PETITIONER: COLLECTOR OF CENTRAL EXCISE ETC. Vs. RESPONDENT: THE HIMALAYAN COOPERATIVE MILK PRODUCT UNION LIMITED ETC. DATE OF JUDGMENT: 07/11/2000 BENCH: U.C.Banerjee, Brijesh Kumar JUDGMENT:
BRIJESH KUMAR, J.
L…..I………T…….T…….T…….T…….T…….T..J
Since the above noted two appeals involve a common
question for determination, as to the interpretation of a
Notification issued by the Central Government under sub-rule
(1) of Rule 8 of the Central Excise Rules, 1944, exempting
goods falling under Item No.68 of the First Schedule to the
Central Excise and Salt Act 1944, on fulfilment of certain
conditions, the appeals are being disposed of by this common
judgment. As usual in such cases, the Revenue is trying to
bring manufacturers within its net to charge it with the
excise duty whereas the manufacturer-respondents trying to
get out of it claiming benefit under the aforesaid
Notification.
2. The brief facts of the case are that the
manufacturer-respondent, Himalayan Cooperative Milk Product
Union Limited manufactures butter and skimmed milk powder
etc. in its industrial complex. For purposes of chilling
plant of Dairy Unit, the respondent seems to have installed
a plant manufacturing liquid nitrogen which item,
undisputedly falls under Item 68 of the Excise Tariff. By
means of Notification No. 105/80-C.E. dated 19.6.1980 the
excise duty payable on goods falling under Item No.68, is
exempted in respect of the first clearances of the said
goods for home consumption by or on behalf of a manufacturer
from one or more factories up to a value not exceeding
rupees thirty lakhs inter alia on the condition that the
total of the value of the capital investment made from time
to time, on the machinery installed for manufacturing said
goods is not more than rupees ten lakhs. According to the
manufacturer-respondents the total capital investment in the
plant and machinery manufacturing liquid nitrogen is less
than rupees ten lakhs, therefore the benefit of exemption
from excise duty is admissible under the Notification in
question dated 19.6.1980. 3. The Assistant Collector,
Central Excise, Siliguri Division by order dated 5.9.1983
rejected the claim of the respondents and confirmed the
demand as raised by the Superintendent of Central Excise
under Central Excise Rules, observing that the respondents
are using all the plants and machinery for purposes of
manufacturing all kinds/varieties of excisable goods falling
under different Tariff items, the total value of capital
investment of all plants and machineries, installed in the
said factory are to be taken into account and no exemption
on investment which was more than ten lakhs was admissible.
Thus according to the excise authorities the total value of
investments in all the plants manufacturing butter and
skimmed milk powder and other dairy products as well as for
manufacturing of liquid nitrogen was to be taken into
account. According to the respondents Himalayan Cooperative
Milk Product Union Limited the value of investment on liquid
nitrogen plant which alone is relevant is much less than
rupees ten lakhs. The appeal preferred against the order of
Assistant Collector was also dismissed by the Collector
(Appeals), Central Excise, Calcutta by order dated 9.1.1984.
Both the authorities have, however, held that liquid
nitrogen itself is a finished product and falls under Tariff
Item 68. 4. The respondents preferred an appeal before the
Customs, Excise and Gold (Control) Appellate Tribunal, New
Delhi. The Appellate Tribunal by its order dated 21.1.1988
allowed the appeal holding that the respondents would be
entitled for the benefit under the Notification of
exemption. On facts though the Tribunal remanded the matter
to the original adjudicating authority for computing the
capital investment on plant and machinery referable to
liquid nitrogen and the common plant and machinery in the
same industrial complex so as to ascertain the capital
investment on generator used for the chilling water. 5. We
feel it would be better to peruse the Notification dated
19.6.1980 exempting the payment of excise duty on goods
falling under Item 68 of the Tariff. It reads as follows:
In exercise of the powers conferred by sub-rule of rule (1)
of rule 8 of the Central Excise Rules, 1944, and in
supersession of the notification of the Govt. of India in
the Ministry of Finance (Department of Revenue)
No.89/79-Central Excises, dated the 1st March 1979, the
Central Government hereby exempts goods, falling under Item
No.68 of the First Schedule to the Central Excise and Salt
Act 1944 (1 of 1944), (hereinafter referred to as the said
goods), in respect of the first clearances of the said goods
for home consumption by or on behalf of a manufacturer from
one or more factories upto a value not exceeding rupees
thirty lakhs, cleared on or after the 1st day of April in
any financial year, from the whole of the duty of excise
leviable thereon:
Provided that during the period commencing on the 19th
day of June 1980 and ending on the 31st day of March, 1981,
the value of the clearances of the said goods eligible for
exemption under this notification shall be subject to the
following conditions, namely:-
(i) The aggregate of the value of clearances eligible
for exemption contained in this notification during the
aforesaid period, and the clearances, if any, already
effected by or on behalf of a manufacturer in terms of the
exemption contained in the notification No. 89/79-Central
Excises, dated the 1st March 1979 aforesaid, during the
period commencing on the 1st day of April 1980, shall not
exceed rupees thirty lakhs; and
(ii) The value of clearances eligible for exemption
contained in this notification during the aforesaid period
commencing on the 19th day of June, 1980 and ending on the
31st day of March, 1981 shall, in no case, exceed rupees
twenty four lakhs.
