Customs, Excise and Gold Tribunal - Delhi
Central Pulp Mills Ltd. vs Collector Of Central Excise on 2 March, 1993
Equivalent citations: 1993(49)ECR132(TRI.-DELHI)
ORDER N.K. Bajpai, Member (J)
1. This is an appeal against the order of the Collector of Central Excise (Appeals), Bombay by which he has upheld the order of the Assistant Collector, Central Excise, Surat Division III denying the benefit of exemption to un-coated kraft paper under Notification 138/86-CE, dated 1.3.1986 claimed in Classification Lists No. 2/87-88, dated 27.3.1987 and 3/87-88 effective from 1.4.1987 and 23.11.1987 respectively. The dispute has arisen because the lower authorities have not accepted the claim that the appellants "factory does not have a plant attached thereto for making bamboo pulp or wood pulp" inasmuch as it is not denied that such a plant has been in existence although it was closed down in 1986, whereas exemption under the Notification is subject to the specific condition that
(iv) the factory does not have a plant attached thereto for making bamboo pulp or wood pulp.
2. It is necessary to closely look at the facts. The appellants had submitted a letter dated 25.3.1987 while filing their Classification List in which they had, inter alia, submitted as under:
Since we shall be manufacturing the said paper and paper board out of pulp containing not less than 50 per cent by weight of pulp made from materials other than bamboo, hard woods, soft woods, reeds or rags and since the aggregate clearances of all paper and paper boards falling within Chapter-48 for home consumption had not exceeded 24,000 tonnes in the preceding financial year, we shall be claiming benefit of exemption under Government of India M.P. notification No. 138/86-CE dated 1.3.86 as amended by notification No. 24/87, dated 1.3.87. As regards to proviso (iv) para 1 of the Notification we have to clarify as follows:
Our pulp making division is closed because of the liberalised Import Policy of the Government of India and as such we are no more engaged in the making of bamboo pulp or wood pulp. Since the notification makes it a condition that for availing of the benefit of exemption under the notification the factory should riot have at the relevant time a plant attached thereto for bamboo pulp or wood pulp, we have already detached totally from the plant the chipping and chips washing unit required for manufacture of bamboo pulp of wood pulp. On this account our plant is totally separated from the chipping and chips washing unit which is a pre-requi-site of making bamboo pulp or wood pulp. Since the pulp manufacturing unit was closed our paper mill should be treated as a "Paper mill does not have a plant attached thereto for making bamboo pulp or wood pulp". We are submitting herewith a fresh classification list under Rule 173B claiming the benefit of exemption under Government of India M.P. Notification No. 136/86, dated 1.3.1986 as amended by Notification No. 24/87, dated 1.3.1987 and also the price list.
We request you to kindly verify the plant operations and allow us to clear the goods under Notification No. 24/87, dated 1.3.1987 from 1.4.1987 onwards.
(Emphasis added)
3. On 14th April 1987, the appellants wrote a letter to the Range Superintendent, Bardoli giving a list of the items detached and these were as under:
(a) "V" Belts of the Chips Blower to silo have been removed.
(b) The Pipe line blowing chips from chips blower to chips silo/yard-linking piece of the pipeline has been kept removed.
(c) The Conveyor belt of the external conveyor to digester chips conveyor has been removed.
(d) The drive motor of the table feeder of chips silo has been removed.
(e) The electric power supply to the power equipments in chipper house has been switched off.
4. On 25th November 1987, a Panchnama was drawn by the Range Superintendent (Range II) at die appellants' factory in the presence of two of the appellants' authorised officers. The Panchnama confirms the position stated in the appellants' letter, dated 14th April 1987 and also records that "the pulp mill is closed since many year".
