2014 (11) TMI 495 - HC - Central Excise

Exemption under Notification No. 23/98-C.E. - Manufacturing of newsprint - Held that - It is an admitted that if any Mill or Industry deals with manufacturing of newsprint material, the same can very well get exemption after getting proper notification under the Newsprint Control Order, 1962. The claim of the appellant/Department is based upon the fact that the second unit of the respondent has not been notified as per Newsprint Control Order, 1962. Only with regard to first unit proper notification has been obtained - for getting exemption from paying Central Excise Duty each unit must be separately or distinctly notified under the Newsprint Control Order, 1962 and admittedly, the respondent has not been notified under the said order. As stated in many places, both the Authorities have given identical findings to the effect that both units are doing identical work and therefore the second unit (respondent) need not to get notification separately. - Since for getting exemption from paying Central Excise Duty notification under Newsprint Control Order, 1962 is very much essential, mere doing of identical works is not at all sufficient for getting exemption. Therefore, the concurrent views expressed by the Commissioner of Appeals as well as the CESTAT are not factually and legally correct - Decided in favour of Revenue.

Summary

Issues:
1. Interpretation of Newsprint Control Order, 1962 for exemption from Central Excise Duty.
2. Notification requirement for separate units under the Newsprint Control Order, 1962.
3. Application of exemption to units engaged in identical work.
4. Legal principles governing exemption provisions.

Interpretation of Newsprint Control Order, 1962 for exemption from Central Excise Duty:
The case involved a dispute regarding the application of the Newsprint Control Order, 1962 for exemption from Central Excise Duty. The appellant contended that the respondent's second unit was not notified under the Order, unlike the first unit, and thus was not entitled to the exemption. The Court analyzed the relevant provisions of the Order and emphasized the necessity of separate notification for each unit to claim exemption.

Notification requirement for separate units under the Newsprint Control Order, 1962:
The Court examined the documents related to the notification under the Newsprint Control Order, 1962. It noted that while the first unit of the respondent had been properly notified, the second unit had not received a separate notification. The Court highlighted the importance of individual units being distinctly notified under the Order to avail exemptions, as per the specific requirements outlined in the legislation.

Application of exemption to units engaged in identical work:
The key contention revolved around whether the exemption granted to the first unit could automatically extend to the second unit, even though both units were engaged in identical work related to newsprint materials. The Court observed that despite similar activities, each unit must be separately notified under the Order to qualify for the exemption. The decisions of the lower authorities granting exemption to the second unit were deemed erroneous.

Legal principles governing exemption provisions:
The Court referred to legal principles emphasizing strict interpretation of exemption provisions in favor of the State in case of doubt. It highlighted that while exemptions should be strictly construed initially, once found applicable, they must be fully enforced. The Court reiterated that for Central Excise Duty exemption, proper notification under the Newsprint Control Order, 1962 was a fundamental requirement, and mere similarity in work between units was insufficient to warrant exemption.

In conclusion, the Court allowed the Civil Miscellaneous Appeal, setting aside the orders of the lower authorities and restoring the Order-in-Original. The judgment underscored the importance of complying with the notification requirements under the Newsprint Control Order, 1962 for availing exemptions from Central Excise Duty, emphasizing the need for separate notifications for distinct units engaged in similar activities.