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TMI Blog2009 (3) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... o 28-2-02. The assessees were paying duty at the rate of Rs. 3 lakhs per chamber per stenter per month as per the provisions of Rule 96ZNB and Notification No. 32/2001-C.E. They filed A.S.P.1 application on 17-5-2001 for fulfilment of condition laid down in Rule 96ZNA, the main condition being that the original value of investment in plant and machinery installed in the factory of the independent textile processors as on 1-3-2001 or 1-5-2001 whichever is higher, must not be in excess of Rs. 3 crores as per Rule 96ZNB (The Rule further provided that in case of installation of any additional plant and machinery, the same should be intimated to the Commissioner of Central Excise within 7 days from the date of installation and that the original value of investment in plant and machinery together with the original value of investment in additional plant and machinery should not exceed Rs. 3 crores). The application duly certified by the Chartered Accountant showed that the total value of the plant and machinery as on 1-3-2001 was Rs. 2,92,05,560.46 and that on 1-5-01, it was Rs. 2,78,97,044.21 - the difference in the value of Rs. 13,08,513.25 was due to sale of 3 chambers float drier to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 96ZNB. The original value of investment in plant and machinery as on 1-3-01 was Rs. 2.91 crores approximately. The contention of the respondents is that as per clause 14.1 of the Accounting Standards AS 10 for accounting of fixed assets (the scheme provides for computing the value of investment in plant and machinery based on Accounting Standards), an item of fixed asset is eliminated from the financial statements on disposal and therefore, the reduction due to sale of 3 chamber float drier has to be taken into account for the purpose of computing the value of plant and machinery. 6. We see merit in this plea for the reason that, although the phrase value of investment in additional plant and machinery occurring in paragraph 8(2) of Notification 32/2001 is also preceded by the word original , it is obvious that it cannot relate to the period 1-3-01, since the additional investment is subsequent to that date. The explanation to para 8 which was inserted by Notification No. 41/01 dated 21-9-01 providing that the original value of investment in plant and machinery installed in the factory of the independent textile processor shall be the original value as determined in accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to subscribe to the views expressed by her in the proposed order. 9. The facts of the case have been clearly brought out in the Order of Hon ble Vice-President. These need no reiteration. 10. The issue for consideration in this appeal is whether the assessee (Respondent herein) was eligible for paying duty under the compounded levy system. An assessee was eligible for payment of duty under the said system only when he fulfilled the conditions enumerated under the erstwhile Rules 96ZNA, 96ZNB, 96ZNC and 96ZND of the Central Excise Rules, 1944 read with Notification No. 20/2001 dated 30-4-2001 for the period from March 2001 to June 2001 and thereafter if the assessee fulfilled the conditions of Notification 32/2001-C.E., dated 28-6-2001. 11. As the controversy is directly a consequence of interpretation of the terms used in Rule 96ZNB of the erstwhile Central Excise Rules, 1944 and Para 8(1) and 8(2) of the Notification 32/2001-CE dated 28-6-2001, it will be relevant to go through the text of those provisions. Rules 96ZNA to 96ZND were introduced in the Central Excise Rules, 1944 vide amendment carried out by Notification No. 16/2001-C.E. (N.T.), dated 30-4-2001. The relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 1st May, 2001. Pending grant of such application by the Commissioner of Central Excise, the independent textile processor may avail the provisions of this section on a provisional basis. However, if the application is rejected by the Commissioner of Central Excise, then he shall not be eligible to avail the provisions of this section from the 1st May, 2001 and he shall discharge the duty liability as per the provisions contained elsewhere than in this section and the duty, if any, paid under the provisions of this section or the notifications issued thereunder, shall be adjusted against the duty payable on such goods : Provided that an independent textile processor commencing production for the first time in a new processing factory coming into existence after the 1st May, 2001, shall make the application prior to the commencement of commercial production so as to cover the period up to 31st March, 2002. Explanation I. - For the purposes of this section, independent textile processor means a manufacturer who undertakes bleaching, dyeing or printing or any one or more of these processes with the aid of power or steam and who also has the facility in his factory (including pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are manufactured or produced on or after the 1st day of May, 2001. OTHERS NOT RELEVANT 12. The said amending Notification also prescribed FORM A.S.P.1 for the purpose of submitting the information. (II) after Series No. 85 and the entries relating thereto, the following shall be inserted, namely :- Series No. Description of Form Rule No. Short Title 85A Application for permission to avail of the special procedure relating to processed textile fabrics 96ZNA A.S.P.1 ; (b) under the Specimen Forms, after Central Excise Series No. 85 and Form sub-heading (II) relating thereto, the following Central Excise Series No. and Form shall be inserted, namely :- Central Excise Series No. 85A FORM A.S.P. 1 Application for permission to avail of the special procedure relating to processed textile fabrics (Rule 96ZNA) Name of factory/factories............................... Address I/We..................manufacture (s) of processed textile fabrics residing at ........ and holder (s) of Central Excise Licence No. ...... dated ......... hereby apply to avail myself/ourselves, during the period begi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssor, he has to declare the original value of the investment in the plant and machinery installed in the factory as on the 1st March, 2001 and on the 1st of May, 2001 in the prescribed format duly certified by a Chartered Accountant or Cost Accountant. (b) Irrespective of whether such plant and machinery is in use or not, or is in working condition or not, for calculating the value of investment in the plant and machinery for the purpose of examining the eligibility of the processor under the said Rule 96ZNB, the higher of the values declared on 1st March 2001 and 1st May 2001 shall be considered. (c) In the case an independent textile processor commencing production for the first time in a new factory coming into existence after the 1st of May, 2001, the said declaration is to be given on the date of making the application under rule 96ZNA. (d) If any additional plant and machinery is installed by the independent textile processor at any point of time, he shall intimate the same to the Commissioner of Central Excise within 7 days of such installation. (e) For claiming the facility under the aforesaid rules, the original value of investment in plant and machi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusion that if there was any addition in the existing plant and machinery after 1st May 2001, the original value of such addition arrived at by applying appropriate Accounting Principles has to be included in the higher of the values declared on 1st March 2001 or 1st May 2001. 17. The aforesaid view is further fortified if we go through the columns prescribed in Form A.S.P.1 which is a part of the Rule. In Column 7 of the said Form (extracted earlier), the existing processor has to give the original value of plant and machinery only on two dates that is on 1st March 2001 and 1st May 2001. There is no other date which is relevant for ascertaining the Original value of existing plant and machinery. 18. With effect from 1-7-2001, the Central Excise Rules, 1944 were rescinded. However the procedure for claiming Compounded Levy was regulated by Notification 32/2001-C.E., dated 28-6-2001. Relevant extract is reproduced below. In exercise of the powers conferred by rule 15 of the Central Excise (No. 2) Rules, 2001, (thereinafter referred to as the said Rules ) the Central Government, hereby, specifies the processed textile fabrics falling under heading Nos. 52.07, 52.08, 52.09, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... calculated, the average value of such goods shall be the average value declared by the independent textile processor at the time of making the application under rule 96ZNA of the Central Excise Rules, 1944 or under this notification; but the amount of duty payable on the said goods shall be re-worked at the end of the financial year on the basis of actual average value of the said goods manufactured or produced in that financial year. 4. The duty levied and collected on the said goods shall be the aggregate of the duty leviable under the Central Excise Act, 1944 (1 of 1944) and the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and shall be apportioned in the ratio of 1:1 between the duty leviable under both the aforesaid Acts. 5. In case the independent textile processor proposes to make any change in the installed machinery or any part thereof which tends to change the number of chambers in the hot-air stenters installed in his factory, he shall intimate, about the proposed change, to the Commissioner of Central Excise in writing, with a copy to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f investment in such additional plant and machinery shall not exceed three crore rupees. Where such original value of investment exceeds the limit of three crore rupees, the provisions of this notification shall not apply from the first day of the month in which such investment exceeded the said limit of three crore rupees. APPENDIX FORM A.S.P.1 Application for permission to avail of the special procedure relating to processed textile fabrics Name of factory/factories....................Address.................................. I/We..............manufacture (s) of processed textile fabrics residing at........ and holder(s) of Central Excise Licence No. ...... dated ........ hereby apply to avail myself ourselves, during the period beginning with ..... 200...... and ending with ...... 200.... of the special procedure for payment of excise duty contained in the notification issued under rule 15 of the Central Excise Rules, 2001, in respect of the production or manufacture of processed textile fabrics with the aid of power or steam at my/our above-mentioned factory/factories. 