear, the Board has clarified that when parts of
footwear were 'manufactured with. the aid of 'power, - such parts
'purchased by another manufacturer of footwear who used such parts» |
for manufacture of footwear without aid of power, would be eligible
_ for the. exemption in the notification
6.6. The: Id, AR has argued that only if the entire processes as
~ stated in the Notification | is carried out without the aid of power, the
exemption from. duty would be eligible. It is also submitted by. him
that the dipped match - "splints by itself cannot be considered as
'matches', 'The dipped match splint along: with the match box alone
can be used to fight fire and therefore the: box along with match splint:
is the marketable commodity as ' "matches. That therefore the entire.
"processes for manufacture of matches as stated in the notification .
should be: cartied out without the aid of power to be eligible for
exemption of duty. In the present case, the dipped. match splints
were purchased on payment of duty under the Tariff. heading
'matches' itself. Thus no doubt, the - dipped. match splints
manufactured using power. are marketable and excisable . _ goods.
There are a lot of intermediate products which are sold in the -
industry which are excisable goods. Such goods may not -be sold
directly to the ultimate | consumer. 'These. are used. in further
manufacture in the industry. For the appellant, the duty paid match':
| splints are: raw materials used for manufacture: of matches.
Admittedly, they. did not use power in the manufacture of matches ~
| carried out by them. The department does not have a case that the'
appellants purchased raw materials and send it outside the factory to.
make dipped match splints using power. The duty paid splints are raw
'materials for them.
aside. The appeals are allowed with 'consequential relief, if any.
16
6. 7 : From the above discussions, we are of the view that the |
appellants having" not used any" power: in- the process carried out by
them for manufacture of matches, the benefit of Notification 4/2006--
CE is eligible to them... So |
6.8 The Id. Counsel Shri S. Venkatachalam has also put
forward arguments that the process of painting the boxes, with red
phosphorous, 'packing the match splints in the boxes or bundling etc.
| 'does. not amount to manufacture. When the. assessee claims to have
availed 'the benefit of notification 'and cleared the goods. without
| payment of excise duty, their contention that the process carried out
: : by- them: does not 'amount to manufacture is self-contradictory. The
. appellants. have obtained central excise registration. also. "Further, as
per section 2(f). of Central Excise Act, 1944, these activities: amount
to manufacture. The contentions put forward. by the counsel stating
that the activity does not amount 7 manufacture, therefore, 'does not
find favour with: US..
- - oe oo Following the decision in Omega Packing P. Ltd. (supra)
: as also » appreciating the. facts and the evidences presented by the -
case, we are' of. the view that the _appellants are eligible for the
Of" notification is therefore set aside. The impugned orders are set
(Order pronounced in the open couirt on. ee )
MEMBER QUDICIAL)
Galante oadsx peertdled |
(P. VENKATA SUBBA RAO)
MEMBER (TECHNICAL)
Rex .
benefit Of. notification. The. demand confirmed disallowing the benefit ..
We
aw py
_~17-
Per P Venkata Subba Rao
1. The facts of the case and the arguments made on both sides have
been détailed by Hon'ble Member (Judicial) and'I find no reason to reiterate
them. The question to 'be decided in this case is whether 'or not the
appellants are entitled to. the benefit. of Notification Na. 4/2006 -CE dated
1.3.2006 (S.No. 72). in. respect. of the matches manufactured and cleared by .
them. during the period September 2010 to August 2011. This notification
reads as follows:
Exemption and effective rate of duty for specified goods of Chapters 25 to 49
in exercise OF. the powers conferred by Sub-section ( 1) of section 5A of the
Central Excise Act, 1944 (1 of 1944), the Central Government, on being a
satisfied that it Ms necessary in 'the public interest so to do, hereby exempts
excisable goods of the description specified in column (3) of the Table below
read with the relevant List appended hereto, as the case may be, and falling
within the _ Chapter, reading: or sub- "heading or tariff item of the First
Schedule fo the Central EXcise Tariff Act, 1985 (5 oF 1986) (hereinafter -
referred to as the Central Excise Tariff Act), as are given in--the
"corresponding entry in column (2) of the said Table, from 50 much of the
~ duty of excise specified thereon under the First Schedule to the Central
"Excise Tariff Act, 'as is in excess of the. amount calculated at the rate.
"specified in the corresponding entry in column (4) of. the said Table and
subject to the relevant. conditions specified in fhe. Annexure to this
. notification, and the Condition number of. which, is referred to in the.
| corresponding entry in column (5) of the Table aforesaid.