Provided further than an officer not below the rank of
an Assistant Collector of Central Excise is satisfied that
the sum total of the value of the capital investment made
from time to time on plant and machinery installed in the
industrial unit in which the said goods, under clearance,
are manufactured, is not more than rupees ten lakhs.
(Underlines by us for emphasis)
2. Where a factory producing the said goods is run at
different times during a financial year by different
manufacturers, the total value of the clearances of the said
goods from such factory eligible for exemption under this
notification in such year shall not exceed rupees thirty
lakhs.
3. Nothing contained in this notification shall apply
to a manufacturer, if the total value of the said goods
cleared, if any, for home consumption by him or on his
behalf from one or more factories in the preceding financial
year exceeded rupees thirty lakhs.
Explanation 1 While determining the sum total of the
value of the capital investment, only the face value of the
investment at the time when such investment was made shall
be taken into account, but the value of the investment made
on plant and machinery which have been removed permanently
from the industrial unit or rendered unfit for any use shall
be excluded from such determination.
Explanation II. In this notification, the
expression factory has the meaning assigned to it in
clause (m) of section 2 of the Factories Act, 1948 (63 of
1948).
Explanation III. For the purpose of computing the
value of clearances under this notification, the clearances
of the said goods which are exempted from the whole of the
duty of excise leviable thereon by any other notification
issued under sub-rule (1) of rule 8 of the Central Excise
Rules, 1944, and for the time being in force, shall not be
taken into account.
A bare perusal of the Notification quoted above shows
that the Central Government under Rule 8(1) of the Excise
Rules exempts goods in respect of first clearance for home
consumption by or on behalf of the manufacturer from one or
more factories upto a value not exceeding rupees thirty
lakhs. The exemption would however be allowable on
fulfilment of a condition as contained in the proviso to
clause (ii) of the Notification which says that an officer
not below the rank of an Assistant Collector of Central
Excise is to be satisfied that the sum total of the value of
the capital investment made on the plant and machinery
installed in the industrial unit manufacturing said goods
under clearance is not more than rupees ten lakhs. On
perusal of the proviso under consideration, it would be
clear that it does not refer to any other goods under
clearance except the goods falling under Item 68 of the
First Schedule to the Central Excise and Salt Act, 1944. In
the beginning itself the Notification says that the goods
falling under Item 68 are to be referred to, in the
Notification, as `said goods. According to own findings of
the Assistant Collector, liquid nitrogen is itself a
finished product and falls under Tariff Item No.68. In that
view of the matter the question of taking into account the
value of the capital investment made on plants and machinery
manufacturing goods other than covered under Item No.68 does
not arise. We find no force in the submissions made on
behalf of the appellants that value of all plants and
machinery manufacturing butter and skimmed milk powder etc.
has also to be added up so as to find out as to whether
total value of the capital investment in the plant and
machinery is rupees ten lakhs or more. In our view the
value of the capital investment has to be in respect of the
plant and machinery manufacturing the said goods viz.
goods covered under Item No.68 of the Tariff, clearances of
which alone is taken into account in exempting from payment
of excise duty under the Notification in question. The said
goods in the present case is only liquid nitrogen. Thus the
value of investment in the plants and machinery
manufacturing other goods not covered under Item 68 has no
relevance nor it is to be taken into account. 6. The
Tribunal while allowing the appeal followed a decision of
Bombay High Court reported in 1984 (16) E.L.T. 30 (Bom.)