2. I/We declare below the particulars of processed textile fabrics produced or manufactured in m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntant shows that the total value of Plant and Machinery as on 1st March 2001 was Rs. 2,92,05,560.46 and that on 1st May 2001 as Rs. 2,78,97,044.21/-. The difference in value of Rs. 13,08,513.25/- was because of sale of three chamber float drier to Harish Enterprises Gujarat on 28th April 2001. Therefore as stipulated in Rule 96ZNB(1), the assessee had declared the two values as certified by their Chartered Accountant after taking into consideration the Accounting Standards AS 10. This has not been disputed by the assessee or their advocate during the course of hearing. 22. In his written submission given on 16-4-2008, the learned counsel for the respondent has pleaded that following the accounting standards on the date when the respondent opted for payment of excise duty under the compounded levy scheme, the original value of investment in plant and machinery together with the original value of the investment in such additional plant and machinery did not exceed Rs. 3 crores. The ld. Advocate demonstrated the same as under : Value as on 1st March, 2001 Rs. 2,92,00,000/- Less : Sale of 3 chambers floats drier on 28-4-2001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35 lakhs during the months of May, 2001 and June, 2001. Therefore, the total value of investment on plant and machinery in the month of June 2001 in terms of Rule 96ZNB(1) and (2) and also Clause 8(1) and 8(2) of Notification 32/2001 Central Excise will be Rs. 3,04,35,000/-. Therefore, the respondent will not be eligible for compounded levy scheme from the month of June, 2001. 25. At this stage, it will be relevant to deal with arguments of the respondent in the Written Submissions given after the hearing of the case. As rightly pointed out, the object of the Scheme was to grant benefit to only those assessees, whose investment in Plant and Machinery never exceeded Rs. 3 Crores during the currency of the Notification. However, by operation of clause Rule 96ZNB(2) of the CE Rules, 1944 and after its rescission, by operation of clause 8(2) of the Notification 32/2001, the object was further made clear that while addition of investment in the existing Plant and Machinery during the currency of the Notification will be considered for the purpose of examining the eligibility for availing the benefit of the Notification, the removal or subtraction of existing Plant and Machinery wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in the case of Dai Ichi Karkaria Ltd. reported in 1999 (112) E.L.T. 353 (S.C.). The subject matter in that case was inclusion of Cenvat Credit in the assessable value and not the interpretation of Rule 96ZNB of the CE Rules, 1944 or clauses of the Notification 32/2001 as amended. Similarly, the reliance placed by the respondent in the case of Mangal Textile Mills Pvt. Ltd. [2004 (171) E.L.T. 160] is also misplaced as in the present case the conditions laid down vide Clause 8(1) and 8(2) of the Notification 32/2001-C.E. are not substituted/deleted by the amending notifications 41/2001 or 53/2001. 28. Reference to Notification 53/2001-C.E. dated 13-11-2001 is again misleading. The said Notification is not applicable to the respondent for two reasons. Firstly, the same is prospective and not retrospective and secondly the same is valid for adding NEW PLANT AND MACHINERY and not an investment in the existing Plant and Machinery. In Para 11 of their submission, they do not claim that the investments in the months of May, 2001 and June, 2001 were in New Plant and Machinery. There is sufficient evidence to suggest that the investment made in May and June was not in the NEW ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same for the similar phrase appearing in Clause 8(2). If the arguments advanced by the respondent are accepted, it will result in adding the expression at the time of additional investment in Clause 8(2) after the phrase original value of investment in plant and machinery . Such an interpretation will result in doing violence to the wordings of the Notification 32/2001-CE or Rule 96ZNB(2) of the erstwhile Central Excise Rules, 1944. Such an interpretation has to be avoided. 30. The respondent has relied on the decision of the Hon ble High Court of Mumbai in the case of Krishnakant (supra) for the proposition that the same word may be assigned different meaning in the different part of an enactment. In para 42 of the said decision, the Hon ble High Court has given a wider meaning to the word levy in section 12 of the Excise Act than what was assigned in Section 3 ibid. There are two reasons for inapplicability of the said ratio in the present case. Firstly, in the said case, two different sections of the Act were involved, whereas in this case, same clause of the Notification and same Rule of the CE Rules, 1944 are involved. Secondly, in that case different meaning was assig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the Commissioner is that he has reduced the value of the plant and machinery considering the disposal of the machinery before June 2001. He has not mentioned as to under what provisions, such deductions are allowed for computing the Original investment or for ascertaining the original value of investment of additional plant and machinery. As the decision of the Commissioner is not based on law, the same deserves to be set aside and the appeal of the department needs to be allowed. 