5. By an order passed in May 1988 the Assistant Collector rejected the claim for exemption under the notification mainly on the ground that, with the disconnection of certain accessories connecting/joining with each other, the pulp mill and switching off the electric power supply, it cannot be said "by any stretch of imagination that they do not have a plant attached to their factory for making bamboo pulp or wood pulp". The Assistant Collector also recalled the definition of "factory" under Section 2(e) of the Central Excises & Salt Act, 1944 and held that it could not be said that the pulp plant was not attached as such in the premises of the factory. He did not accept the appellants' contention that rendering the plant incapable of making bamboo pulp or wood pulp for the time being would amount to fulfilling the condition of the notification. He held that the plant was capable of making bamboo pulp or wood pulp and by disconnecting certain accessories/linking parts, it had been made inoperative. The Assistant Collector also observed that the word "attached" used in the notification cannot be given its dictionary meaning. The relevant portion of his order is extracted below:
In the taxing statue, all the expressions used therein have to be given the proper weightage and understanding, in so far as their meaning and the purpose behind their use in the statute is concerned, because it is the law of the land expressly enacted by the legislature, which is distinguished from a customary law or the law of use and wont. The expression "attached" used as the relevant condition to Notification No. 138/86, dated 1.3.1986 has to be construed as "installed".
Further the Annual report of the Mills for the year 1985-1986 (Annexure B to the defence reply) emphatically establishes that they have suspended their pulp division operations and have kept the paper making activity going with purchased pulp and waste paper when their pulp division operations have been suspended, the Mills cannot be said to have detached the pulp plant from their factory.
(Emphasis added)
6. The Assistant Collector while approving the Classification List and denying the exemption, directed the appellants to "pay the consequential difference in duty forthwith."
7. When the matter went up in appeal, Collector (Appeals), besides rejecting the claim for exemption on the same grounds, also rejected the contention that the demand of duty could not have been made without issue of a show cause notice and the RT-12 returns for the relevant periods having been duly approved by the authorities, the demands made by the Superintendent were illegal. The relevant portion of the order is extracted below:
....At the very outset it is pointed out that in this case there was no question of issue of a show cause notice demanding duty as the impugned order relates only to the classification matter and in the order only the issue relating to Classification has been settled by the Assistant Collector, therefore, no separate show cause notice calling for demand of duty was necessary.
(Emphasis added)
8. In the present appeal, the following grounds have been taken:
(a) An exemption notification in a taxing statute is required to be liberally construed and, in cases of doubt, benefit of exemption must always be given to the assessee. The notification should be interpreted in its ordinary, natural and grammatical sense. If the assessee comes within the plain meaning of an exemption provision, the benefits of the exemption cannot be denied on any supposed intention of the exempting authority.
(b) The Assistant Collector's interpretation of the word "attach" to mean "installed" is a meaning clearly not contemplated by the language of the notification. The expression "attached" in condition (iv) of the notification is to be construed as contemplating the pulp plant to be a captive unit or forming an integral part joined to the paper manufacturing factory.
(c) Before the Collector (Appeals) they had cited the decision of the Tribunal in the case of Ballarpur Industries Ltd., Yamunanagar v. Collector of Central Excise, New Delhi . In this case, the Tribunal had interpreted the terms "plant attached" as a "plant designed and in fact used for making bamboo pulp". The Collector had misdirected himself and has not followed the decision of the Tribunal.
(d) Though the classification lists were filed with effect from 1.4.1987 and 23.11.1987, and clearances were accordingly made, no dispute was raised by the Department and the appellants collected duty from their purchasers only as per the concessional rate under Notification 138/86. For the first time, the appellants in January 1988, were called upon by the Assistant Collector to appear before him in regard to the finalisation of the Classification List. The demands made by the Supdt. under his letter, dated 18.5.1988 for the period 1.4.1987 to 30.4.1988 were time barred. They have been made in gross violation of the provisions of Section 11A inasmuch as there is no order for provisional assessment as contemplated under Section 11A read with Rule 9B.
(e) The demand for Rs. 87,67,174.08 is incorrect inasmuch as the provisions of Section 4(4)(d)(ii) of the CESA have not been taken into consideration. From the cum-duty price, the assessable value has to be first worked out and, thereafter, the duty has to be computed so that the component of the duty element and the value should match the total cum-duty price. This has not been done and the demand is in excess.
