2018 (6) TMI 768 - AT - Central Excise

Benefit of N/N. 6/2006 CE dt.1/3/2006 - It appeared to the department that appellants are not eligible for the notification, since the CPU without monitor does not constitute a machine namely Computer to attract concessional rate of duty as per the notification - whether the appellants are eligible for the benefit of concessional rate of duty as per the N/N. 6/2006-CE dt.1/3/2006 (Entry No.16), when they have not cleared the monitor alongwith CPU? - Held that - Entry No.16 applies to goods falling under CTH 8471. When the goods fall under the said classification, the appellants come within the ambit of the eligibility / application of notification. Whether the goods fall within the description of Computers as given in the Explanation in Column 3 of the Notification? - Held that - It is very much clear from the explanation that even if the CPU is cleared separately or cleared with monitor, mouse and keyboard together as a set, the benefit of notification would be applicable. The word used in the Explanation is includes , the Hon.Apex Court in the case of Bharat Diagnostic Centre analysed the meaning of the word include in Notification No.63/88, wherein it was held that the said word generally enlarges the meaning of words or phrases to comprehend not only such things as they signify according to their natural import or as per common parlance, but also those things which interpretation or explanation clause declares that they shall include. In the present case, admittedly the goods fall under CTH 8471 and thus the appellants are eligible for benefit of notification. This being so, the benefit of exemption has to be then construed liberally. Even without such liberal interpretation, since the explanation uses the word include , it is very clear that although the CPU is not cleared alongwith the monitor, the goods would fall within the description of Computers as given in Column 3 of the Notification. Appeal allowed - decided in favor of appellant.

Issues:
1. Eligibility for concessional rate of duty under Notification No.6/2006-CE.
2. Interpretation of the term "computer" under the notification.
3. Application of the term "includes" in the explanation clause.
4. Legal precedent analysis regarding interpretation of notification clauses.
5. Consideration of strict vs. liberal interpretation in exemption notifications.

Eligibility for Concessional Rate of Duty:
The case involved the appellants, manufacturers of computers, facing allegations of wrong availment of benefits under Notification No.6/2006-CE. The show cause notice claimed that the appellants were not eligible for the notification as the CPU without a monitor did not constitute a machine categorized as a "computer." The department proposed demanding differential duty, interest, and penalties. The original authority confirmed these demands, leading the appellants to appeal before the tribunal.

Interpretation of the Term "Computer":
The appellant argued that the impugned goods were eligible for the concessional rate of duty under the notification as they were classified under 84713010, covering personal computers. They contended that even without the monitor, the goods should be considered computers as per the explanation in the notification. The appellant relied on legal precedents, including Bharat Diagnostic Centre v Commissioner of Customs, to support their interpretation of the term "includes" in the notification.

Application of the Term "Includes" in the Explanation Clause:
The tribunal examined the explanation clause in the notification, which stated that a computer shall include a CPU cleared separately or with a monitor, mouse, and keyboard as a set. The tribunal referred to legal precedents to analyze the term "includes," emphasizing that it enlarges the meaning of words to encompass not only their natural import but also what the interpretation clause declares they shall include. This interpretation guided the tribunal's decision-making process.

Legal Precedent Analysis Regarding Interpretation of Notification Clauses:
The tribunal cited legal precedents such as Ramala Sahkari Chini Mills Ltd v Commissioner of Central Excise and Commissioner of Customs (Imports) v Tullow India Operations Ltd to establish principles for interpreting exemption notifications. These cases highlighted the need for strict interpretation of eligibility criteria but a liberal interpretation of exemption clauses once eligibility is established. The tribunal applied these principles to the current case to determine the appellants' eligibility for the notification benefits.

Consideration of Strict vs. Liberal Interpretation in Exemption Notifications:
The tribunal emphasized the need for strict interpretation of eligibility criteria in exemption notifications but a liberal interpretation of exemption clauses once eligibility is established. In this case, since the goods fell under the classification specified in the notification, the tribunal concluded that the appellants were eligible for the benefits. The tribunal's decision to set aside the demand was based on a combination of strict and liberal interpretation principles applied to the notification's clauses.

In conclusion, the tribunal set aside the impugned order, allowing the appeal with consequential reliefs. The dismissal of miscellaneous applications not pressed further supported the tribunal's decision. The detailed analysis of legal interpretations and precedents played a crucial role in determining the appellants' eligibility for the concessional rate of duty under the notification, ultimately leading to the favorable outcome for the appellants before the tribunal.

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