Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Cochin Port Trust on 27 June, 1991
Equivalent citations: 1992(57)ELT321(TRI-DEL)
ORDER P.K. Kapoor, Member (T)
1. This is an appeal against the order No. 13/84 dated 9-4-1984 passed by the Collector of Central Excise (Appeals), Madras. The facts of the case are that the respondents have a workshop in which they were manufacturing goods falling under Tariff Item 68 of the erstwhile Central Excise Tariff. The workshop employing about 200 workers was registered under the Factories Act. The items manufactured in the workshop were used for the repair of the vessels and tugs berthed in the dry-dock situated adjacent to the workshop. The Assistant Collector of Central Excise by his order dated 5-12-1983 held the respondents were not eligible for exemption under Notification No. 118/75 since the excisable goods manufactured by them were being used in the repair of vessels brought to the dry docks which was not in the factory or workshop where they were manufactured. Being aggrieved by the order passed by the Assistant Collector the respondents filed an appeal before the Collector (Appeals), who while allowing the appeal held that the dry-dock had to be deemed as a part of the factory premises since various sections of the workshop constituting the factory and the dry-dock were surrounded by a single compound wall having a single entrance from the road side. Against the order passed by the Collector (Appeals) the Collector of Central Excise has filed this appeal.
2. On behalf of the appellants we heard the learned JDR Shri M.S. Arora. He referred to the definition of the term 'factory' in Section 2(e) of the Central Excises and Salt Act, 1944 and contended that the exemption under Notification No. 118/75 was not admissible to the respondents since the dry-dock of the Port Trust could not be treated as part of the workshop or its precinct where the manufacturing activity was carried out.
3. On behalf of the respondents the learned Advocate Shri J.B. Koshy appeared before us. He stated that the Collector (Appeals) had correctly held that the dry-docks of the Port Trust had to be deemed as a part of the factory precinct, since it was surrounded by various sections of the workshop in which manufacturing activity was being carried out. He contended that dry-dock and the workshops being surrounded by a single compound wall, the entire complex including the dry-docks would have to be deemed as 'factory' in terms of Section 2(e) of the Central Excises & Salt Act, 1944.
4. We have examined the records of the case and considered the arguments advanced by both sides. It is seen that Notification No. 118/75 exempted goods falling under Item 68 of the First Schedule to the Central Excises and Salt Act, 1944 manufactured in a factory and intended for use in the factory in which they were manufactured, or in any other factory of the same manufacturer, from the whole of the duty of excise leviable thereon. Hence, the only point to be examined in this case is whether the goods manufactured in the Port Trusts own workshop which was licensed as a factory on being, used for the repair of various types of vessels in the dry-docks could be deemed to have been used in the factory.
5. It has been contended on behalf of the appellant Collector that even though the dry-dock was adjacent to the workshop/factory where the goods were being manufactured, the excisable goods used for the repair of vessels in the dry-dock were not eligible for exemption under Notification No. 118/75 since in terms of Section 2(e) of the Central Excises and Salt Act, 1944 the dry-dock where no manufacturing activity was carried out could not be deemed as part of the factory or its precinct. In this regard it is seen that in the case of Delhi Cloth and General Mills Co. v. Joint Secretary, Govt. of India reported in 1978 (2) ELT (J 421) the Honourable Supreme Court has observed that the definition of "factory" in Section 2(e) of the Central Excises and Salt Act, 1944 makes it clear that it is the whole of the premises in a part of which excisable goods are manufactured and its meaning cannot be deemed to be restricted only to the part of the premises in which such goods are manufactured. The relevant extracts from the judgment are reproduced below :-
"The expression "factory" is defined in Section 2(e) to mean any premises including the precincts thereof wherein or in any part of which excisable goods are manufactured. The definition covers the present case because the calcium carbide is manufactured in one part of the factory while the acetylene gas is manufactured in another part thereof. The definition of "factory" makes it clear that the meaning of factory is not restricted to only the part in which the excisable goods are manufactured. On the other hand it includes the whole of the premises in a part of which such goods are manufactured."
6. It is also seen that in the case of Indian Iron & Steel Co. Ltd. v. Collector of Central Excise reported in 1990 (46) ELT 409, the Tribunal had occasion to interpret the exemption Notification No. 281/86 under the new Tariff which corresponds to the exemption which was available in terms of Notification No. 118/75 under the erstwhile Central Excise Tariff. It was held that so long as the excisable goods manufactured in a workshop within a factory are intended for use in that factory for the purpose of repair and maintenance of machinery, the exemption cannot be denied on the ground that only goods manufactured in a workshop which is restricted to a tool room would be eligible for exemption. An extract from para 3 of the Tribunal's order is reproduced below :-
"When the Notification does not define a Workshop, the Revenue cannot give a finding this it refers to a smaller place called a tool room. So long as the excisable goods are manufactured in a workshop within a factory and intended for the use in the said factory for the purpose of repair and maintenance of machinery, the exemption cannot be denied on the score that only goods capable of manufacture in a workshop which is restricted to a tool room is eligible for exemption. The import of this notification cannot be given effect to by such a restricted application. Especially in view of the fact that earlier, prior to the introduction of the new Tariff, such exemption was in existence in terms of Notification No. 118/75, dated 30-04-1975, which, however, did not make any mention of workshop. In 1983 (12) ELT 209 (Kar.) - India Sugars & Refineries Ltd. v. Union of India and Ors., interpretation of a notification has been discussed :-
"If an expression in Notification is used in plain and meaningful language there is no scope for assuming an ambiguity and trying to interpret it on a supposed intention of the makers of the notification."
Further in 1983 (13) ELT 1017 (CEGAT) - Hercules Tyre & Rubber Industries v. Collector of C. Ex., Chandigarh, it has been indicated that "the notification should not be construed in a manner which defeats the very purpose of the notification."
7. In the case before us we find from the impugned order that the Collector (Appeals) after inspecting of the relevant sketch map has recorded the finding that the dry-dock was surrounded by various sections of the workshop like welding, fabricating, carpentry, foundry, blacksmithy, tin-smithy etc. and these sections of the workshop including the dry-dock were surrounded by a single compound wall with one entrance from the road side. Under these circumstances, on the ratio the decisions quoted above, we are of the view that the entire complex consisting the various sections of the workshop and the dry-dock constituted the factory premises and various excisable goods falling under Tariff Item 68 manufactured after subjecting the raw materials to various processes in different sections of the workshop, when used in the dry-dock were eligible for exemption under Notification No. 118/75-C.E.
8. In view of the foregoing, we see no reason to interfere with the order passed by the Collector of Customs (Appeals). Accordingly, we reject the appeal.