1996 (10) TMI 275 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification 24/91 regarding benefit extension to cement manufactured using vertical shaft kiln.
2. Absence of condition in Notification 24/91 requiring cement to be manufactured from clinker produced in the same factory.
3. Application of legal principles for interpreting exemption notifications and resolving doubts in favor of the assessee.

Analysis:

Issue 1: Interpretation of Notification 24/91
The appeal concerns the interpretation of Notification 24/91 regarding the benefit extension to cement manufactured using a vertical shaft kiln. The notification specifies that the concession is available for cement produced by utilizing the kiln for the manufacture of clinker, ultimately leading to cement production. The Tribunal rejected the respondents' interpretation that having the kiln suffices, even if not used for cement manufacture. Reference was made to a previous case where machinery installation did not determine benefit eligibility; rather, the process to which goods are subjected was crucial. The Tribunal emphasized that the concession is for cement produced by using the kiln, and cement from externally purchased clinker does not qualify as manufactured using the kiln in the factory.

Issue 2: Absence of Condition in Notification 24/91
The absence of a condition in Notification 24/91 necessitating cement to be manufactured from clinker produced in the same factory was highlighted. Unlike previous notifications, Notification 24/91 does not mandate the origin of clinker for cement production. The respondents argued that the source of clinker, whether own or purchased, is irrelevant as long as other conditions are met. They contended that the benefit should apply to cement manufactured from externally sourced clinker as long as the cement plant includes the kiln as specified in the notification.

Issue 3: Application of Legal Principles
The Tribunal applied legal principles for interpreting exemption notifications and resolving doubts in favor of the assessee. It was emphasized that the meaning of the notification should primarily depend on the terminology used, as per established legal precedents. In cases of doubt or multiple interpretations, the one reducing tax incidence or enlarging exemption scope should be adopted. The Tribunal cited various legal decisions supporting the assessee's position and concluded that the benefit of Notification 24/91 should be extended to cement manufactured from externally purchased clinker as long as the kiln specified in the notification is utilized in the factory.

In conclusion, the Tribunal allowed the Revenue's appeal, holding that the lower authority erred in granting the benefit of Notification 24/91 to the respondents. The judgment clarified that the benefit extends only to cement generated from clinker manufactured using the vertical shaft kiln in the factory, thereby denying the benefit to cement produced from externally sourced clinker.