We
-18-
Explanation.-- For the purposes of this notification, the rates specified in
column: (4) of. the said Table are ad valorem rates, unless otherwise
specified.
S. Chapter Description of _excisable Rate | Candition
'No. or . No.
heading
or sub-
heading
or tariff --
item of
the First .
Schedut. .
(4) 2) 8) __ (4) (5)
72. 3605 00 Matches, in or in relation to Nil --
10° orthe manufacture of which
3605 00 none of the following
90 processes fs ordinarily carried
on with the. aid of power,
namely:
| Gi) the process of giving-the
'veneer flats or strips, the
configuration of a match
box including the outer
Slide or the inner slide
with the use of match
Paper, .
(ii) frame filling;
(ii) dipping. of splints in the
'composition. for match
heads; .
(iv) filing of boxes with
matches; a
(v) pasting of labels on
match bexes or veneers
or cardboards;
. (vi) packaging
A plain reading of the above notification. shows that there is no stipulation in
it that all the above processes have to take place within the same factory. It
also does not stipulate that the benefit is available if the power is not used
by the person claiming the benefit of the exemption notification or his job
workers. Therefore, the place of use of power is irrelevant. The person who
a | Ky
-19-
uses the power is also irrelevant. The = only thing that is relevant, is that the
power should not. have been used in any of the. Six processes mentioned
"therein. It does not matter if the power is used in any - of the other
processes in the manufacture of the Wiatches, the benefit is still available as
long as the power is not used in the above SIX processes. If power is used in
any of the above SIX processes, then 'the benefit of the exemption
_ notification is not available regardless of who used the power in that process
or on whose account..
2; The assessee could either undertake the entire manufacture
themselves: or outsource any of the processes to a job worker (who
completes the process on account of the assessee) or they could purchase
- goods from a vendor. (who completes the process on his own account and
sells to the assessee) and then complete the remaining- processes. It is
immaterial as far as the notification is concerned which method is adopted.
What is crucial 'is whether the power has been used in any of these
processes.
3. In the case of Standard Fireworks dealing with a notification similar to
the present notification, Hon'bie Apex Court held that benefit of the
notification is not available even if the processes were undertaken outside |
. the factory of the assessee: with- the aid of power. In that: case, the power
was used by' the Job workers in one of the processes. In the present case,
' the power is used by the vendor in one of the processes.-What is relevant for
.the exemption notification iS whether power 'was used in one of the six
processes and NOT who used it. The ratio of the judgment of the Hon'ble
Apex Court. in the case of Standard Fireworks Industries vs CCE [1987 (28)
ELT 56 (SC)] (supra) squarely applies to the Present case inasmuch as in
"O
-20-
both cases, the notification only specified the processes in which: the power
should not be used 'without specifying who should not be using the power in
that processes and it is. held that even if the power is not used in the factory
of the manufacturer but it is used 'outside, the benefit of the exemption
notification: is not available.
4. To say that the exemption is. not available only if the power was not
used by the assessee, one neéds to insert the words 'by the manufacturer or
his job workers' in the notification and read it as Matches, in or in relation to
the manufacture of which none of the following processes -is ordinarily"
carried on with the aid of power by the assessee'.
5. .° To hold that the exemption is not available only if the power was not
used by the assessee or his job workers, one needs to insert the words 'by
the manufacturer or his. job workers' in the notification and read. it as
Matches, in or in relation to the manufacture of which none of the following
_ processes is ordinarily carried on with the aid of power by the assessee or
his job workers'. "Such enlargement of the scope of the notification is
beyond the powers of this Tribunal.
6. The Constitution of India divides the powers between Lefislature,
Executive -and Judiciary with legislation being solely domain of the
Parliament. Subordinate legislation such as this notification is made by the
Government which is answerable to the Parliament. Further each and every |
notification is placed before the Parliament whose Committee on Subordinate
Legislation scrutinises the notification and directs any changes which it feels:
iS necessary. It is for this reason, the power of making subordinate
-21-
legislation is. delegated to the Government which is answerable to the
Parliament and 'not. to other arms of the State.
7. qt is therefore, not open for the Tribunal to: enlarge the scope of the ©
notification by reading into it the additional words that do not exist. Even if it
iS 'viewed that the: exemption notification can also be interpreted to mean
that the power should. not be used -by the assessee-or his job. workers only, it
cannot be denied that a plain reading of the exemption notification forbids.
the use of power in processes. without reference to who undertakes the
processes.
