2018 (4) TMI 1027 - AT - Central Excise

Benefit of N/N. 6/2002-CE - Scouring Machine falling under Chapter 8451.10.10 or milling machine? - case of appellant is that the intention of the said notification is to grant exemption to both milling machine and to scouring machine and not to a combined milling and scouring machine - Held that - The appellants have produced an expert opinion which clearly states that the scouring machine is significantly different from milling machine and he has opined that the scouring machines are used for fiber like, cotton yarn and polyester yarn, whereas the milling machine is used for processing of woolen yarn - the certificate produced by the appellants is at contrast with the findings of the Commissioner (Appeals). This finding of the fact goes to the root of the issue. In case no combined scouring and milling machine exists then the notification cannot be implemented in the manner in which Revenue seeks to interpret. Such interpretation in these circumstances will deter the purpose of the notification. Since the expert opinion was not produced before the Commissioner (Appeals) and it has the variance with the findings of the learned Commissioner (Appeals) on the basis of literature, it would be in the interest of justice to ascertain the correct position in fact before going further into the interpretation of notification - matter is remanded to Commissioner (Appeals) to first decide if a combined scouring and milling machines exist after comparing the evidence produced by the appellant. Appeal allowed by way of remand.

Summary

Issues:
Interpretation of Notification No. 6/2002-CE regarding exemption for machine manufacturing under Chapter 8451.10.10.

Analysis:

Issue 1: Interpretation of Notification No. 6/2002-CE
The appellant contended that the machine they manufactured, a scouring machine, falls under item 21 of List 6 of the said notification, specifically Milling and Scouring machine. They argued that the intention of the notification was to grant exemption to both milling and scouring machines separately, not to a combined milling and scouring machine. The appellant relied on a previous notification to support their interpretation. They presented a Chartered Engineer's certificate highlighting the differences between scouring and milling machines, emphasizing that they are not complementary processes. The appellant also referred to the Finance Minister's statement on modernizing the textile industry to support their argument. They further argued that the term "and" in the description should be read as "or" based on the language used in other entries under the same notification.

Issue 2: Respondent's Argument
The respondent argued that the notification should be strictly interpreted, citing Supreme Court decisions to caution against stretching the notification beyond its plain language. They emphasized that the word "and" should not be read disjunctively based on legal precedents. The respondent relied on previous court judgments to support their stance on interpreting terms in notifications.

Issue 3: Tribunal's Decision
After considering the arguments from both sides, the Tribunal found that the expert opinion presented by the appellant differed from the findings of the Commissioner (Appeals) based on literature. The Tribunal highlighted the importance of determining whether a combined scouring and milling machine exists before interpreting the notification further. As the expert opinion was not presented before the Commissioner (Appeals), the Tribunal remanded the matter back to the Commissioner (Appeals) for fresh adjudication. Both parties were given the opportunity to provide additional evidence to support their claims.

In conclusion, the Tribunal set aside the impugned order and directed a reevaluation by the Commissioner (Appeals) based on the expert opinion submitted by the appellant. The decision was pronounced in court on 09.04.2018.