2017 (3) TMI 511 - AT - Central Excise

Benefit of N/N. 3/2001-CE dated 01/03/2001 - denial on the ground that the appellant availed exemption of the entire 3500 MTs of products and did not restrict itself to first clearance of 3500 MT - Held that - The intention of the Government was clearly to exempt first clearances i.e. the clearances in the chronological order up to the aggregate value of ₹ 75 lacs. The intention is not to grant a total concession of ₹ 75 lacs on the goods cleared at any time during the financial year. The logic is understandable. The exemption was meant to Units whose aggregate clearances in the previous year were below two crores, which shows that the Government wanted the benefit to be taken only by small manufacturers. The exemption was to be given on first clearances i.e. in the serial order of clearances. As soon as the aggregate came to ₹ 75 lacs, the concession would automatically stop. The intention was not to give a concession of ₹ 75 lacs straightaway - appeal dismissed - decided against appellant.

Summary

Issues:
Interpretation of Notification No.3/2001-CE regarding exemption for paper and paper boards manufactured from specific materials and first clearances limit of 3500 MTs.

Analysis:
The case involves M/s.Pudumjee Agro Industries engaged in manufacturing paper and paper boards availing exemption under Notification No.3/2001-CE. The notification provides exemption for products manufactured from materials other than bamboo, hard wood, softwoods, reeds, or rags, and for first clearances up to 3500 MTs in a financial year. The appellants availed exemption for the entire 3500 MTs without restricting themselves to the first clearance of 3500 MTs, leading to demands raised and confirmed by lower authorities.

The appellants relied on a previous Tribunal order in the case of Pudumjee Pulp & Paper Mills Ltd., where relief was granted on similar grounds. However, the learned Assistant Commissioner argued that the first clearance should be considered based on legal precedents like the decision of the Hon’ble High Court of Madhya Pradesh in BK Rubber Industries (P) Ltd. and the Larger Bench of the Tribunal in Marutham Textiles Pvt. Ltd.

The Tribunal, in its analysis, found that the earlier order in the case of Pudumjee Pulp & Paper Mills Ltd. did not consider the observations of the Hon’ble High Court of Madhya Pradesh and the Larger Bench of the Tribunal. The Tribunal clarified that the exemption is only applicable to goods qualifying for the first clearance of 3500 MTs, and all other goods would be chargeable to duty. The Hon’ble High Court of Madhya Pradesh interpreted the term “first clearances” to mean clearances in chronological order up to a specific value, not as a total concession for the financial year. The Large Bench of the Tribunal also supported this interpretation.

Ultimately, the Tribunal dismissed the appeals, disagreeing with the earlier decision in the case of Pudumjee Pulp & Paper Mills Ltd., as it was made without considering the relevant legal precedents. The judgment highlights the importance of interpreting exemption notifications in line with legal principles and precedents to ensure correct application and avoid misinterpretation of statutory provisions.