8. ~Over years, two different approaches were taken while interpreting the :
exemption 'notifications - strict and . liberal or purposive construction.
. Beneficial exemption notifications. have, at times, . been interpreted SO as to |
serve the purpose - of the exemption notification 'without being unduly "
restricted by the words of the notification. Both approaches to interpret the
notifications were taken even by. the Supreme Court and therefore the issue -
a was. "referred to. the five member Constitutional bench of the 'Hon'ble
Supreme Court which | has finally settled the law in the case of Dilip Kumar &
Co. [2018 (361) ELT 0577 (SC)] in-the following words:
«52. To sum UP, we answer the reference holding as under -
(1 ) Exemption notification should be interpreted strictly; the burden.
= of proving applicability would be on the aSSESSee to show that his.case
comes within the parameters of the exemption clause or exemption
notification. | |
(2) When there is ambiguity in exemption notification which is
subject to strict interpretation, the benefit of such ambiguity cannot be
qv yn
-2?-
Claimed by the subject/assessee and it must be interpreted in favour |
; of the revenue. |
(3) The ratio in Sun Export case (supra) is not correct and all the
decisions which took similar view as in Sun Export case { supra ) stands
overruled.
The ratio of the judgments of Standard Fireworks Industries vs CCE [1987
(28) ELT 56 (SC)] and Dilip Kumar & Co. [2018 (361) ELT 0577 (SC)] are
binding on all courts and tribunals leaving. me with no option but to conclude.
| that the appellant assessees are not entitled to the benefit of the exemption
notification.
9. It has also been canvassed on behalf of the appellants that what they .
are doing is mere packing of the splints into boxes and no new commodity
has come into. existence and there is no 'Chapter note in 1.the Central Excise ©
Tariff to hold that packing of matches amounts to manufacture. it nas also
been argued that the Tariff heading indicates the standard unit as kg and:
not as boxes and hence there | is no intention to tax matches packed. in
boxes. Even a child knows that the match. box is not. merely a packing
material but it has half the chemicals required to make fire through friction.
It does not take too much effort to understand that the splints Hameo oie Ge
and the matches in boxes are "different commodities as known to the market.
The standard unit indicated in the tariff does not determine whether duty is:
"payable or not. Match boxes are countable but they can also be weighed.
~ Simply because they can be easily counted and the standard unit indicated
"in the tariff is kg, it does not mean that. no excise. duty is payable on
matches in boxes. Several other goods in the same chapter which are
ql
-23-
"equally countable such as safety fuses, detonators, signalling flares, etc., all
have the standard unit as kg. This does not make them not dutiable.
10. - It has also. been argued on behalf of the appellants that with respect to
an exemption notification no. 49/86-CE for footwear, CBEC issued circular
NO. 1/93-CX -dated 2-12-1993 indicating that the particular exemption
notification is available even in cases where the suppliers of the inputs used
power. Therefore, 'the same logic should apply to them. I find that in the first
place, CBEC's circular is binding on the department but not on the Tribunal,
Secondly, the circular dealt with a different. exemption notification and it
~ cannot be treated as a binding ratio and extended to other exemption
notifications. Thirdly, the circular was issued at a.time when the issue of how
to. interpret an exemption notification was not settled by the Constitutional
bench. of the Supreme Court in the case of Dilip. Kumar (supra). Lastly, any ©
clarification by the Board in the form of a Circular cannot prevail over the
ruling of the Hon'ble Apex Court that the exemption notifications must be
interpreted strictly with benefit of: any doubt going against the assessee and |
in favour. of the Revenue. Thus, I find that the 'circular relied upon does not
carry the case of the appellants any further.
41. In view of the above, I find that the benefit of the exemption
notification no. 4/2006-CE is not available to the assessees and the demands
confirmed by the impugned. orders need to be upheld and the en are
liable to rejected.
(P VE iV fe [oe
ember (Technical)
24.
'Registry is directed to place the matter before the Hon'ble President to refer
the matter toa third member to decide the following question:
"Whether the appellants are eligible for the exemption notification no.
4/2006-CE dated 1.3.2006 as held by Member (Judicial) or they are not
eligible for the exemption as held by Member (Technical)."
(Order pronounced in open court on )
- (SULEKHA BEEVI€.S.) | (Pp VENKATA SUBBA RAO)
Member(Judicial) ember (Technicat)
25
PER P. DINESHA (THIRD MEMBER) : --
4
~ The above: matter has come up for hearing as per
the order of reference by the Hon'ble President vide letter
in F.No. -- 01(06)/DOO/CESTAT/Reg./2017 dated
18.09.2019.
