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TMI Blog2002 (4) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the appellants and have also perused the impugned orders. The issue for consideration here is whether the appellants are entitled to the exemption from duty under Notification 136/94 or not. As discussed below, I am disposing of the main appeals without personal hearing. 4. Notification 136/94, dated 10-11-94 extends exemption from excise duty to an E.O.U. for certain specified goods subject to certain terms and conditions. The dispute centers around the question whether the above said goods are required in connection with the production or manufacture or packaging of materials specified in the notification. The AC has taken the view that these items are not Green House equipment or its accessories and so cannot be covered by the notification. From the records it is seen that all the appellants are floriculture units engaged in the export of flowers/cut flowers and have explained that the refrigerated atmosphere is an essential requirement for production/packing and export of flowers. I find force in the above plea of the appellants. It is common knowledge that flowers are perishable items prone to wilting unless they are kept in the cold atmosphere. The Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the ground challenging the benefit to the other items indicated in respective orders-in-original which have been delineated in Annex.-I supra. 3. Learned SDR contended that the transformer couldn t be considered to be capital goods for grant of the benefit of the notification. He pointed out to the notification which exempts excisable goods specified in the Annex.-I to this notification when brought in connection with the production or manufacture or packaging of articles specified in Annex.-II to this notification, as the case may be, into a 100% export oriented undertaking from the whole of (i) the duty of excise leviable thereon under Section 3 of the Central Excises and Salt Act, 1944 (1 of 1944); and (ii) the additional duty of excise leviable thereon under sub-section (1) of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) subject to the following conditions, namely :- (a) the undertaking is approved by the Board of Approval for 100% export oriented undertaking appointed by the Central Government in exercise of the powers conferred by Section 14 of the Industries (Development and Regulation) Act, 1951 (65 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like diesel generating sets, mobile refrigerating unit with cold storage unit on the same grounds as contended in the above appeal. 6. Revenue likewise have brought for setting aside the grant of benefit to the items refrigerated truck and diesel generating sets in Appeal E 1615 against the SIP Industries. 7. None appeared on behalf of the SIP Industries, Bangalore, while Shri H. Karthik Seshadri, Advocate accompanied by M/s. Elizebeth appeared for M/s. Suvarna Florex Ltd., Bangalore and M/s. SPA Agro Ltd., Bangalore. They have filed written submissions on behalf of the respondents. They have contended that the order is correct and proper. The respondents are Export Oriented Units (EOU) manufacture cut flowers for 100% export. They are two big features of this activity : (a) The activity is a highly delicate and sensitive one and the flowers have to be maintained at the right atmospheric conditions throughout the period of their growth. (b) The cut flowers after harvesting are to be maintained at a temperature of 2 to 5 degree centigrade throughout till they reach the overseas market. Therefore, it is essential that they are stored and transported (by road and air) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an accessory of the green house which in itself is an equipment. It is indispensable to the proper functioning of the green house, it promotes the efficiency and is essential for the operation of the green house itself. 11. They further pointed out that the use of Air-conditioning Unit by which the cut flowers are maintained at a temperature of 2 to 5 degrees C till they are sorted, graded and packed. This could take between 12-24 hours, throughout which time the temperature is to be maintained with the use of the air-conditioning units. Therefore, it clearly comes within item 1 or item 7 of Annexure-I. Moreover, Diesel generator chassis with mobile refrigerating unit and cold storage unit is NOT a mobile truck. This is only a temperature control system for the purpose of packing in the course of transit. It has its own power system, which is the diesel generator set. The unit is fitted onto a transport vehicle. Exemption is NOT sought for the transport vehicle. The diesel generator chassis is different and independent of the vehicle chassis and must not be confused with this. Since the temperature must be maintained at 2 to 5 degrees throughout the journey to the airport and dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be referred to the Development Commissioner before adjudication. They referred to the Board s Circular No. 122/95-Cus., dated 28-11-95 wherein the Board expressed the view that in these type of matters the issue should be examined before issue of show cause notices and legal position settled. They contented that the items in dispute have clearly been exempted from the payment of Excise duty by the order of the Joint Development Commissioner. They farther submit that under EXIM Policy the definition of capital goods is wide enough to bring within its fold all the three items in dispute, and hence, the items are exempted from payment of duty. 15. On a careful consideration of the submissions made by both the sides, we are of the considered opinion that the learned Commissioner has carefully examined the issue in the light of the Apex Court judgment and has correctly applied the ratio while interpreting the terms of the notification in question and that there is no infirmity in the impugned order. We have also independently applied our mind and found that from the terms of the notification the notification exempts excisable goods when brought in connection with the production or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts all the items used in the process of manufacture. The Apex Court held that goods used for any of the processes in connection with the manufacture, it has to be construed to have been used within the process of manufacture. This judgment has a clear applicability to the facts of the case. The learned Commissioner has also examined the other judgments, which are applicable to the facts of the case, and has rightly drawn its ratio for upholding the claim of the respondents. There is no infirmity in the order as he also found that these items are essential and necessary in connection with the production or manufacture or packing of the articles in question. In the view of the matter, there is no merit in these appeals and hence they are rejected Sd./- (S.L. Peeran) Member (J) Appeal Nos. E/1617,1615,1616/97 17. [Order per : Jeet Ram Kait, Member (T) (Oral)]. - I am not able to persuade myself to agree with the order proposed by my learned Brother, Shri SL Peeran, Member (J). 18. The learned Commissioner (Appeals) vide Order-in-Appeal No. 97/98, 98/97 (CBE), dated 19-9-97 has allowed the benefit of Notification No. 136/94, dated 10-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Since these goods are not used within the green house they cannot be regarded as green house equipment or its accessories 21. M/s. SPA Agro Ltd. (Respondents in Appeal No. E/1616/1997 have sought for exemption from levy of Central Excise duty in terms of Notification No. 136/94-C.E. in respect of Diesel Generator sets, Chassis of vehicle on which mobile Refrigeration Unit is mounted and Cold Storage units to be procured from an indigenous manufacturer against CT-3 certificate. They have admitted that as per Annexure I to the above notification, cold storage units (both stationery and mobile) have been excluded. However, they have claimed exemption on the ground that the items in question are very essential for cut flower production and also that the Ministry of Industries have permitted duty-free procurement of such items. The DG set for which they sought for exemption from payment of duty vide Notification No. 136/94 is meant to be used in the sub-station outside the green house. The participation of DG sets is to generate electric power in the sub-station outside the green house and for supplying electricity to the green house and other equipment installed both within and out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Apex Court has held that the expression in the manufacture of goods takes within its compass all processors which are directly related to the actual production without which commercial production would be inexpedient. I am of the view that the ratio of this decision is not applicable to the instant case for the reason that the notification extends exemption to such goods which are listed in the Annexure I to the said notification. 25. I would also like to observe that the Hon ble Supreme Court in the case of M/s. Mehra Brothers v. Jt. CTO as reported in 1991 (51) E.L.T. 173 (S.C.) had occasion to interpret the word accessory and the Apex Court held that accessory means anything which is joined to another thing as an ornament, or render it more perfect, or which accompanies it, or is connected with it as an incident, or as subordinate to it, or which belongs to or with it, adjunct or accompaniment. A thing of subordinate importance. Aiding or contributing in secondary way of assisting or contributing to as subordinate . 26. Further, I find that according to the Chambers English Dictionary Green House is defined as a Glasshouse for plants, esp. one with little or n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inside and outside the green house. (2) Refrigerated truck is meant for transport of cut flowers after the process of packing is over. (3) DG sets are meant to be used in the sub-station outside the green house for supply of electric power to the green house and other equipments and installations both within and outside the green house. (4) Chassis of vehicle on which mobile Refrigeration unit is mounted is meant for transport of cut flowers after the process of packing is over. The vehicle used for transport of the cut flower cannot be regarded as used for production or packaging of the product. (5) Cold storage units are meant for storing the finished product viz. cut flower after the process of packing is over. 31. I find that the Revenue in their Appeal No. E/1617/97 [and not in the Appeal No. E/1615/97 as mentioned by learned M(J) in Para 2 of his order] in the prayer portion has limited their prayer for setting aside the benefit in respect of Transformer only and not for AC unit. 32. In view of the above discussion, all these items (except AC Unit) though may be necessary for the preservation of the flowers/cut flowers after they are produced and packed, they do n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submissions made before me. The facts of the case are given in details in the respective orders recorded by the learned Members which need not be repeated. The respondents are running a 100% EOU and export the cut flowers. The issue relates to the availability of exemption to the respondents under Notification No. 136/94-C.E., dated 10-11-94 on the procurement of certain machines/machinery and equipment used in the manufacture/production and export of such goods. The golden rule for interpreting the exemption notification is that it should be interpreted strictly as per the language used in the notification. However, while considering the eligibility to exemption of the goods under consideration, one also has to keep in view the Board s Circular No. 302/18/97-C.E. M.F., dated 10-3-1997 in Paras 4 and 5 of which is clarified as follows : 4. It is further clarified that the activity of cultivation should be construed as production activity falling within the purview of the said notification and for determining the eligibilty of this notification to any item, the criteria adopted should be its essentially with reference to production/manufacture/packaging of an item specified in A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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