(f) For determining the value for the purposes of cess, duty of excise and sales tax have to be excluded. This is supported by the decision of the Tribunal in the case of Escorts Ltd. v. Collector of Central Excise 1992 (42) ECR 481. (The grounds (e) and (0 were not taken before Collector (Appeals). They were allowed to be taken under Rule 10 of the CEGAT (Procedure) Rules by a separate application].
9. We have heard Shri V. Lakshmi Kumaran, the learned Counsel for the appellants and Smt. Ananya Ray, the learned Senior Departmental Representative.
10. During his arguments Shri Lakshmi Kumaran referred to the need for looking to the object and purpose of the notification while interpreting it and cited the following decisions:
(a) The Tata Oil Mills Co. Ltd. v. Collector of Central Excise
(b) Rohit Pulp & Paper Mills Ltd. v. Collector of Central Excise
(c) Commissioner of Sales Tax v. Ashoka Dairy 1983 (53) STC 231
(d) Hindustan Aluminium Corp. Ltd. v. The State of U.P. 1981(48) STC 411 (SC)
(e) Ballarpur Industries Ltd, Yamunanagar v. Collector of Central Excise, New Delhi. .
11. He submitted that if the object and purpose of the exemption granted by notification 138/86 is carefully studied, it will appear that the exemption is available to such paper mills which do not have a bamboo pulp or wood pulp plant attached to it and is also not working. Since such a plant had been detached and was not working, the goods manufactured by them were eligible for exemption. He also explained the meaning of the words "Plant", "Attached" and "making" from the dictionaries.
Plant:
The land, buildings, machinery, apparatus and fixtures employed in carrying on a trade or a mechanical or other industrial business. (Websters Third New International Dictionary of the English Language) Attached:
Joined functionally (Oxford English Dictionary II Edn. 1989) Making:
The word 'making' is formed f am a present participle, and literally applies to the present and not the future time.
[Words & Phrases (Permanent Edition) Vol. 26 p. 166)
12. He explained that a plant is a land, building apparatus and fixtures joined together functionally and used in the present and not in the future. This being the meaning of the words used in the notification, it is clear that what was not functionally joined and used in the present could not be considered to be "attached". The mere existence of the appellants' bamboo pulp plant (which had been made non-functional being disconnected from the factory) could not therefore disqualify them from availing of the exemption. On a question from the Bench, Shri Lakshmi Kumaran conceded that the Supreme Court had held that it was not possible to hold a dictionary in one hand and to look at the statute in the other.
13. Shri Lakshmi Kumaran thereafter referred to paras 3 and 8 of the decision of the Tribunal in the case of Ballarpur Industries (supra) and submitted that the Tribunal had held in this case that the plant which was designed for processing wood, though bamboo could also be processed, could not be treated as a plant for making bamboo pulp because the requirement of chippers for wood and bamboo were totally different. He relied on the following portion of the order:
7. ...According to Shri Narasimhan, the plant installed may be capable of crushing bamboo but only hard and soft woods were being crushed and the benefit of the Notification would be available. In support of his contention, he relied on the affidavit of the Plant Manager filed before us to the effect that the plant was commissioned in 1960 and was basically designed to process hard wood, soft wood, grasses and agricultural residues. It is affirmed that right from its inception it was not designed to process bamboo as raw material for making pulp. He also relied on the technical opinion furnished by the Institute of Paper Technology, Saharanpur, to the effect that the requirement of chippers for wood and bamboo are totally different, especially in design of feed system, number and angle of knives and type of rechipper to be used. Shri Jain SDR on the other hand, pointed out that the Assistant Collector had sworn to an....SC. P. 857
8....The affidavit, of Shri M.H. Pandey, Superintendent, Ballarpur Industries Ltd., indicates that right from the inception this plant had not been used for making bamboo pulp. It is manifest from the particulars furnished by the Institute of Paper Technology that though bamboo and wood are primarily raw materials for making pulp, they differ significantly in their physical and morphological characteristics. Different types of chippers are therefore required for their use. The feed system for wood and bamboo are totally distinct. The energy for chipping and the location of the knives are also different. So it is clear that even though the plant is capable of making bamboo pulp, it was not designed for such a purpose. Shri Narasimhan also pointed out that the appellants never admitted that they were making bamboo pulp. The Appellate Collector had proceeded on the basis that if the factory is "equipped" with a plant attached thereto for making bamboo pulp, the exemption would not be applicable. Such an interpretation is not called for as the notification refers only to a factory having no plant attached thereto for making bamboo pulp. The term "attached" should be interpreted as a plant designed and in fact used for making bamboo pulp. The mere fact that the plant was capable of being used for making bamboo pulp will not disentitle the appellants to the benefit of the exemption. There has been no suppression of facts.....
