2004 (10) TMI 92 - SC - Central Excise

Benefit of Notification No. 13/97-Cus. - Whether the appellant is entitled to the benefit of Notification No. 13/97-Cus. as amended by Notification No. 25/99-Cus - Held that - benefit of the Notifications could not be denied in respect of goods which were intended for use for manufacture of the final product but could not be so used due shortage or leakage. The Notifications relied upon in the decision in National Organic Chemical Indus. Ltd. (1999 (5) TMI 388 - CEGAT, MUMBAI) are substantially similar to the present Notification. The Tribunal, however, relied upon its earlier decision in the case of Commissioner of Central Excise, Meerut v. M/s. BPL Display Devices Ltd. reported in 2002 (7) TMI 446 - CEGAT, NEW DELHI to hold against the appellant. This Court following the affirmation of the Tribunal's reasoning in National Organic Chemicals Indus. Ltd. (supra) on 20-2-2002, allowed the appellant's appeal. This appeal must therefore be necessarily allowed. We are of the view that no material distinction can be drawn between the loss on account of leakage and loss on account of damage. The words 'for use' used in similar exemption Notifications have also been construed by this Court earlier in the State of Haryana v. Dalmia Dadri Cement Ltd., 1987 (11) TMI 94 - SUPREME COURT OF INDIA to mean 'intended for use'. According to this decision the object of grant of exemption was only to debar those importer/manufacturers from the benefit of the Notifications who had diverted the products imported for other purposes and had no intention to use the same for manufacture of the specified items at any stage - Decided in favour of assessee.

Summary

Issues:
Entitlement to benefit of Notification No. 13/97-Cus. as amended by Notification No. 25/99-Cus. for imported parts of picture tubes damaged in transit.

Analysis:
The appeal before the Supreme Court revolved around the entitlement of the appellant to the benefit of Notification No. 13/97-Cus. as amended by Notification No. 25/99-Cus. These notifications offer benefits to specified items imported into India 'for use' in the manufacture of other specified items. The appellant had imported parts of picture tubes for manufacturing color picture tubes, with both the imported parts and the manufactured items falling under the purview of the notifications. A small percentage of the imported parts were damaged in transit during 2000-2001, rendering them unusable for manufacturing picture tubes. The appellant sought to claim the benefit of the notifications for the entire lot of imported parts, citing a previous Tribunal decision and subsequent Court ruling in a related case. The Tribunal, however, relied on a different precedent to rule against the appellant.

The Supreme Court, in its analysis, highlighted the similarity between the notifications in question and those in previous cases. It noted that a loss due to damage should be treated no differently than a loss due to leakage, emphasizing that the term 'for use' in the exemption notifications should be construed to mean 'intended for use.' Referring to a prior decision, the Court clarified that the purpose of granting exemptions was to prevent importers or manufacturers from diverting imported products for other purposes, with no intention of using them for manufacturing specified items. The Court ultimately allowed the appeal, concluding that there was no substantial distinction between losses incurred due to leakage or damage, and affirming the appellant's entitlement to the benefit of the notifications.

In conclusion, the Supreme Court allowed the appeal without imposing any costs, thereby ruling in favor of the appellant's entitlement to the benefit of Notification No. 13/97-Cus. as amended by Notification No. 25/99-Cus. for the imported parts of picture tubes damaged in transit.