2018 (6) TMI 874 - AT - Central Excise

SSI Exemption - Scope of Rural Area - existence of unit in rural area - N/N. 8/2003-CE dated 1.3.2003 - It is submitted by the respondent manufacturer that admittedly the unit of the respondent falls outside the peripheral limit of cantonment area as such village Derathu falls under definition of rural area - whether the location of the factory of the manufacturer i.e. the Derathu village falls within the municipal limit of Nasirabad cantonment? Held that - In a plethora of cases, it has been stated by various judicial pronouncements that where, the language is clear, the intention of the legislature is to be gathered from the language used. It is not the duty of the court either to enlarge the scope of legislation or the intention of the legislature, when the language of the provision is plain - The Commissioner (Appeals) has rightly adjudicated upon the controversy holding that village Derathu does not fall within the cantonment area in as such is well covered under the definition of rural area for which the notification is very much applicable - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Appeal against dropping of demand and penalties by Commissioner (Appeals).
2. Interpretation of the term "rural area" under Notification No. 8/2003-CE.
3. Determining if the factory location falls within municipal limit of Nasirabad cantonment.

Analysis:
The appeal in this case was filed against the dropping of demand and penalties by the Commissioner (Appeals) in an excise matter. The respondent, engaged in manufacturing detergent and soap, was found to have incorrectly availed exemption under Notification No. 8/2003-CE. The original adjudicating authority confirmed the demand and imposed penalties. The appellant department contended that the unit must exist in a rural area to avail exemption, excluding areas like cantonment. The respondent argued that their unit fell outside the cantonment's periphery, making it a rural area. The Tribunal had to decide if the factory location fell within the municipal limit of Nasirabad cantonment.

The key issue revolved around interpreting the term "rural area" under the notification. Rule 5(H) defined rural area as excluding areas like municipal committees and cantonment boards. The Tribunal emphasized that the unit must fall within a rural area to avail the exemption. The legislation's language was deemed clear, and the Tribunal reiterated that courts cannot rewrite legislation based on assumptions. The Tribunal held that the Commissioner (Appeals) rightly determined that the factory location was outside the cantonment area, falling within the definition of a rural area eligible for the notification's benefits.

In conclusion, the Tribunal upheld the Commissioner (Appeals)'s decision, stating that the factory location was within a rural area and, therefore, eligible for the exemption under the notification. The appeal against dropping the demand and penalties was rejected, emphasizing the importance of interpreting legislation based on clear language without adding or assuming provisions.