Rajasthan High Court - Jaipur
Commissioner Of Central Excise Alwar vs M/S Kamdhanu Ispat Ltd on 16 November, 2016
Author: K.S. Jhaveri
Bench: K.S. Jhaveri
-1-
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
AT JAIPUR BENCH, JAIPUR
JUDGMENT
DB EXCISE APPEAL NO.20/2015.
Commissioner of Central Excise, Alwar, New Central Revenue Building,
Statue Circle, C-Scheme, Jaipur- 302 005.
Versus
M/s. Kamdhenu Ispat Ltd., A-1114, Phas-III, Industrial Area, Bhiwadi
(Rajasthan).
Date of order : 16.11.2016.
PRESENT
HON'BLE MR. JUSTICE K.S. JHAVERI
HON'BLE MR. JUSTICE MAHENDRA MAHESHWARI
Mr. Anuroop Singhi for the appellant.
Mr. P.K. Kasliwal for the respondent.
BY THE COURT:
1. By way of this appeal, the Department has challenged the order passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi, whereby the appeal preferred by the Department was dismissed and the order passed by the Commissioner (Appeals) was confirmed.
2. Counsel for the appellant Mr. Singhi contended that in view of the well settled provisions of law, the circular dated 28.08.1995 was already interpreted by the Punjab & Haryana High Court at Chandigarh in the case of Dee Development Engineers Ltd. Vs. Union of India (UOI) and Ors.- 2010 (254) ELT 412 (P&H) and particularly paragraphs 16 and 18, which reads as under:
"16. The argument of learned Counsel for the assessee that since M/s Thermax Babcock & Wilcox Limited, Pune had awarded as purchase order to the assessee for supply of steam generator and its accessories, directly to M/s Kakatia Cement Sugar & Industries Ltd., -2- Hyderabad, so it (assessee) is entitled to the exemption clause on the basis of certificate issued in favour of M/s Thermax Babcock & Wilcox Limited, Pune, is not only devoid of merit, but misplaced as well, because it is not a matter of dispute that the certificate (Annexure A2) by Project Implementing Authority was issued in the name of supplier M/s Thermax Babcock & Wilcox Limited, Pune and not in favour of the assessee, authorizing it, to remove all the goods under the Notification (Annexure A1) and the goods were not supplied, directly to the project financed by Asian Development Ban k. Therefore, there is no ambiguity in the Notification (Annexure A1) and contrary arguments of learned Counsel for the assessee "stricto sensu" deserve to be and are hereby repelled in the obtaining circumstances of the case.
18. Accordingly, it is held that as no certificate was issued by the Project Implementing Authority approved by the Government of India in favour of the assessee, therefore, it (assessee) cannot claim exemption from duty on the basis of certificate (Annexure A2) issued in favour of the supplier M/s Thermax Babcock & Wilcox Limited, Pune."
2.1. Therefore, he contended that the matter requires to be admitted on the following substantial questions of law which have been framed by him and which reads as under:
"(i) Whether as per the case the learned Tribunal is correct in law in concluding that all the conditions for exemption were satisfied when the eligibility criteria of supply to the project were not fulfilled?
(ii) Whether the meaning of the term "supplied to the projects" can be expanded to included "supply to the other parties" even when such other parties use the goods for the project?
(iii) Whether the exemption would be available to goods supplied to the other parties especially when the goods supplied have a life span and utility far beyond the duration of the project and the preponderance of probability is that the goods will be withdrawn from the project and put to uses not covered by the exemption?
(iv) Any other question of law as this Hon'ble High -3- Court may formulate in the facts and circumstances of the case."
3. Counsel for the respondent, Mr. P.K. Kasliwal, contended that in view of the preliminary objections and the reply filed by him, the appeal deserves to be dismissed.
4. We make it clear that we have heard learned counsel for the parties on merits only and not on preliminary objections and we are deciding the case only on merits.
