Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise vs M/S. Lakshmi Light Metal Industries on 26 June, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
E/01228/2004
[Arising out of Order-in-Appeal No.89/2004 (M-III), dated 26.07.2004 passed by the Commissioner of Central Excise (Appeals), Chennai]
FOR APPROVAL AND SIGNATURE:
Honble Shri Pradip Kumar Das, Judicial Member :
Honbe Shri Mathew John, Technical Member :
1. Whether Press Reporters may be allowed to see the Order
for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982? :
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication in
any authoritative report or not? :
3. Whether the Members wish to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
Commissioner of Central Excise,
Chennai-III
Appellant
Versus
M/s. Lakshmi Light Metal Industries
Respondent
Appearance:
Shri K.S.V.V. Prasad, SDR Shri S. Muthu Venkataraman, Adv.
For the Appellant For the Respondent CORAM:
Honble Shri Pradip Kumar Das, Judicial Member Honbe Shri Mathew John, Technical Member Date of hearing : 26.06.2013 Date of decision : 26.06.2013 FINAL ORDER NO.____________ Per Pradip Kumar Das:
Revenue has this appeal against the Order-in-Original passed by Commissioner (Appeals), Chennai-III.
2. The relevant facts of the case in brief are that the respondents are engaged in the manufacture of Wick Stoves and parts/sub-assemblies of Wick Stoves classifiable under sub-heading 7321.10 and 7321.90 of the Central Excise Tariff Act, 1985. A show-cause notice no.20/99, dated 03.03.1999 was issued proposing demand of duty for the period 01.03.1994 to 22.07.1996 on the ground that the respondents are liable to pay duty on parts of Wick Kerosene Stoves captively consumed in the manufacture of kerosene stoves. Consequent to withdrawal of Notification No.181/88-CE, dated 13.05.1988 as amended by Notification No.64/94-CE, dated 01.03.1994. The original authority confirmed the demand of duty of Rs.38,73,939/- and imposed a penalty of Rs.2 lakhs. Commissioner (Appeals) set aside the adjudication order and allowed the appeal filed by the respondent. Hence, the Revenue filed this appeal.
3. The learned authorised representative submits that S.No.13 of the Table appended to Notification No.181/88-CE, dated 13.05.1988 allowed nil rae of duty on parts of Kerosene Wick Stoves. He submits that by Notification NO.64/94-CE, dated 01.03.1994, the earlier Notification No.181/88 was rescinded. Thereafter by Notification No.41/94-CE, dated 01.03.1994 allowed the nil rate of duty in respect of kerosene burner, kerosene stoves and wood burning stoves made of iron and steel. He submits that Notification No.41/94-CE, did not extend the nil rate of duty in respect of parts of kerosene stoves. It is contended that only Notification No.10/96-CE, dated 23.07.1996 vide S.No.15 of the Table appended thereto extended the exemption benefit for the parts of kerosene stoves. He further submits that it is clear from the legislative history that during the intervening period there was no Exemption Notification and, therefore, Commissioner (Appeals) wrongly granted the exemption benefit. He also submits that Commissioner (Appeals) erroneously proceeded on the basis of Explanation 6 to Notification No.1/93 is to avoid only double reckoning of value of clearances in respect of inputs and value added products.
4. The learned advocate on behalf of the respondent submits that Commissioner (Appeals) rightly passed an order following the decision of the Tribunal in the case of Universal Electrical Industries Vs Collector of Central Excise, New Delhi reported in 1994 (70) E.L.T.279 (Tri.). He submits that this decision was upheld by the Honble Supreme Court in the case of Collector of Central Excise, New Delhi Vs Universal Electrical Industries reported in 2003 (153) E.L.T.266 (S.C.). He further submits that subsequently the Tribunal in series of decisions followed the Universal Electrical Industries case. He also submits that Commissioner (Appeals) also examined the demand, barred by limitation.
5. The learned authorised representative relied on the decision of the Honble Supreme Court in the case of Elso Machines Pvt. Ltd. Vs Collector of Central Excise reported in 1988 (38) E.L.T.571 (S.C.).