33. In the Show Cause Notice, there was a proposal for confiscating the goods on which the duty was short paid and for imposing penalty on the respondent. Imposition of penalty was warranted as the respondent had not declared the additional value of investment in the existing plant and machinery within the time limit prescribed. For this limited purpose of adjudging the liability of confiscation and for fixing the quantum of penalty, the case is to be remanded to the Adjudicating Authority. 34. Since there is a difference of opinion between the Member (Technical) and the Hon ble Vice-President, the Registry is directed to put up the papers to Hon ble President for referring the matter to the th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said goods, as on the 1st March 2001 or on the 1st of May 2001, whichever is higher, for an existing factory of the independent textile processor or on the date of making the application under rule 96ZNA in the case an independent textile processor commencing production for the first time in a new factory coming into existence after the 1st of May 2001, shall not exceed three crore rupees, irrespective of whether such plant and machinery is in use or not, or is in working condition or not, and the independent textile processor shall declare the original value of investment in such plant and machinery installed in his factory, on the dates mentioned above, in the prescribed format duly certified by a Chartered Accountant or Cost Accountant. The Commissioner of Central Excise may require any such documentary evidence as he considers appropriate in respect of such original value before granting the application. (2) If any additional plant and machinery is installed by the independent textile processor at any point of time, he shall intimate the same to the Commissioner of Central Excise within 7 days of such installation and the original value of investment in plant and machinery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal value of the investment on plant and machinery 37. The provisions of Rule 96ZNB and notification 32/01 nowhere provide for reduction in the value of investment and only provide for increase in the value. Therefore, no cognizance is to be taken of the reduction if any in the value of plant and machinery. It was submitted that Clause (5) of the notification took care of the situation where the assessee deliberately reduced the number of stenters during the year, after opting for the compounded levy. Thus, while increase in number of stenter will entail higher duty, decrease in number of stenter/chambers, is of no consequence as far as quantum of duty is concerned. 38. Ld. Advocate for the respondent on the other hand argued that the word original appearing in Rule 96ZNB(2) corresponding to Clause 8(2) of Notification 32/01 will not mean original value of the investment on plant and machinery as on 1-3-01. According to him, the word original in Rule 96ZNB(2) or Clause 8(2) of Notification 32/01 does not carry the same meaning as in Rule 96ZNB(1) or Clause 8(1) of Notification 32/01. It was submitted that both these provisions relate to different point of time and deal with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f additional investment . Therefore, the meaning assigned to the phrase original value of investment in plant and machinery in Clause 8(1) of the notification has to be the same for the similar phrase appearing in Clause 8(2). If the argument advanced by the respondent are accepted it will result in adding the expression at the time of additional investment in Clause 8(2) after the phrase original value of investment in plant and machinery . Such an interpretation will result in doing violation to the wording of the Notification 32/01-C.E. or Rule 96ZNB(2) of the erstwhile Central Excise Rules, 1944. Such an interpretation has to be avoided. In support thereof he referred to the Supreme Court-decision in the case of Commissioner of Wealth Tax - 1989 (40) E.L.T. 239 (S.C.) where it was held that if meaning of statutory interpretation is plain, it is fair to apply the meaning regardless of the result. Reference was also invited to the Supreme Court decision in the case of ITC Ltd. - 2004 (171) E.L.T. 433 (S.C.) wherein it was held that while interpreting a statute it is not permissible to make any addition or amendment of words and words must be construed as they stand if reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy procedure. It is only if the additions result in crossing limit of Rs. 3 crore, that the processor will go out of the compounded levy scheme and it is for this reason that the provisions of Rule 96ZNB only keep track of the additions made. However, as stated by Member (T) also the intention of the whole scheme is that at no time the investment in plant and machinery should exceed Rs. 3 crore. For determining this reduction if any made cannot be ignored. Sub-clause (2) of the notification requires to determine the total investment including that of additional investment made on the date of additions to determine if the investment has not gone beyond Rs. 3 crore. It logically follows that the original value of investment in plant and machinery referred to in sub-clause (2) cannot mean anything else than the investment in, plant and machinery on the date of such addition. This will not result in addition of the words because what the revenue is arguing is to treat such original value of the investment in plant and machinery to be one which has been adopted for the purpose of Rule 96ZNB(1) which will also amount to addition of words when there are no such words. Rule 96ZNB does n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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