5. The notification dated 28.08.1995, as pointed out by Mr. Singhi, reads as under:
" In exercise of the powers conferred by sub- section (1) of section 5A of the Central Excises and Salt Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all goods falling under the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the said goods) when supplied to the United Nations or an international organization for their official use or supplied to the projects financed by the said United Nations or an international organization and approved by the Government of India, from the whole of -
(i) the duty of excise leviable thereon under section 3 of the Central Excise Act, 1944 (1 of 1944); and
(ii) the additional duty of excise leviable thereon under sub-section (1) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957):
Provided that before clearance of the said goods, the manufacturer produces before the Assistant Commissioner of Central Excise having jurisdiction over his factory,-
(a) in case the said goods are intended for the official use by the United Nations or an international organization, a certificate from the United Nations or that international organization that the said goods are intended for such use;
(b) in case the said goods are --4-
(i) supplied to an international organisation listed in the Annexure appended to this notification for use in a project that has been approved by the Government of India and financed (whether by a loan or a grant) by such an organisation, a certificate from such an organisation that the said goods are required for the execution of the said project and that the said project has duly been approved by the Government of India; or
(ii) supplied to a project that has been approved by the Government of India and financed (whether by a loan or a grant) by an international organization listed in the said Annexure, a certificate from an officer not below the rank of Deputy Secretary to the Government of India, in the Ministry of Finance (Department of Economic Affairs) that the said goods are required for the execution of the said project and that the said project has duly been approved by the Government of India.
(c) in case the said goods are intended to be supplied to a project financed (whether by a loan or a grant) by the World Bank, the Asian Development Bank or any international organization other than those listed in the Annexure, and
(i) if the said project has been approved by the Government of India, a certificate from the executive head of the Project Implementing Authority and countersigned by an officer not below the rank of a Joint Secretary to the Government of India, in the concerned Line Ministry in the Government of India, that the said goods are required for the execution of the said project and that the said project has duly been approved by the Government of India, and
(ii) if the said project has been approved by the Government of India for implementation by the -5- Government of a State or a Union Territory, a certificate from-the executive head of the Project Implementing Authority and countersigned by the Principal Secretary or the Secretary (Finance), as the case may be, in the concerned State Government or the Union Territory, that the said goods are required for the execution of the said project, and that the said project has duly been approved by the Government of India for implementation by the concerned State Government.
Explanation. - For the purposes of this notification,-
(a) "international organization"
means an international organization to which the Central Government has declared, in pursuance of section 3 of the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), that the provisions of the Schedule to the said Act shall apply;
(b) "Line Ministry" means a Ministry in the Government of India, which has been so nominated with respect to a project, by the Government of India, in the Ministry of Finance (Department of Economic Affairs).
ANNEXURE
1. United Nations Development Programme,
2. United Nations International Children's Fund,
3. Food and Agricultural Organisation,
4. International Labour Organisation,
5. World Health Organisation,
6. Nations Population Fund.
7. United Nations World Food Programme.
8. United Nations Industrial Development Organisation.
Notification No. 108/95-C.E., dated -6- 28-8-1995 as amended by Notifications No. 7/98-C.E., dated 2- 6-1998; No. 33/98-C.E., dated 13-10- 1998; No. 4/99-C.E., dated 11-2- 1999, No. 40/99-C.E., dated 2-11- 1999, No. 36/2001-C.E., dated 6-7- 2001 and No. 50/2001-C.E., dated 12-10-2001"
6. As relied upon by both the authorities i.e. the Tribunal and the Commissioner (Appeals), the decision of Madras High Court in the case of Commissioner of C.Ex., Pondicherry Vs. Caterpillar India Pvt.
Ltd.- 2013(297) E.L.T.8 (Mad.), more particularly, paras 7 and 8, which reads as under:
"7. Reiterating the contentions found in the show cause notice, learned Standing counsel appearing for the Revenue pointed out that the on the admitted fact that the machineries had not been entrusted to the contract implementing authority and that the supply of goods were to the Sub- Contractors leading to possible misuse of the goods for unintended purposes, no exception could be made to the imposition of duty and there-by reject the benefit of the Notification.
