2005 (2) TMI 131 - SC - Central Excise

Whether concessional rate of duty under Notification No. 138/86-C.E., dated 1st March, 1986 is available only for clearances made for home consumption and/or it is also available for all clearances? Held that - Under this Notification concessional rate of duty is granted to paper and paperboard made by smaller paper mills using unconventional raw material. The concession is granted up to the quantities specified in Column (2) of the Table annexed to the Notification. The Table, annexed to the Notification, shows that as the quantity increases the concession also increases. The Table also indicates that the concessional rate of duty is available for clearances which may go up to even 2 lakh tonnes. Proviso (i) and Clause (2) of the said Notification lay down limits in respect of clearances for home consumption. Under Clause (2) the maximum clearance for home consumption can be 33,000 tonnes. This shows that the balance clearances at concessional rate must be for exports. Undoubtedly, proviso (i) and Clause (2) of the Notification use the word home consumption but they do not specify that the entire clearances must only be for home consumption. All that is provided is that the clearances for home consumption must be within the limits specified therein. If the clearances for home consumption exceed the limits specified in 1st proviso and in Clause (2) then the benefit of the Notification would be lost. However, if the clearances for home consumption do not exceed those limits then even though the other clearances are for exports the benefit of the Notification would be available. In this view of the matter, we see no reason to interfere.

Summary

Issues:
Interpretation of Notification No. 138/86-C.E. regarding concessional rate of duty for paper and paperboard made by smaller paper mills using unconventional raw materials.

Analysis:

Issue 1: Interpretation of Notification No. 138/86-C.E.

The Supreme Court was presented with the question of whether the concessional rate of duty under Notification No. 138/86-C.E. dated 1st March, 1986, is applicable only for clearances made for home consumption or if it extends to all clearances. The Tribunal had held, by a majority decision, that the benefit of the Notification is not limited only to clearances for home consumption. The Court acknowledged that while they did not completely agree with the Tribunal's reasoning, they found the ultimate conclusion to be correct. The Notification provides for concessional rates based on specified quantities in the Table annexed to it, with increasing concessions as the quantity increases. Proviso (i) and Clause (2) of the Notification set limits on clearances for home consumption, with a maximum clearance of 33,000 tonnes for home consumption. The Court clarified that exceeding these limits would result in losing the benefit of the Notification, but as long as the clearances for home consumption are within the specified limits, the benefit would still be available even if the remaining clearances are for exports.

In conclusion, the Supreme Court upheld the Tribunal's decision and dismissed the Civil Appeal, stating that there is no reason to interfere with the interpretation provided. The Court emphasized that as long as the clearances for home consumption do not exceed the specified limits, the benefit of the concessional rate of duty under Notification No. 138/86-C.E. would be available, even if the other clearances are for exports.