(Emphasis added)
14. Smt. Ananya Ray, the learned SDR, referred to the judgment of the Supreme Court in the case of Samrat International (P) Ltd. v. Collector of Central Excise in which, while dealing with the question of time bar in the context of a refund claim lodged under Section 11B when the Classification Lists were pending approval, the Court had observed that the assessment in such a situation was "obviously provisional" till the approval of the Classification List. Smt. Ray submitted that though these observations were made in connection with a refund claim, the principle enunciated by the Supreme Court would equally apply to cases of demand too. She, therefore, submitted that the plea of time bar should be rejected. In any case, the letters, dated 12.5.1988 and 16.5.1988 asking the appellants to file a revised Classification List and pay the consequential difference in duty were not demand notices but only communications in pursuance of the Assistant Collector's order of approval of the Classification Lists. They did not, therefore, attract the time limits laid down in Section 11A.
15. Smt Ray referred to Sub-rule (2) of Rule 173B and submitted that it was clear on a plain reading of the rule that the assessee does not have to wait for a notice under Section 11A for paying the differential duty because in a case of this type in which it was the appellants who were claiming a lower rate of duty because of the benefit of exemption, it was obligatory on them to determine and pay the correct duty after the approval of the Classification List.
16. Referring to the decision of the Supreme Court in the case of Assistant Collector of Central Excise, Calcutta v. National Tobacco Co. of India Ltd. [1978 ELT J 416 -1974 Nov Cen-Cus 1 (SC) : ECR C 398 SC, Smt. Ray submitted that the Court had drawn a clear distinction between "levy", "collection" and "assessment" of duty under the Central Excises & Salt Act. She stated that Section 11A mentions cases of short levy and non-levy. A case in which the Classification List had not been approved could not be a case or levy at all and, therefore, the question of invoking the provisions of Section 11A would not arise.
17. Smt. Ray also cited the following cases in support of her arguments:
(a) N.B. Sanjana v. Elphinstone Spg. & Wvg. Mills Co. Ltd. [1978 ELT J 399 SC : 1973 July Cen-Cus (vi) (SC) : 1990 (28) ECR 582 (SC) : ECRC368SC]
(b) Star Paper Mills v. Union of India [1981 ELT 577 (Del) : 1982 ECR 689D (Delhi)]
(c) International Computers Indian Manufacturers Ltd. v. Union of India and Ors. 1981 ELT 632 (Del) : 1981 ECR 403 D (Delhi))
(d) Premier Automobiles Ltd., Bombay v. Union of India
(e) Collector of Central Excise v. Rambal (P) Ltd. [.
18. On the merits of the appeal, Smt. Ray submitted that what was necessary was to read the notification as it is and not bring in the concept of attachment of the bamboo or wood pulp plant at a particular time when the appellant wanted to avail of the exemption. For the same reason, temporary suspension of the pulp plant operations cannot be taken to mean that by merely disjoining it the pulp plant is not attached to the paper mill. All that could be said was that the paper mill did have a pulp plant attached to it hut it was not being used for the time being because, it had been disconnected. Exemption could not be claimed in such a situation because the basic condition of the paper mill not having a pulp mill attached to it was not fulfilled. Referring to the ratio of the Ballarpur Mills case Smt. Ray submitted that in that case the plant was so designed as not to be used for bamboo pulp, whereas in the present case, it was an admitted position that the plant was designed for use of bamboo pulp.
19. As regards the additional ground taken through a Miscellaneous Application by the appellants (and this had earlier been allowed) Smt. Ray submitted that since the question was of recalculating the duty in terms of Section 4(4)(d)(ii) because this plea had not been taken before Collector (Appeals), the matter would have to be remanded to the Assistant Collector.