8. We do not find any justifiable ground to interfere with the order of the CESTAT based on a factual finding and there was no material placed by the Revenue on the allegations of the possible misuse of the goods for unintended purposes by the Sub-Contractors. Secondly, being the beneficial Notification issued in public interest and the project itself being executed fully by the Contractors as per the directions of the Project Implementing Authority, the fact that the machineries were not given directly to the project implementing authority but given to the agency executing the work in fact cannot go against the assessee's claim. Thus ultimately, as the machineries had been put in use by the sub- contractors, who were given the job of execution the claim for exemption cannot be denied. The use of the phrase 'supplied to the projects financed by the said United Nations or an International Organisation and approved by the Government of India' clearly shows that the condition for grant of exemption is supply of the goods towards the -7- project and nothing beyond. The extract of the Notification No.108/95-CE dated 28.08.1995 reads as follows:-
" In exercise of the powers conferred by sub- section (1) of Section 5A of the Central Excises and Salt Act, 1944, (1 of 1944) read with sub- section (3) of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all goods falling under the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the said goods) when supplied to the United Nations or an International organisation for their official use or supplied to the projects financed by the said United National or an international organisation and approved by the Government of India, from the whole of:-
(i) the duty of excise leviable thereon under section 3 of the Central Excises and Salt Act, 1944 (1 of 1944) ; and
(ii) the additional duty of excise leviable thereon under sub-section (1) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) :
"Thus with all the conditions satisfied, the beneficial Notification applies to the case on hand. In the circumstances, we do not find any justification to introduce any condition or read in a restrictive manner. Consequently, the Revenue's appeal fails and hence, the same is dismissed. No costs."
6.1. Counsel for the respondent further contended that the decision of Madras High Court dated 20.06.2013 was carried to the Supreme Court where the SLP was dismissed by order dated 01.03.2016. There is another decision of Madras High Court in the case of Commissioner of Central Excise, Pondicherry Commissionerate Vs. Customs Excise & Service Tax Appellate Tribunal- (2016)55 GST 222 (Madras), where the same notification was considered in paras 10, 11 and 12, which read as under:
-8-"10. On the first question, the answer is not too difficult to be found. A careful look at the Notification No.108/95-C.E. dated 28.8.1995 shows that the object of the Notification was to exempt all goods falling under the first Schedule to the Central Excise Tariff Act, 1985, when they are supplied to the United Nations or an International Organization for their official use or supplied to the projects financed by the United Nations or an International Organization and approved by the Government of India. It is sufficient to extract the first portion of the Notification to appreciate this point.
"In exercise of the powers conferred by sub- section (1) of section 5A of the Central Excise and Salt Act, 1944 (1 of 1944), read with sub- section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all goods falling under the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the said goods) when supplied to the United Nations or an International Organization for their official use or supplied to the projects financed by the said United Nations or an International Organization and approved by the Government of India, from the whole of-"
11. The focus of the Notification is actually only on two things namely (a) goods when supplied to the United Nations or an International Organization for their official use or (b) goods supplied to the projects financed by the United Nations or the International Organization and approved by the Government of India.
12. In other words, the supply made to the Organization indicated in the Notification for their official use as well as supply made to the projects financed by them, are both included within the purview of the Notification. It may be open, to the Department to contend, in some cases where the supply is made for the official use of International Organization that such supply should have been made directly. We are not saying this as an interpretation to the Notification, but we are indicating that at least if a case falls within the first limb, there is some possibility for the Department to take such a contention.
-9-7. We have heard learned counsel for both the parties.
8. Taking into account the reasoning adopted by the Commissioner (Appeals), particularly, at page 46 wherein it has relied various decisions of Supreme court which reads as under:
(b) In the case of Commissioner of Customs, Kolkata V/s Rupa and Co. Ltd reported in 2004(170) ELT 129 (S.C.) Hon'ble Apex Court has observed that "An exemption Notification has to be constrained strictly but that does not mean that the object and purpose of the Notification is to be lost sight of and the wording used therein ignored.
Where wording of the Notification are clear and unambiguous they have to be given effect to. Exemption cannot be denied by giving a construction not justified by wordings of the Notification."
