2019 (3) TMI 660 - AT - Central Excise

Manufacture of pipes and pipe fittings falling under chapter heading 73070000 CETA 1985 - benefit of N/N. 47/2002 CE dated 06.09.2002 as amended and Notification No. 6/2006-CE dated 01.03.2006 (Sr.No.7) - benefit denied on the ground that benefit of exemption is admissible only to pipes and not to pipe fittings - interpretation of the notification - Held that - On a simple reading of the aforesaid notification there is no room for doubt that the exemption has been allowed to Pipes needed for delivery of water from its source to the plant and from there to the storage facility. It is clear that no where the expression Pipe fittings has been mentioned in the said notification. Needless to mention an exemption notification has to be strictly construed. The Constitutional bench of Hon ble Supreme Court in Dilip Kumar & Company s case 2018 (7) TMI 1826 - SUPREME COURT OF INDIA laying down the principle of interpretations of an exemption notification has held that When there is ambiguity in exemption notification which is subject to strict interpretation the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. - thus there cannot be any doubt that to extend the benefit of the exemption one has to read pipe fittings alongwith the word pipe in the relevant entry of the said notification. Limitation - Held that - The Ld. AR for the Revenue at this stage submits that some period of the demand notice falls within the normal period of limitation whereas the Learned Advocate for the appellant in his synopsis mentioned that the period of demand is from March 2006 to July 2008 and the show cause notice was issued on 09/02/2010. Therefore the entire demand was barred by limitation - To ascertain the correct position matter remanded to the adjudicating authority to compute the demand if any for normal period. Appeal allowed by way of remand.

Summary

Issues:
- Interpretation of exemption notification regarding benefit for "pipes" and "pipe fittings"
- Applicability of exemption to "pipe fittings"
- Issue of limitation in demanding duty
- Imposition of penalty

Interpretation of Exemption Notification:
The case involved two appeals challenging an order passed by the Commissioner of Central Excise, Thane-I. The appellant had availed the benefit of exemption under specific notifications for "pipes" and "pipe fittings." The appellant argued that "pipe fittings" should also be considered under the exemption notification, citing a Supreme Court judgment. However, the Revenue contended that the exemption was strictly for "pipes" and not "pipe fittings." The Tribunal analyzed the relevant notifications and held that the exemption was only for "pipes" as explicitly mentioned, emphasizing the strict interpretation of exemption notifications. The Tribunal distinguished previous judgments on similar issues and upheld the Commissioner's order in denying the benefit of exemption to "pipe fittings."

Applicability of Exemption to "Pipe Fittings":
The Tribunal examined the language of the exemption notifications and emphasized that the benefit was limited to "pipes" as per the clear wording of the notifications. The appellant's argument that "pipe fittings" should be included was rejected based on the principle of strict interpretation of exemption notifications. The Tribunal referenced relevant case law to support its decision and concluded that the benefit of exemption did not extend to "pipe fittings."

Issue of Limitation in Demanding Duty:
Regarding the issue of limitation in demanding duty, the Tribunal reviewed the appellant's compliance with reporting requirements and found that the appellant had diligently disclosed the production and clearance of both "pipes" and "pipe fittings." The Tribunal noted that the appellant had followed the necessary procedures for discharging duty on exempted goods. Ultimately, the Tribunal ruled that the demand for duty beyond the normal limitation period was not sustainable and remanded the matter to the adjudicating authority for further assessment within the normal limitation period.

Imposition of Penalty:
The Tribunal dismissed the Revenue's appeal for the imposition of a penalty, considering that the issue primarily involved an interpretation of the law and there was no evidence of fact suppression. As a result, the Tribunal set aside the demand for the extended period, partially allowing the appellant's appeal. Additionally, the Tribunal allowed a change in the cause title due to a company name change. The judgment highlighted the importance of strict interpretation of exemption notifications and adherence to procedural requirements in claiming exemptions.