20. Replying, Shri Lakhsmi Kumaran submitted that the expression used in the notification was ....Central Government hereby exempts paper and paperboard falling within Chapter 48....taken together, upto a quantity specified in Column (2) of the Table hereto annexed, cleared on or after the 1st day of April in any financial year....
(Emphasis added) and it cannot, therefore, be said that in the particular financial year the appellants were not eligible for the exemption because, in that financial year, the factory had a bamboo or wood pulp plant attached to it. Once the plant was detached, the appellants would qualify for exemption in that year.
21. Shri Lakshmi Kumaran also referred to the judgment of the Supreme Court in the case of Collector of Central Excise, Baroda v. Kosan Metal Products Ltd. and submitted that demands could not be made on RT-12 returns as had been done in the present case for several months. In terms of this judgment the differential duty could only have been recovered by issuing a demand notice under Section 11A and this not having been done, the duty could not be recovered in the manner the authorities had sought to recover.
22. Rebutting the argument of the learned SDR, Shri Lakshmi Kumaran referred to the provisions of Sub-rule (2A) of Rule 173B and submitted that not being a case of provisional assessment under Rule 9B, the only course open to the authorities was to issue a demand notice under Section 11A for the differential duty. Since such a course of action had to be taken within the time limits prescribed therein, the authorities had chosen to adopt a course of action not permissible under the law. He also referred to the use of the expressions "duty of excise (is) provisionally assessed" in Section 11A(3)(ii)(b) and "duty of excise (is) paid provisionally" in the Explanation B(e) to Section 11B. He also referred to the judgment of the Bombay High Court in the case of D.N. Kohli, Collector of Central Excise v. Krishna Silicate & Class Works (1983 ELT 216 Bombay), in paragraph-13 of which the Court had held as under:
13....The Division Bench of the Calcutta High Court in that case has taken the view that assessment and provisional assessment of duty under the Central Excises and Salt Act and Rules read with the relative Finance Act can only be in accordance with the statutory provisions. These are not common law rights and, therefore, a provisional assessment can only be made in accordance with the provisions of Rule 9B, because no other provisions in the Act or the Rules have been brought which enable a provisional assessment to be made. Rule 9B makes it clear that a manufacturer, curer or owner of goods warehoused may ask for provisional assessment only in a case where the assessment of the goods involves two or more alternative basis. Provisional assessment under Rule 9B is a statutory matter and must come within its four corners. One might call an assessment "Provisional" in the larger on dictionary sense, but that will not make it a provisional assessment under Rule 9B...
23. Shri Lakshmi Kumaran submitted that until there was provisional assessment under Rule 9B, a plea of short levy could not be taken, and even in that case, the date has to be reckoned from "the date of adjustment of duty after the final assessment thereof. In the absence of provisional assessment under Rule 9B, there was no question of any demand for duty being raised in the manner it was sought to be done. The Supreme Court judgment in Samrat International case was distinguishable as a case of refund, the ratio of which could not be applied to the present case. Shri Lakshmi Kumaran also handed over copies of the following unreported decisions of the Tribunal:
(a) Order No. 180/90-C, dated 6.7.1990 in the case of Mis. Venus Paper Mills Ltd. v. Collector of Central Excise, New Delhi.
(b) Order No. E/27/91-B1, dated 28.2.1991 in the case of Mis. Orient Steel Industries v. Collector of Central Excise, Calcutta.
(c) Order No. 85 to 87/91-A, dated 6.2.1991 in the case of Sawhney Steel Press Works Ltd. v. Collector of Central Excise, Madras.
(d) Order No. 30/91-C, dated 9.1.1991 in the case of Repmos Corporation v. Collector of Central Excise, Bombay-II.
24. In support of the plea that the assessable value has to be arrived at after allowing abatement of duty payable under Section 4(4)(d)(2), Shri Lakshmi Kumaran cited the following decisions:
(a) Bata Shoe Co. (P) Ltd. v. Collector of Central Excise and Ors.
(b) Assistant Collector of Central Excise v. MRF Ltd.
