2024 (10) TMI 450 - HC - Central Excise

Interpretation of N/N. 115/86-CE dated 1.3.1986 - mandatory requirement or otherwise, for the assessee to maintain charge-wise register - eligibility for exemption - HELD THAT - On perusal of the Notification, it refers to the granting of exemption from the excise duty on the vegetable products made from the indigenous cotton seed oil or any one or more of the other indigenous minor oil specified in the table annexed to the Notification or mixture of any one or more of such oil with any other oil, as stipulated therein on condition that such vegetable products for additional percentage point of increase in the use of the cotton seed oil in excess of 15% and in case of specified minor oil being 3% of the total oil used. It emerges from the record that the appellant has used the cotton seed oil more than 15% per month. The Notification No. 115/86 came into effect from 1st March 1986 and the appellant has filed the refund claims for the months of March, April and May 1986 immediately after the Notification which are subject matter of these appeals and accordingly, filed the refund claims without understanding the process of calculation of percentage of usage of the cotton seed oil. However, the Assistant Commissioner of Central Excise, while sanctioning the refund, has applied the provisions of Explanation (3) and (4) of the Notification for the purpose of calculation of the use of cotton seed oil, which is found to be more than 15%, which entitles the appellant for the benefit of the Exemption Notification. It is a trite law that exemption in a Notification cannot restrict the benefit of exemption. Explanation (3) and (4) which are invoked by the respondents authorities and confirmed by the appellate authority and the CESTAT only provide methodology of calculation of percentage as well as the percentage of usage of the cotton seed oil so as to see that such usage of cotton seed oil is more than in excess of 15% of the cotton seed oil used so as to grant the benefit of exemption of Rs.30 per ton of such vegetable products for additional percentage point of increase. On bare perusal of the Notification, it is clear that there is no mandatory requirement to maintain the chargewise register as the Explanation (4) gives an option to the assessee for calculation either on the basis of the individual charge or on monthly basis. As the appellant has filed the refund claim per month, it goes without saying that the appellant has exercised the option on monthly basis and in absence of any specific requirement to file such option to claim the exemption under the said Notification. In such circumstances, the allegation that the appellant has failed to maintain individual charge for the usage of the cotton seed oil is without any basis. The Tribunal has clearly erred in law in interpreting Notification No. 115/86-CE dated 1st March 1986 to read therein a mandatory requirement for the assessee to maintain charge-wise register, failure whereof would render the assessee not eligible to exemption - merely because the assessee has filed the refund claim on monthly basis without there being any individual charge basis, it is not mandatory for the appellant to maintain the charge-wise register to claim the benefit of the Exemption Notification No. 115/86 dated 1st March 1986. Issue answered in favour of the assessee - Appeal allowed.

Issues Involved:
1. Interpretation of Notification No. 115/86-CE dated 1st March 1986 regarding the requirement for maintaining a charge-wise register for claiming exemption.
2. Eligibility of the appellant for exemption based on the use of cotton seed oil exceeding 15%.
3. Validity of refund claims filed by the appellant for the months of March, April, and May 1986.
4. Application of the Supreme Court decision in Wipro Limited vs. Union of India to the present case.

Issue-wise Detailed Analysis:

1. Interpretation of Notification No. 115/86-CE:
The central issue was whether the Notification No. 115/86-CE dated 1st March 1986 required the appellant to maintain a charge-wise register to claim exemption. The appellant argued that the Notification did not mandate maintaining such a register, and the exemption could be claimed based on monthly data. The court observed that the Notification provided an option for calculation either on the basis of individual charge or on a monthly basis. It was concluded that there was no mandatory requirement to maintain a charge-wise register, and the appellant's monthly filing was sufficient to claim the exemption.

2. Eligibility for Exemption:
The appellant was engaged in manufacturing vegetable products and claimed exemption under the said Notification based on the use of more than 15% cotton seed oil. The court noted that the appellant had demonstrated the usage of cotton seed oil exceeding 15% before the Assistant Commissioner of Central Excise, who had sanctioned the refund. The court emphasized that the exemption could not be denied by interpreting the Notification to impose a mandatory requirement for maintaining a charge-wise register. The appellant was found eligible for the exemption as the conditions of the Notification were met.

3. Validity of Refund Claims:
The appellant filed refund claims for March, April, and May 1986, which were initially sanctioned by the Assistant Commissioner after scrutiny. However, the claims were later challenged on the grounds that the appellant did not maintain a charge-wise register. The court held that the appellant's monthly filing constituted an exercise of the option provided in the Notification, and there was no specific requirement to file such an option. Therefore, the refund claims were valid, and the appellant was entitled to the exemption.

4. Application of the Supreme Court Decision in Wipro Limited:
The respondents relied on the Supreme Court's decision in Wipro Limited vs. Union of India, arguing that the appellant did not fulfill the conditions specified in the Notification. The court distinguished the present case from Wipro, noting that the specific conditions in the Wipro case were not applicable here. The court concluded that the appellant had complied with the essential conditions of the Notification, and the reliance on the Wipro decision was misplaced.

Conclusion:
The court ruled in favor of the appellant, holding that the Tribunal erred in interpreting the Notification to require a mandatory charge-wise register. The appellant's method of claiming exemption on a monthly basis was deemed valid, and the refund claims were allowed. The appeals were thus allowed, and the appellant was entitled to the exemption under Notification No. 115/86-CE.

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