Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Central Excise, ... vs Borosil Glass Works Ltd. on 7 September, 2001
Equivalent citations: 2001(78)ECC821, 2002(149)ELT549(TRI-CHENNAI)
JUDGMENT
S.L. Peeran
1. These two Revenue appeals arise from the order in Appeal No. 44 & 45/97 (M) dated 20.3.97 passed by the Commissioner (Appeals) by which he has set aside the order in original passed by the Assistant Commissioner denying the benefit of Exemption Notification No. 89/95 dated 18.5.95 for the glass of scrap falling under heading 7001.10 of the CET. As a consequence, the Revenue rejected the refund claim of Rs. 2,16,360/- for the period 7.7.95 to 22.8.95. The Notification lays down a condition that the exemption would be available only to the factory which manufacture no dutiable goods. The proviso states that if dutiable goods are manufactured and the scrap is removed, then the exemption would not apply. The Commissioner has appreciated the pleas made by the assessee and has accepted their plea that during the period in question, the assessee has not manufactured any excisable goods. The findings recorded in paras 4 to 7 are reproduced below:
4. The AC has observed in the first order dt: 29-5-96 that the appellant themselves had admitted that from 30.8.95 they manufactured dutiable items in the factory and so the benefit of notification 89/95 would not be extended to them. In the 2nd order the AC observed that the classification list No. 1/94-95 dt: 30-3-95 for glassware with duty of 10% and 20% was approved and subsequently the declaration dt: 15-9-95 for duty of 15% was also filed by the appellant. So the AC ruled that goods other than the exempted goods were also being manufactured in the factory and hence the benefit of notification 89/95 could not be extended to them. He accordingly rejected the refund claim.
5. In the grounds of appeal, the appellants have contended that exemption cannot be denied by importing limitation not specifically inserted in the exception clause of notification 89/95. They averred that they were not manufacturing any excisable goods other than the exempted goods during the period when they claimed exemption. They relied on the decision of Tribunal in the case of BHEL Ancillary Association v. Collector reported in 1990 (49) ELT 33(T) and Supreme Court Decision in the case of Hemraj Gordhandas v. AC reported in 1970 (2) ELT 350 (SC). They submitted that vide their letter dt: 299-8-95 they had clearly stated that until 29-8-95, they were manufacturing only the items which were assessable to nil duty under notification 53/95 and started manufacturing non-exempted goods only from 29-8-95. In response to the query raised during the hearing as to when they commenced the manufacture of dutiable excisable goods, they have given detailed written submissions wherein they stated that they had set up the new factory at M M Nagar registered with Central Excise on 24-10-94. They fired the furnace on 23-3-95 and intimated the department on 24-3-95. They also reported to the AC that they had started their production on 30-3-95 vide their reply to the AC's query dt: 5-6-95. The range Superintendent had also verified and confirmed the same. They started their production on 30-3-95 with exempted goods and they continued the production of the same till 29.8.95 and started manufacturing dutiable items only with effect from 30-8-95. They also pleaded that they have not passed on the excise duty paid by them on cullet to the buyer of the laboratory glassware. They have submitted that they erroneously paid the excise duty on cullet, waste and scrap of glass which were recycled to produce only the exempted goods.
6. I find force in the submissions of the appellants. The fact that they manufactured dutiable items for the first time only w.e.f. 30.8.95 has not been controverted by the department by any evidence. This is also clear from the show cause notice. Since it is a new factory and the appellants started production of exempted goods for the first time on 30-3-95 and continued till 29-8-95, as intimated to the department, they could not be denied the benefit of the exemption whether they claimed benefit of the same in the classification list or not. The decision of CEGAT in the case of Vickors Sperry reported in 1989 (40) ELT 202 (T) supports this view. The period involved here is prior to 29-8-95 during which the appellants claim is that they did not manufacture any dutiable goods; they call in support the RT 12 and other returns filed by them. The AC has not disputed this fact. If the appellant had mistakenly paid the duty on the exempted goods; they could very well file a claim seeking refund of the same. The AC's observation that the appellant's factory was a factory wherein non-exempted goods were also being manufactured is not supported by any evidence. His observation of the other hand is that for a small period only there was no manufacture of dutiable goods. This is relevant here, since the appellant's factory is a new factory. It is not the AC's case that the appellant actually manufactured dutiable goods to start with and stopped the same briefly and then resumed manufacture of dutiable goods subsequently. In the absence of any evidence to the contrary, the AC could not deny the exemption for the relevant period ie prior the date of commencement of manufacture of non-exempted goods. The AC's orders are therefore not correct and have to be set aside. The AC is directed to extend the benefit after due verification and sanction the refund in accordance with the provisions of Section 11 B.