(c) B.K. paper Milk (P) Ltd. v. Union of India
(d) Mangalore Chemicals & Fertilisers Ltd. v. ACC
(e) ITC Ltd. v. Union of India
(f) ACCE v. A.P. Paper Mills Ltd.
(g) Bata Shoe Co. Pvt. Ltd. v. Collector of Central Excise W.P. No. 1330/70 decided, on 28.6.1971 (Pat)
(h) Seraikella Glass Works Pvt. Ltd. v. Collector of Central Excise
(i) Rana Rubber Industries v. Collector of Central Excise
(j) Polyformalin Pvt. Ltd. v. Collector of Central Excise
(k) Wood Polymer Ltd. v. Collector of Central Excise 1988 (11) ETR 363 (Tri)
(i) Window Glass Ltd. v. Collector of Central Excise
(m) Collector of Central Excise v. Wipro Information Technology
(n) K.M. Industries v. Collector of Central Excise Order No. 172/87-B1 dt. 13.3.1987
(o) Collector of Central Excise v. VST Industries 1991 (32) ECR 346 ((T)
(p) Jindal Aluminium Ltd. v. Collector of Central Excise Order No. 1253/90A.
25. Shri Lakshmi Kumaran submitted that since the duty would require recalculation, the case may be remanded as had been done in the case of Venus Paper Mills Ltd. v. Collector of Central Excise, . He also submitted that in case his pica on this point was not accepted, the matter could be remanded to Collector (Appeals) because he did not decide on this issue at all.
26. We have carefully considered the appeal and the detailed submissions made by both sides. The first question to be decided is the eligibility of the appellants to exemption under Notification 138/86-CE, dated 1.3.1986. It is because of non-fulfilment of condition (iv) that the authorities have denied the exemption. While the appellants' claim is that by detaching totally the chipping and chips washing unit required for the manufacture of bamboo pulp from the plant, they have qualified for exemption because it can no longer be said that their factory has a plant attached thereto for making bamboo pulp or wood pulp. The further claim is that by rendering the plant incapable of making bamboo pulp or wood pulp and by disconnecting certain accessories, it has been made inoperative. They would, therefore, qualify for exemption. The expression used in the Annual Report of the mills for the year 1985-86 is "they have suspended their pulp Division operations" and, therefore, they qualify for the exemption. The Assistant Collector, on the other hand, has interpreted the word "attached" to mean "installed". The appellants have derived support from the decision of the Tribunal in the case of Ballarpur Industries (supra) in which, on the facts and in the circumstances of that case, it was held that the term "attached" should be interpreted as a plant designed and in fact, used for making bamboo pulp. A plea was also taken by the learned Counsel for the appellants with the help of certain dictionaries that the concept of "attached" in the case of a "plant" used in "making" means "functionally joined together". The learned SDR, on the other hand, repelled these arguments by saying that what was necessary was to read the Notification as it is and not to bring in the concept of attachment at a particular point of time. We agree with the learned SDR that by suspending the operation of the pulp division by the appellants themselves by detaching the chipping and chips washing unit for the time being, it cannot be construed that the paper mill does not have a plant attached for making bamboo pulp or wood pulp. All these operations are of a temporary nature and can be reversed at the will and convenience of the appellants. The Notification does not grant exemption in such circumstances. We agree that even on a plain reading of the Notification such a meaning which gives the freedom to the appellant of attaching and detaching the pulp making plant at the appellants' will for the time being cannot be given to condition (iv) of the Notification. The exemption would be available to a paper mill which does not have a plant attached to it for making bamboo pulp or wood pulp and by temporarily disconnecting such a plant or discontinuing its use, the paper mill does not undergo a change in its character and become eligible for exemption. We, therefore, agree with the learned SDR that the Notification has to be read as such. In view of this, the appellants, in our view, are not entitled to the exemption. The reliance on the ratio of the Ballarpur Industries case (supra) does not help the appellants. In that case, the question was whether the pulp making plant for wood could be treated to be bamboo pulp making plant and, it is in this context, that, after taking into consideration the opinion of the experts, that the Tribunal held that bamboo and wood differ significantly in their physical and morphological characteristics. Different types of chippers are required for their use. The feed system for wood and bamboo are totally distinct. The energy for chip and the location of the knives are also different. Even though, the plant was capable of making bamboo pulp, it was not designed for such a purpose. While considering the question of design the Tribunal went on to say that the plant should, in fact, be used for making bamboo pulp. As we have seen, the facts of the present case are clearly distinguishable and the question is not whether the pulp making plant is suitable for making bamboo pulp or wood pulp, but whether the bamboo pulp or wood pulp making plant is attached to the paper mill. Thus, it is clear that the ratio of the Ballarpur Paper Industries case does not support the appellants' contention.