6. After hearing both sides and on perusal of the records, we find that the dispute is as to whether parts of kerosene stove would be eligible for exemption which would be covered under Explanation 6 to Notification No.1/93-CE, dated 01.03.1993. We find that the kerosene stove is classified under sub-heading no.7321, which is a specified good under Notification No.1/93. The Explanation 6 to the said notification reads as under:-
Where any specified goods (inputs) are used for further manufacture of a specified goods within the factory of production of inputs, the clearances of such inputs for such use shall not be taken into account for the purposes of calculating the aggregate value of clearance under this notification. We find that Commissioner (Appeals) passed the order following the decision of the Tribunal in the case of Universal Electrical Industries (supra). The relevant portion of the said decision is reproduced below. The Tribunal, while dealing with the similar provisions in Notification No.175/86-CE, dated 01.03.1986 observed as under:-
21. It is well settled that a notification has to be interpreted strictly and that there is no scope for intendment.
22. Further, the interpretation adopted by the learned Member (T) and by the lower authorities will militate against the specific provisions of Explanation u to the said notification which is reproduced below :
Explanation II - For the purposes of computing the aggregate value of clearances under this notification, the clearances of any excisable goods, which are chargeable to nil rate of duty or, which are exempted from the whole of duty of exise leviable thereon by any other notification (not being a notification where exemption from the whole of the duty of excise leviable thereon 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 said Rules, 1944, shall not be taken into account.
23. It is well settled that a notification has to be read as a whole and in the event of any ambiguity a harmonious interpretation which gives effect to all the parts of the notification and does not render any part thereof futile has to be adopted.
24. The said Explanation III clearly provides that For the purpose of computing the aggregate value of clearances under this notification, the clearances of any excisable goods which are chargeable to nil rate of duty or, which are exempted from the whole of duty of excise leviable thereon by any other notification (not being a notification where exemption from the whole of duty of excise leviable thereon is granted based upon the value of quantity of clearances made in a financial year) issued under sub-rule (1) of rule 8 of the said Rules, 1944, shall not be taken into account. (Emphasis supplied). It is not the Departments case that the Notification 160/86-C.E. dated 1-3-1986 which exempted room heaters from the whole of Central Excise duty and Notification 124/88-C.E. dated 1-3-1988 which similarly exempted electric toasters or the Notification 155/86-C.E. which wholly exempted centrifugal power driven pumps are hit by the qualifications under Explanation III.
25. In view of this, reading both the Explanations II and III together the interpretation put by the lower authorities on the Explanation III is not, in my opinion, in order. It is noted that this matter went upto Honble Supreme Court. The Honble Supreme Court dismissed the Revenues appeal and the relevant portion is reproduced below:-
8. Now, coming to? Explanation III, it provides that where inputs which are specified goods, are used within the factory of production for further manufacture of finished goods which are also specified goods, the clearance of such inputs for such use shall not be taken into account for the purposes of calculating the aggregate value of clearances under this notification. There appears to be a rationale behind this Explanation; firstly, when the value of the finished goods, which are exempted under different notifications, is to be excluded, having regard to the wording of Explanation II, on the same analogy, the value of inputs which are being used for manufacture of finished goods are also excluded as both are specified goods, subject, of course, to the limit of the notification. Secondly, the notification provides relief to small scale industries; when the inputs which enjoys the exemption under the notification have already been dealt with, there is no reason why the value of the same inputs again be added for the purposes of aggregate value. It follows that the assessee would be entitled to the benefit of Explanation III while computing the aggregate value for the purposes of availing exemption under the notification.
9. In this view of the? matter, we find no illegality in the order of the Tribunal. The appeals are, therefore, dismissed with costs.
7. We find that on a similar issue, the above decisions were followed by the Tribunal in subsequent cases. In view of that, respectfully following the decision of the Honble Supreme Court, we allow the appeal and we do not find any reason for interference with the order of the Commissioner (Appeals). Accordingly the appeal of the Revenue is dismissed.
(Dictated and pronounced in open court)
(MATHEW JOHN) (PRADIP KUMAR DAS)
TECHNICAL MEMBER JUDICIAL MEMBER
ksr
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E/01228/2004