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2020 (2) TMI 1114 - AT - Central ExciseProcess amounting to manufacture - Packing of duty paid machine dipped match splints purchased from mechanized match units - Benefit of N/N. 4/2006-CE dated 1.3.2006 (Sl. No. 72 of the Table) denied - Department was of the view that the appellants are not eligible for the benefit of Notification since the match splints purchased by them have been manufactured using the aid of power - Board Circular No. 1/93-CX-4 dated 2.121993 - difference of opinion - matter referred to Third member. HELD THAT - The scope and cause of reference to the Third Member is limited to the difference of opinion between the Members and therefore, as a Third Member, I cannot go beyond the reference to entertain the above application. However, I deem it proper to place the above application before the regular Bench for any order on the application. The Member (Judicial) has held that the appellants are eligible for the benefit of the Notification (supra) and has set aside the demand whereas, the Member (Technical) has held that the benefit of the exemption Notification (supra) is not available to the assessees and has accordingly confirmed the demand. The only question formulated by the Members on the Difference of Opinion is whether the appellants are eligible for the exemption Notification No. 04/2006-C.E, dated 01,03.2006 as held by Member (Judicial) or they are not eligible for the exemption as held by Member (Technical). In Union of India Vs. Elphinstone Spinning Weaving Co. Ltd., 2001 (1) TMI 966 - SUPREME COURT , the Hon'ble Apex Court formulated what it termed the cardinal principle of construction in the following words a statute is a command of the Legislature. The interpreter must, therefore, in interpreting and construing the statute, identify the intention of the Legislature; that in identifying the intention of the Legislature by the process of constructing, the Court will have to adopt both literal and purposive approaches. This would mean that the true or legal meaning of an enactment is derived by construing the meanings of the words used in the enactment in the light of any discernible purpose or object which comprehends the mischief of its remedy to which the enactment is directed. In State of Uttar Pradesh Vs. Vijay Anand 1962 (3) TMI 7 - SUPREME COURT , the Hon'ble Apex Court inter alia when the language is plain and unambiguous and admits of only one meaning, no question of construction of a statute arises, for the Act. When the meaning is plain and unambiguous, no process of construing or interpreting a statute can proceed beyond the literal or textual interpretation except if absurdity results as a consequence. In my considered opinion, the same principles apply to construing - Although courts have historically taken the assistance of common law principles in interpreting statutory law, there is very little common about the tax laws. There are a sui generis set of principles that apply to the interpretation of taxing statutes. It is the we / settled proposition that the subject is not to be taxed without clear words for that purpose; and every Act of Parliament must be read according to the natural construction of its words. Member (Judicial) rightly points out that the notification does not require that the processes listed therein are required to be carried out by a single/same manufacturer. However, for the reasons I have given above, the converse too is not true. That is, the absence of such a requirement does not automatically entitle the assessee to the exemption - The very heading of the Notification, i.e., GENERAL EXEMPTION NO,47 reads thus Exemption and effective rate of duty for SPECIFIED GOODS of chapters 25 to 49 and it applies. to exempt excisable goods of the description specified in column (3) of the table. So, the conditions upon which the exemption depends is relatable not to the assessee, not the manufacture and not even the manufacturer, but only to the goods specified. It is the case of the appellants that they have procured dipped match splints from other manufacturers who have removed such goods on payment of that this would not make any difference since the entitlement to exemption is to be determined separately in each assessee's case. The fact that duty has been paid on some intermediate/ semi-finished goods not themselves entitled to exemption is in no manner relevant to whether exemption is to be granted at a subsequent stage to the finished goods. In any event, the cascading effect is effectively mitigated by CENVAT credit. The exemption notification must be applied only to the goods .it seeks to cover. The appellants are not eligible for the benefit of exemption notification No.4 ibid and accordingly, I concur with the conclusions drawn by the Member (Technical) - Registry is directed to place the matter before the Division Bench for recording majority/Final Orders accordingly. Majority order recorded - Appeals dismissed.
Issues Involved:
1. Eligibility for the benefit of Notification No. 4/2006-CE dated 1.3.2006. 2. Interpretation of the term "ordinarily" in the context of the notification. 3. Whether the processes carried out by the appellants amount to manufacture. 4. Application of the precedent set by the Supreme Court in Standard Fireworks Industries vs. CCE. 5. Relevance of CBEC Circulars in interpreting the exemption notification. Detailed Analysis: 1. Eligibility for the Benefit of Notification No. 4/2006-CE: The appellants argued that they were eligible for the exemption under Notification No. 4/2006-CE as they did not use power in their factory for the processes of painting, packing, and bundling matchboxes. The department contended that since the dipped match splints were manufactured using power, the exemption was not applicable. The Tribunal examined the notification and concluded that the notification does not stipulate that all processes need to be carried out in a single factory or by a single manufacturer. The Tribunal held that since the appellants did not use power in their factory, they were eligible for the exemption. 2. Interpretation of the Term "Ordinarily": The term "ordinarily" in the notification was significant. The Tribunal noted that the notification's restriction applies not just to specific goods but to the same goods whenever manufactured. The burden was on the assessee to prove that the specified processes were not ordinarily carried out with the aid of power. The Tribunal found that the appellants failed to discharge this burden. The interpretation of "ordinarily" was crucial in determining the eligibility for the exemption. 3. Whether the Processes Carried Out Amount to Manufacture: The appellants contended that their activities did not amount to manufacture as no new product emerged after packing the match splints in boxes. The Tribunal disagreed, stating that the processes undertaken by the appellants, such as painting and packing, amounted to manufacture as per Section 2(f) of the Central Excise Act, 1944. 4. Application of the Precedent Set by the Supreme Court in Standard Fireworks Industries vs. CCE: The department relied on the Supreme Court's decision in Standard Fireworks Industries, where it was held that the use of power in any process, even if done outside the factory, disqualified the assessee from claiming the exemption. The Tribunal found the facts in Standard Fireworks Industries distinguishable from the present case. However, the Third Member agreed with the department's view, holding that the benefit of the exemption notification was not available if power was used in any of the specified processes, regardless of who used it. 5. Relevance of CBEC Circulars: The appellants relied on CBEC Circular No. 1/93-CX-4, which clarified that the benefit of an exemption would be available even if parts manufactured using power were purchased and used without the aid of power. The Tribunal noted that the circular was not binding on the Tribunal and dealt with a different exemption notification. The Third Member held that the circular did not carry the appellants' case further. Conclusion: In the majority order, the Tribunal concluded that the appellants were not eligible for the benefit of Notification No. 4/2006-CE as the processes involving the use of power disqualified them from the exemption. The appeals were dismissed, affirming the department's demand for duty, interest, and penalties.
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