(c) In the case of Commissioner of Central Excise Trichy v/s Rukmani Pakkwell Traders reported in 2004(165) E.L.T. 481 (S.C.) Hon'ble Apex Court has observed that "It is settled law that Exemption Notification have to be strictly construed. They must be interpreted on their own wordings. Wordings of some other notification are of no benefit in construing a particular Notification."
(d) In the case of I.T.C. Ltd. V/s Commissioner of Central Excise, New Delhi reported in 2004(171) ELT 433 Hon'ble Apex Court has observed that 'If the statutory language is unambiguous then that must be given effect to. The legislature is deemed to intend and mean what it says. The need for interpretation arises only when the words used in the statue are on their own terms ambivalent and don not manifest that intention of the legislature."
(g) In the case of Johnson & Johnson Ltd. V/s CCE, Aurangabad reported in 1997(92) ELT 23 (SC) Hon'ble Apex Court, has held that "Interpretation of taxing statute- Exemption- In interpreting an earlier notification, when the question is whether a narrow view or a broader view would be more appropriate, intention of the authorities could be gathered from the subsequent notification- Section 5A(1) of Central Excise Act, 1944.- We are of the opinion that the intention of -10- the authorities was to grant exemption to certain life saving and sight saving articles manufactured in the country and once this intention is clear from the subsequent notifications issued under Section 5A of the Act in 1995, we do not see any reason why we should take a narrow view to confine the two items produced by the appellants to Entry 3005.90 rather than place them in the wider connotation of surgical appliances in Entry 90.18 of Chapter 90."
9. The Commissioner (Appeals) has observed as under:
"10. In view of above discussion, I observe that in the said notification there is no specific requirement that the certificate issued by the competent authority should be issued in the name of the Appellant/ assessee. The act of importing additional condition, which is not mentioned in the Notification, by way of interpreting the Notification is not tenable. I also find that the Adjudicating Authority has erred in importing additional conditions which were not present in the Notification.
11. I also find that, the Appellant has submitted a certificate from executive head of the Project implementing Authority and countersigned by Principal Secretary or the Secretary (Finance) in the concerned State Govt., that the said goods are required for the execution of the said project. This is not a case where the goods have not been supplied to the specified project or diverted. There is no allegation on the Appellant about non supply of the goods for the specified project. Thus, I find that, the appellant has submitted a clarified later on by their letter dated 2.5.2005, and they supplied the goods to the specified projects, which has not been denied, therefore, the benefit of Notification No.108/95 C.E. dated 28.8.95 is admissible."
10. The Tribunal, has in para 5, has observed as under:
"5. We have considered the submissions from both the sides and perused the records. The Respondent had supplied mild steel CTD bars for use in certain Projects financed by Asian Development Bank and being implemented by Rajasthan Urban Infrastructure Development Project, Jaipur. There is no dispute that the necessary certificates as per the requirement of the exemption Notification certifying that the goods -11- supplied are required for the projects and that the projects are financed by the Asian Development Bank through loan and have been duly approved by the Govt. of India, have been produced. The only objection of the Department is that the Respondent's name is not mentioned as supplier of the material in the certificates. But since it is not denied that the respondent have supplied the material to the persons mentioned in the certificates and there is no allegation of diversion of the material supplied for any other purpose, in view of the judgment of the Hon'ble Madras High Court in case of Caterpillar India Pvt. Ltd. (supra), the benefit of exemption cannot be denied. Therefore, there is no infirmity in the impugned order. The Revenue's appeal is dismissed and the cross objection also stands disposed of."
11. In our view, the decision of Madras High Court which has been confirmed by the Supreme Court, is required to be followed. Apart from that, the letter dated 2.5.2005 has been clarified by Commissioner (Appeals) that the goods were supplied by the assessee. In that view of the matter, while construing the provisions, the authorities have rightly considered the documents. However, a contention has been raised that a certificate ought to have been issued in favour of the assessee. In view of the letter dated 2.5.2005, things are clarified, therefore, in our view, there is no error committed by the authority or Tribunal. No substantial question of law arises for consideration by this Court. The appeal deserves to be and is dismissed.
(MAHENDRA MAHESHWARI), J. (K.S. JHAVERI), J. bblm