2002 (6) TMI 566 - AT - Central Excise

Summary

Issues: Interpretation of Notification 274/86 regarding exemption for damaged or sub-standard textile fabrics and chindies.

Issue 1: Interpretation of the 5% clearance limit for damaged or sub-standard textile fabrics and chindies.
The central issue in this judgment revolves around the interpretation of Notification 274/86 concerning the exemption for damaged or sub-standard textile fabrics and chindies. The primary question is whether the 5% clearance limit specified in the notification should be separately applied to damaged or sub-standard textile fabrics and chindies, or if it should be a combined total for both categories. The Commissioner (Appeals) in two separate orders took conflicting views on this matter. One order held that the assessee could avail of 5% clearance for damaged or sub-standard goods in addition to 5% for chindies, while the other order held the opposite view.

Analysis:
After considering both sides, the Tribunal concluded that the interpretation adopted by the Commissioner in the order allowing 5% clearance for damaged or sub-standard goods in addition to 5% for chindies was correct. The Tribunal pointed out that the notification treated damaged or sub-standard textile fabric as one group and chindies as another, with each being entitled to the exemption. The proviso in the notification used the word "or" between damaged or sub-standard fabrics and chindies, indicating that the clearance limit should not exceed 5% for each category. The Tribunal rejected the argument to read "or" as "and" in the proviso, as it would distort the clear intention of the legislature. Referring to statutory interpretation principles, the Tribunal emphasized that unless the literal reading of the words leads to an absurd result, the original wording should be maintained. Additionally, the Tribunal noted that another notification, 63/87, provided similar exemptions for damaged or sub-standard fabric and chindies, each with a 5% clearance limit, reinforcing the consistency in the legislative intent for both basic and additional duties.

Outcome:
In conclusion, the Tribunal dismissed Appeal E/5442/91 and allowed E/1078/92 with consequential relief, affirming the interpretation that the 5% clearance limit applies separately to damaged or sub-standard textile fabrics and chindies as distinct categories under Notification 274/86.