Devidayal Electronics & Wires Ltd. and another versus Union
of India and another. The similar notification in respect
of an earlier year was under consideration before the Court.
It had been noticed that two words have been used in the
Notification namely, the `factory and `industrial unit.
The two expressions would be presumed to have been used for
different meaning. It was held that industrial unit would
mean something other than the factory, which would be a
separate isolate part of the plant which is exclusively used
for manufacture of goods for which exemption is claimed.
Learned counsel for the appellants tried to distinguish the
case on facts. We, however, find that in principle what has
been held in Devidayal (supra) as followed by the Tribunal,
cannot be said to be an incorrect view. The factual
deviation would be a matter on facts of each case. The
other case which the Tribunal has referred to is reported in
1987 (27) E.L.T. 273 (A.P.) Golden Press versus Deputy
Collector of Central Excise, Hyderabad and Another. In this
case a notice was issued on the manufacturer of cartons as
to why penalty be not imposed since the goods manufactured
were removed without payment of duty. It was pleaded that
cartons were exempted under a notification exempting all
products of printing industry. The Court, however, held
that cartons though may be printed, cannot be held to be
product of printing industry. They will be relatable to
packaging industry. Hence, the benefit, as pleaded, was not
admissible. In so far as the other arguments raised about
the value of the investment made for manufacture of printed
cartons, it was held that cost of cutting machines etc.
could not be excluded which according to the manufacturer
was not used for printed cartons. The argument that the
value of the investment in the plant and machinery
manufacturing a particular item under a separate tariff
would alone be taken into consideration was not accepted.
The language of the exemption notification as involved in
that case was quoted which was to the effect: The sum
total of the value of the capital investment made from time
to time on plant and machinery installed in the industrial
unit in which the goods under clearance are manufactured, is
not more than rupees ten lakhs. (As quoted in Para 22 (b)
of the judgment).
It is then observed that according to the said
notification total value of the entire machinery in the
industrial unit should be taken into account as there was no
occasion for allocating the machinery between various goods
manufactured therein and by way of an example, it was
observed that it may create complications where a factory
manufacturing goods falling under more than one tariff item
but has only one generator of power plant, so in such cases
in what manner generator or power plant was to be allocated
between two items. The plea raised was negatived and it was
held that total value of the entire machinery in the
industrial unit should be taken into account. At this
stage, it would be appropriate to point out the difference
in the language used in two notifications. We find that in
the Notification dated 19.6.1980, with which we are
presently concerned, the proviso to clause (ii) of the
Notification says the capital investment made from time
to time on plant and machinery installed in the industrial
unit in which the said goods under clearance are
manufactured.. The expression said goods is not used in
the Notification interpreted in the case of Golden Press
(supra). The said goods signifies or identifies the goods
which are covered under Item 68 in respect of which
exemption has been granted. But the word said is not used
in the Notification under consideration in the case of
Golden Press (supra) as indicated above says industrial
unit in which the goods under clearance are
manufactured. The goods have not been specified by
using the expression said goods. In the Notification
dated 19.6.1980, as already indicated earlier, the goods
falling under Item 68 are to be referred as said goods.
Therefore, in our view it will not be possible to take into
consideration the value of investment of all the plants and
machinery manufacturing different items viz. goods other
than the said goods.
7. In our view the Tribunal rightly preferred the
view taken in the case of Devidayal (supra). The factual
hurdles like a common generator may be in use by different
units in the factory complex as indicated in the case of
Golden Press (supra) can well be worked out by devising
proper method while apportioning the value of different
plants proportionately. In no way such hurdle, as posed,
would change the meaning of a Notification which on the face
of it and by the plain language used therein has unambiguous
and clear meaning. 8. Such Notifications by which
exemption or other benefits are provided by the Government
in exercise of its statutory power, normally have some
purpose and policy decision behind it. Such benefits are
meant to be provided to the investors and manufacturers.
Therefore, such purpose is not to be defeated nor those who
may be entitled for it are to be deprived by interpreting
the notification which may give it some meaning other than
what is clearly and plainly flowing from it. 9. 9. In
view of the discussion held above, we find no merit in the
appeals and they are hereby dismissed. No order as to
costs.