2:1 When the: matter. was taken up for hearing on
_ 16.10.2019, Shri. Ss. Venkatachalam, Ld. Advocate
appearing for the appellants, submitted a Memo for
withdrawal of Excise Appeal No. 40692 of 2013 in respect
of M/s. Jeyakannan Matches Pvt. Ltd., Sivakasi, stating .
that the appellant is exploring the 'possibility of availing
the. benefit -of. the Sabka Vishwas (Legacy Dispute
7 Resolution). Scheme, 2019 and thus requested that the
appeal may be permitted to be withdrawn.
2.2. The scope and cause of reference to the Third
Member is limited to the difference of opinion between
the Members and therefore, as a Third Member, I cahnot
go beyond: the reference to entertain the - above.
application. However, I deem it proper to place the above
application before the regular Bench for any order on the _
application: --
3.1. The facts have been meticulously reflected in the
Interim. Order and therefore, the same are not repeated
oe here. The only issue to be decided by me is whether the
- appellants. are. eligible for. the benefit of exemption of
Notification No. 04/2006-C.E. dated 01.03.2006. _
3.2 The Member (Judicial) has held that the appellants
are eligible for the benefit of the Notification (supra ) and
: has: set aside the "demand whereas, the Member
(Technical) has held that the benefit of the exemption
Notification (supra) is not available to the assessees and
- has accordingly confirmed the demand. The only question
- formulated by the Members on the Difference of Opinion
is "whether the appellants are eligible for the exemption .
Notification No. 04/2006-C.E, dated 01.03.2006 as held
&.
26
ce by Member (Judicial) or they are not eligible for the --
oo exemption as held by Member (Technical)."
4.4 During the hearing on 16.10.2019, Shri. S.
Renganathan, Shri. K. Ramachandran and Shri. S.
~ Venkatachalam, Ld. Advocates, appeared for the.
na appellants. and inter alia contended that in Chapter Note 3
- of Chapter 36, there is no mention as regards packing of
match sticks amounting to manufacture; that the
_ appellants are purchasing - duty paid match splints and
; that if dipped splints | are matches, then there was no
- further : manufacture taking place in the appellants'
- factory, etc.
4. 2 - They further relied on their arguments recorded in
the Interim Order.
5.1 Per - contra, -- Shri. Ss. Govindarajan, Ld.
Departmental Representative, appeared for the Revenue:
-He- would submit that the Notification No. . 04/2006
(supra) is issued | In order to encourage the industries |
which. are manufacturing goods without the aid of power.
and the same is available only if afl the processes
mentioned therein are carried out without the aid of
: power. -
5.2. He also drew support from the findings of the lower .
authorities to inter alia contend that the dipped match
splints by itself cannot be considered as matches; that
_ the same are manufactured with the aid of power, are
. marketable and excisable and so are a lot of intermediate
products which are sold in the market; that. the. 'match
_ Splints. manufactured with the aid. of power are raw
. materials for the appellants and therefore, the appellants
have not satisfied the conditions for claiming the benefit
of the exemption Notification (supra).
5:3 He concluded that the ratio in the case of M/s. --
Standard Fireworks Industries Vs: Collector of
Central Excise, Madurai reported in 1987 (28) E.L.T..
I : a*
27
56 (S.C.) squarely applies and therefore, the ratio of the
Tribunal: or of other High Courts | need not be considered in
the light of a clear Supreme Court Judgement.
6. I have considered the rival contentions and
os perused the documents placed on record.
7 Ld. Advocate submitted that there is no issue with
regard to the interpretation 'of the exemption Notification © -
since the conditions | are very clear and that the
appellants/manufacturers have 'satisfied the conditions
: inasmuch as, they have not used 'the power in so far as.
their manufacturing activities are concerned. Ld. DR also
contends that there is no issue with regard to the
Notification since, according to him, the manufacturing
, activity is 'required to be looked into as a -whole.
comprising of all the processes and hence, in one of the
processes the. power having been admittedly used, that is
7 _ sufficient to dislodge claim of appellants that they are
'entitled to the benefit. He vehemently contended that the
benefit is qua processes and not qua manufacture and not
even: qua person since the very purpose of impugned
Notification is to encourage manufacturing sector wherein
power is not at all used.