27. We would now consider the case law cited by Shri Lakshmi Kumaran. In Tata Oil Mills case, the question for consideration was whether exemption from duty was available to soap on use of rice bran oil if, instead of rice bran oil, rice bran fatty acid produced outside the factory was used. It is in this context that the Supreme Court had observed that in trying to understand the language used by an exemption notification one should keep in mind the object and purpose of the exemption. Applying this principle to the present case, it cannot be concluded that the object of Notification 138/86 was to give exemption even to a paper mill which had a bamboo/wood pulp plant attached to it, but it had been disconnected for the present so that it could qualify for exemption. The language of the notification is quite clear as is its purpose. The interpretation placed by the appellants would mean that the exemption is available when the operations of the pulp mill are temporarily suspended and exemption is denied when such operations are resumed. The notification cannot be subjected to such an interpretation. The object clearly is to grant exemption to such of the paper mills as do not have a bamboo/wood pulp mill attached to them.
28. In the case of Rohit Pulp, the question for consideration was the principle of noscitur a sociis and it is in this context that the Supreme Court referred to the object and purpose of the notification and observed that all parts of the notification should be read harmoniously in aid of, and not in derogation, of that purpose. The purpose of the notification, as we have seen, is to grant exemption and such exemption cannot be dependent on the sweet will of the manufacturer to detach the pulp plant of a paper mill so as to avail of the exemption.
29. In the case of Ashoka Dairy relating to interpretation of a notification under the U.P. Sales Tax Act, the Allahabad High Court had observed that while interpreting a particular notification, the scheme of taxation followed earlier may be taken into consideration. In the case of Hindustan Aluminium Corporation Ltd., the Supreme Court had observed that a word describing a commodity in a sales tax statute should be interpreted according to its popular sense, the sense being that in which people conversant with the subject-matter with which the statute is dealing would attribute to it. Words of everyday use must be construed not in their scientific or technical sense but as understood in common parlance. The Apex Court had gone on to say that this principle holds good where contest exists between the scientific and technological connotation of the word on the one hand, and its understanding in common parlance on the other. These are fundamental principles of interpretation and the application of these principles to the interpretation of the word attached would lead us to die same conclusion at which the lower authorities have arrived. In other words, there has been no violation of these principles in arriving at the conclusion in the proceedings before the lower authorities.
30. We have now to consider the question whether the differential duty could be demanded and collected from the appellants in pursuance of an order denying exemption claimed in a Classification List. Rule 173B is the basis for filing classification lists and Sub-rule (2A) which is relevant for our purposes is as under:
2AAll clearances shall, subject to the provisions of Rule 173CC, be made only after the approval of the list by the proper officer. If the proper officer is of the opinion that on account of any inquiry to be made in the matter or for any other reason to be recorded in writing there is likely to be delay in according the approval, he shall, either on a written request made by the assessee or on his own accord, allow such assessee to avail himself of the procedure prescribed under Rule 9B for provisional assessment of the goods.