7. In the light of the above discussions, both the appals are allowed.
2. In this appeal the Revenue does not dispute the fact that there was no production of excisable goods during the period in question. They contend that the respondents had intention to manufacture dutiable goods. Therefore by this fact which is admitted, during the period in question and after the period, they had manufactured dutiable goods and on that premises, the benefit should be denied.
3. Heard Shri A. Jayachandran, learned DR and Shri Vijayaraghavan, learned Consultant for the respondents.
4. The learned DR takes us through the grounds of appeal and contends that the respondents had themselves admitted about their intention to manufacture excisable and dutiable goods. Therefore, benefit of Notification is required to be denied.
5. The learned consultant submits that the language of the Notification cannot be violated to read in a manner in which the Revenue requires it to be read. Nowhere in the Notification it is stated about the intended manufacture; it merely lays down the proviso that during the relevant period, the assessee should not have manufactured any excisable goods. He also relied upon the following judgments in support of his plea:
(a) HMM Ltd v. CCE, New Delhi reported in 1996 (87) ELT 593 (SC)
(b) Krishna Sahakari Sakhar Karkhana Ltd. v. CCE, reported in 1991 (55) ELT 411
(c) Metrosyl Jesidih Industrial Area v. CCE, reported in 1991 (53) ELT 93
(d) Rainbow Industries Pvt Ltd. v. CCE, reported in 1991 (53) ELT 56
(e) Hemraj Gordhandas v. H H Dave, AC, Customs, reported in 1978 ELT (j-350)
(f) Pratap Steel Rolling Mills v. CCE, reported in 1996 (87) ELT 188
(g) Parle Products v. CCE reported in 1995 (80) ELT 182
(h) Advance Paints Pvt Ltd. v. CCE, reported in 1991 (53) ELT 398
(i) CCE v. Vikrant Tyres Ltd reported in 1992 (58) ELT 224
(j) Bama Metal Industries v. CCE, reported in 1196 (82) ELT 81
3. We have heard both the sides in the matter and have given our consideration to the pleas made by both the sides. We have also perused the orders passed by the CCE (Appeals), which is extracted above. There is no dispute about the factual position that during the period in question, the refund has arisen as the respondents had manufactured only exempted goods. They had not manufactured any excisable goods or dutiable goods during the relevant period. Therefore, the interpretation which the Revenue requires to be given that they had intention to manufacture dutiable goods in future, that by itself, cannot be a ground to disentitle the appellants to the benefit of the Notification. We are not in a position to agree with this proposition as the Notification clearly lays down the following terms:GENERAL EXEMPTION NO. 72
Exemption to waste, parings and scrap arising during manufacture of exempted goods. - In exercise of the powers conferred by Sub-section (1) of Section 5A of the Central Excises and Salt Act, 1944 (1 of 1944), the Central government, being satisfied that it is necessary in the public interest so to do, hereby exempts waste, parings and scrap arising in the course of manufacture of exempted goods and falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), from the whole of the duty of excise leviable thereon which is specified in the said Schedule:
Provided that nothing contained in this notification shall apply to waste, parings and scrap cleared from a factory in which any other excisable goods other than exempted goods are also manufactured.
Explanation.- For the purpose of this notification, the expression "exempted goods" means excisable goods which are chargeable to "Nil" rate of duty or, are exempted from the whole of the duty of excise leviable thereon by any other notification (not being a notification where exemption from the whole of duty of excise is granted based upon the value or quantity of clearances made in a financial year) issued under Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 or Sub-section (1) of Section 5A of the said Act.
[Notification No. 89/95-C.E., dated 18-5-1995.]
4. As can be seen from the proviso to the above Notification the Notification shall not apply to waste, parings and scrap cleared from a factory in which any other excisable goods other than exempted goods are also manufactured. The wording of the above Notification that during the relevant period the assessee should have manufactured only exempted goods and this provision cannot be read to mean that they have intention to manufacture dutiable-goods in future time or there was provision to manufacture excisable goods. The Commissioner (Appeals) has rightly interpreted the terms of the Notification in the light of the various judgments noted supra. Therefore, we find no merit in the Revenue appeal and the same is dismissed.
(Dictated and pronounced in open Court)