'|
8.1 I consider. it expedient to. first set out some
principles of interpretation that will guide me 'in this
exercise. In Union of India VS. Elphinstone Spinning &
; Weaving Co. Lid. " reported in AIR 2001 SC 724, the
Hon'ble 'Apex. 'Court formulated what it termed the
cardinal principle of construction in the following words:
"a statute is a command of the Legislature. The
interpreter must, therefore, in interpreting and construing
the statute, identify the intention of the Legislature; that.
in identifying the intention of the Legislature by the
"process of constructing, thé Court will have to adopt both
literal and purposive approaches. This would mean that -
the true or legal meaning of an enactment is derived by
construing / the . meanings of the words. used in the
Be
.
o% 28 enactment in the | fight of any discernible purpose or Yo object which comprehends the mischief oF its remedy | to which: the enactment is directed. "
8.2 In State of Uttar Pradesh Vs. Vijay Anand reported in AIR 63.SC 946, the Hon'ble Apex Court inter alia n __ observed that "when the language is plain and | unambiguous | and admits of only one meaning, no ~ question of construction of a statute arises, for the Act speaks | for itself....".
8. 3 Thus, when the meaning is s plain and unambiguous, "no process of construing. or interpreting a statute can . : proceed beyond the literal or textual interpretation except if absurdity results asa consequence. In my considered opinion, the 'same. principles apply to _ construing 'notifications too.
8.4 Although. courts. have historically taken the | assistance of common law principles | in interpreting : statutory law, there is very little. common-about the tax - : laws. 'There are a sul generis set of principles that apply 7 to the 'interpretation of taxing statutes. ":....Jt is the well ° settled proposition that the subject -is not to be taxed without clear words for that purpose; and every Act of Parliament must. be. read according . to the natural construction of its words....., held the Hon'ble, Apex Court _in Member Secretary, AP; State Board for Prevention and -- Control of Water Pollution Vs. Andhra Pradesh Rayons Ltd. AIR 1989 SC 611. se .
8, 5 In Commissioner of Central Excise, Pondicherry Vs. 7 ACER 'India Ltd. Reported | in (2004).8 SCC 173 and
- Commissioner of Central Excise. Vs. Kisan Sahkari Chinni 7 Milis Ltd. Reported in (2001) 6 SCC.697, the Hon'ble Apex Court inter alia observed that " win a taxing. Act, one has to look merely at what. is clearly said. There is no room "for any intendment. There "is no equity about a tax. There is no presumption.as to tax. Nothing is to be read
- in, nothing is to bé implied. One can only look fairly at the a e 29
- language used... . It is also an equally well- settled rule . that exemption notifications are to be construed strictly to ~ the extent that their applicability is being examined. 9.1 Now, I may proceed' to apply these principles in . 'figuring out if the appellants qualify for exemption "notification no. 4/2006-CE dated Ol. 03.2006 which is 'presently | under dispute and since appropriate extracts of 'the notification. have already been reproduced by both the Ld. Members, I need not do so once again.
"912. In view of broader principles laid down by any ~. number of judgments including those quoted in the above paragraphs, it is imperative that all the words used in the _ notification/statute are to taken into consideration and all 'the words should 'be given the mest. natural/possible meaning. Statutory: pronouncements must be read in a . manner that they are given effect to in the most complete "manner, .
9.3. Firstly, the notification reads as:* Matches, in or in 'relation to the manufacture of which ....". It is important that it is' either in the manufacture or in relation. to manufacture. of Matches with ne caveat to either of the _ cases. 4 9.4 Secondly, the use of the word "ordinarily" in Sl. No... 72 in the exemption notification no. 4/2006-CE is thus of particular significance and cannot be ignored. it has the . effect of further widening the scope of the restrictions. ~ Thé restriction that the processes must not be carried out. with the. aid. of power applies not just to the specific goods under consideration but the same goods whenever | manufactured. In, other words, if the specified processes in relation' to such goods are, in the ordinary. course of commerce, carried out with the aid of power, the | "restrictions would apply and the exemption would not be. available. This conclusion may be reached de hors the:
facts of the specific cases at hand. Thus, in order to: succeed in its claim for exemption, the burden on the é 30 assessee is heavy ~ it must prove that the specified or
- listed processes are not ordinarily carried out with the aid of power and not merely that power was not used in its specific case. This burden has not been discharged. 9.5 I may also » point out that in the case of Omega 7 Packing relied on by. the Member(Judicial), this 'tribunal has clearly noted that the condition in the notification considered there (Notification No, 71/83-CE) was that "such containers are produced without the aid of power."