31. The opening sentence of this sub-rule makes it clear that all clearances have to be made only after the approval of the list by the proper officer. There is a stipulation for provisional assessment in case there is likelihood of delay in according approval. Such a provision does not and cannot override the requirement that all clearances shall, subject to the provisions of Rule 173CC be made only after the approval of the List. If, therefore, the appellant chose not to make a request for provisional assessment or the officer did not order provisional assessment, the appellant is not entitled to say that he was free to make clearances pending approval of the Classification List. We have seen from the facts of this case that it is not covered by Rule 173CC. Therefore, it is evident that either the appellants had to wait until the Classification List had been approved and or, they had to approach the Assistant Collector for provisional assessment of duty. We do not find that any of the decisions which have been cited before us by the learned Counsel for the appellants supports his plea that in the absence of a recourse to provisional assessment, demands for duty would become time barred under Section 11 A. In fact, the facts on record go to show that the appellants were fully aware of the implication of their request for exemption, beginning with their letter, dated 25th March 1987 and subsequent conduct that followed. Not only did they disconnect the chipping unit, they had also requested the authorities to verify the plant operations for allowing them the exemption. A panchanama was also drawn up later. What is further significant is that in each of the Central Excise Gate Passes, they were making a remark to the effect "subject to approval of Classification List". This is evident from para-3 of the Range Superintendent's letter, dated 16th May 1988, which was placed before us by the learned Counsel on the final day of the hearing. We do not consider that in these circumstances, the appellants can claim, as they have done, that no dispute was raised by the Department and that, for the first time, the Department called upon them in January 1988 in regard to finalisation of the Classification List The appellants were fully aware that they had claimed an exemption which would lower the incidence of duty, and Rule 173B did not provide that in such a case, they could clear the goods without the approval of the Classification Lists or, pending their approval, without taking recourse to provisional assessment. We do not, therefore, think that the order of the Assistant Collector asking them to pay the differential duty in pursuance of his order on the Classification List was without any legal basis or was contrary to the provisions of Rule 173B. The decision of the Supreme Court in the case of Samrat International which, though it relates to a case of refund, would equally apply to cases of demand. The judgment of the Bombay High Court in the case of Krishna Silicates and Glass Works cited by the appellants' counsel relates to a case of physical control and the ratio of that decision is not applicable to the present case, which, being a case of self-removal procedure is governed by Rule 173B. Similarly, the unreported decisions copies of which were handed over to us by the learned Counsel deal with other aspects such as Section 4(4)(d)(ii), violation of the principles of natural justice by raising demands on RT-12 returns. The question that we are considering in the present case is about the provisions of Sub-rule (2A) of Rule 173B and not the other issues that have been raised in the unreported decisions cited before us. It is no doubt true that reference was made during the hearing to the finalisation of certain RT-12 returns while certain others remained unfinalised, but the proceedings in this case have arisen out of the order of the Assistant Collector on Classification List resulting in liability for differential duty because of denial of the exemption. We do not think that there was any denial of the principles of natural justice or that the appellants were not aware that it is they who had claimed assessment of duty at a lower rate and they who are trying to prove their case by explaining the position in a letter accompanying the Classification List, followed by another letter intimating that the pulp plant had been disconnected from the paper mills. In these circumstances, we do not think that a demand for duty under Section 11A of the Act was required to be issued and the differential duty cannot be recovered except by complying with the requirements of Section HA. We accordingly reject the appellants' contention on this point.
32. We agree that so far as determination of the assessable value is concerned, this has to be done in accordance with Section 4(4)(d)(ii) of the Act. We notice that at our direction the appellants had submitted a letter dated 10th February, indicating that the demand after giving effect to the provisions of Section 4(4)(d)(ii) will not exceed Rs. 79,63599.30. This is subject to verification by the authorities concerned.
33. As far as the quantum of cess, that is being demanded, is concerned, we agree that, while calculating the cess, the assessable value alone has to be taken into account and excise duty, sale tax, paid or payable, are not to be added to the assessable value for computing the cess. To this extent, the appellants' contention is acceptable.
34. In view of the foregoing, while rejecting the appeal for exemption from duty under Notification 138/86-CE dated 1.3.1986 and also rejecting the contention about the requirement of issuing a notice under Section 11A, we remand the matter to the Assistant Collector, Central Excise, Surat for re-calculation of the duty on the lines indicated by us. The appeal is disposed of in above terms. Since the matter is old, we direct that the Assistant Collector should dispose of the matter expeditiously. We also hope that the appellants will provide necessary assistance by way of verification of the calculation etc., without delay.