= Such a finding of the tribunal would indicate that the word "ordinarily" used in the present notification constitutes a 'material departure from: the law as it then stood. 9.6 I may point ¢ out in passing that, presumably, the Intention of the subordinate legislation. was to prevent 'businessmen from. artificially splitting ~ up the
- manufacturing processes across multiple. assessees to enable a larger than deserving claim for exemption.
10. | Further, Member(Judicial) rightly points out that ~ the notification does 'not require that the processes listed |
- therein are required to be carried out by a single/same
-manufacturer. However, for the reasons I have given above, the converse too is not true. That is, the absence of such a requirement does not. automatically entitle the assessee to the exemption. -
11. The very heading of the Notification, i.e., GENERAL. EXEMPTION NO. AT reads thus: "Exemption and: effective ' rate of duty for SPECIFIED GOODS of chapters 25 to 49" :
and it applies. to exempt excisable goods. of the | description specified in column (3) of the table. So, the conditions upon which the exemption depends is relatable snot to the assessee, not the manufacture and not even ~ the manufacturer, but only to the goods specified.
12. It is the case of the - appellants that they have procured dipped match splints from other manufacturers . who have removed such goods on payment of duty. I find 4 31 that this would not make any difference: since the entitlement to exemption is to be determined separately - in each. assessee's case. The fact that duty has been paid _ on some. . intermediate/ semi-finished goods not themselves entitled to exemption is in no manner -- relevant to whether 'exemption is to be granted at a
- subsequent stage to the. finished goods. In any event, the - cascading effect is effectively mitigated by CENVAT credit. ' The exemption notification must be applied only to the goods it seeks to cover.
13... There aré also references to many Circulars/Notifications by. Member(Judicial}, but as is well known, each Notification/ Circular is issued in particular circumstances, in- respect of particular: areas or. sectors, | with' particular intentions. f am of the view that we must"
be circumspect. ins determining their analogous applicability to other circumstances. One size. does not fit:
all. There can be no generality.
'14. - The notification under consideration refers to many activities i.e, processes, right from- procurement of
- inputs/raw materials, that culminate. in or in relation to manufacture of Matches and. hence, there is no scope to ignore/omit any. _ process/es to claim the benefit. As"
regards raw. materials, 'I need not burden myself with that: -. | issue | as. the - exemption notification _ doesn' t. whisper - anything about it, since the same is qua processes and 'not even qua manufacture - or. the manufacturer. Moreover, it is none of the processes 'that is ordinarily "carried on with the aid of power AND NOT the o manufacture per se, at is carried on with or without the aid of power. That 'is, the center of gravity is the 'Processes' and not' manufacture'.
"is. In_ its judgment in the case of M/s. Standard Fireworks. (supra), Hon'ble Supreme court has inter alia. W held as under: .. The Notification purports to allow exemption 'from duty only when in relation. to. 'the - b 7
- . | | 32 -
"manufacture of the goods no process is ordinarily carried on with the aid of power. It is. not disputed that the 'cutting of the steel wires or the treatment of paper is a process for the manufacture of goods in question. Since _ those. processes were carried on with the aid of power | though carried outside the factory, the requirement of the notification would not bé answered so as to entitle the _ appellants to exemption from duty. It is not necessary to refer to any authority. inasmuch as on the analysis , indicated above the claim for refund appears to have a | been rightly rejected... -
16. On 'an overall analysis of facts in the cases on hand, I find that the above ratio decidendi squarely applies to the. facts on hand and hence, I am of the | opinion that the appellants are not eligible for the. benefit of exemption. notification No.4 ibid and: accordingly, I . concur with the éonclusions drawn by the Member (Technical).. Registry is directed to place the matter before the Division Bench for recording majority/Final | _ oo - . Orders. accordingly.
- os oo -- . (Order pronounced in the open court on A. |. et A ce, (P. DINESHA) MEMBER QUDICIAL) on 1 2019.
wm ec! Sdd on . 33 MAJORITY ORDER _In view of. the order of the Third Member Hon'ble
- Shri. P. Dinesha, Member (Judicial), agreeing with the view taken by the Hon'ble Member (Technical), the appeals are dismissed.
ot (Order pronounced in. the open court on 19.11.2019) Janata Mews . (SULEKHA BEEVI C.S.) 'MEMBER (JUDICIAL) ANT (P. ANJANI KUMAR) MEMBER (TECHNICAL) .
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