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TMI Blog2010 (7) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... crane parts and fabrication work classifiable under sub-heading Nos. 84313100 and 84314990 respectively of the Schedule to the Central Excise Tariff Act, 1985. During the period from 18-8-2007 to 17-5-2008, the appellants cleared the goods under the provisions of Notification No. 108/95-C.E. dated 28-8-95 to different contractors without payment of central excise duty amounting to Rs. 2,35,797/-. The appellants, therefore, were issued with a show cause notice dated 2-7-2008 requiring to show cause against demand of the said duty and levy of penalty. The proceedings were contested by the appellants essentially, on three grounds viz. :- (a) The appellants had duly complied with the conditions of the notification (b) The decision of the Tribunal in the case of Caterpillar India Pvt. Ltd. v. CCE, Pondicherry reported in 2005 (185) E.L.T. 430 (Tribunal-Delhi) clearly applies to the facts of the case in hand and justifies their right to claim exemption under the said notification. (c) Clearances being in accordance with the provisions of law, question of imposition of penalty does not arise. 4. The Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants. The Explanation clarifies that the goods are not to be withdrawn by the supplier or the contractor and the same clearly discloses that the goods can be supplied to the supplier or contractor for their utilisation for the project work. Drawing our attention to the Notification No. 39/96-Cus., dated 23rd July, 1996, as amended, ld. Advocate submitted whenever the Government wanted to impose any condition about the use or nature of supply, the same is always specified in the notification itself as had been done in case of Notification No. 39/96. Under the Sl. No. 1 of the said notification, exemption is granted in relation to the import of metals and generators but the same is available only in case of those which are imported directly by the Government and not otherwise. The requirement of import directly by the Government has been specifically stated in the condition which is apparent from the use of the word "directly". The said word relates to the factum of import of the goods. According to the ld. Advocate, in case the Government had intended that the goods were required to be supplied directly to the project than it would have specified so in so many words in the notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Advocate for the appellants, the Tribunal in cases like IBM India Pvt. Ltd., Caterpillar India Pvt. Ltd., Toyo Engg. India Ltd., has taken a view that in terms of the said notification, the goods can be supplied to the contractor or .suppliers and need not be supplied directly and essentially to the project whereas the Tribunal in Escorts Construction's case and Action Construction's case has taken a contrary view. The contention in that regard is disputed on behalf of the Department. It would be, therefore, necessary to scan through all these decisions to ascertain whether there are contradictory views expressed and further on this ground, whether matter needs to be referred to a Larger Bench. 9. In IBM matter, the Division Bench of the Tribunal had held that the notification in question does not insist that the goods, which are intended to be supplied to a project financed by the World Bank, the Asian Development Bank or other International Organisation should be directly supplied to the project implementing authority. The said finding, however, was given in a fact situation recorded in the said order, which reads thus, "in the present case, admittedly, the goods in ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 2006 (199) E.L.T. 73 (Tribunal-Chennai) while in Caterpillar India's case, the Tribunal had relied upon the decision of the Larger Bench in Toyo India Engg Ltd. case and of the Division Bench of the Tribunal in Nestor Pharmaceuticals Ltd. v. CCE, New Delhi reported in 2000 (116) E.L.T. 477 (Tribunal-Delhi). 12. In Toyo Engg's case, the Larger Bench was dealing with a matter which was referred to decide the following questions :- (i) Can the benefit of the notification be denied to the appellants on their admission of imported goods after being fully utilised for the specified fertilizer project is then taken for use, if they are still available for other project? (ii) Whether the expression "specified" in the Tariff Item No. 84.66 of CTA includes named project in a particular place or in several places? 13. The above reference arose in a case where the authorities below had held that the machinery and equipment imported by the assessee would not be classified under Heading No. 98.01 of the first Schedule to the Customs Tariff Act, 1975 and had denied the benefit of project import under the Project Import Regulations. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'industrial plant' as it is designed to be employed directly in the performance of processes necessary for manufacture of fertilizer. Once the fertilizer plant is covered by the industrial plants specified in Heading No. 98.01 of C.T.A., all the auxiliary equipments which are required for the initial setting up of the unit can be imported under the Project Import Scheme. Auxiliary means giving additional help; supplemental or subsidiary; an item not directly a part of a specific component or system but required for its functional operation." 16. Further, while observing that "it is not the case of the Department that the construction equipments imported by the appellants were not used in the initial setting up of the plant" and that "no evidence has been brought on record by the Revenue to prove that the impugned goods were taken for use for any other project after these were utilized for initial setting up of the project for which these were imported except a mere statement during the course of hearing before the Collector (Appeals) that it would be used for other project/plants, if the goods were held to be eligible for the benefit". The decision apparently discloses that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce produced did not contain required certificate. Apparently, the ground for denial of benefit was totally different from the one on which the same has been denied in the case in hand. Besides, the said denial in Automatic Electric Ltd. case was set aside by the Tribunal on the ground that "since the goods supplied are exempt, the certificate produced and the contract between BHEL and NTPC, accepting the appellant to be a sub-contractor or supplier, the project being an approved project as per certificate of the Ministry of Power, Government of India, then there is no reason to look for actual supply to site". Apparently, it was not in relation to interpretation of the notification in question. 19. In Nestor Pharmaceuticals Ltd., which was relied upon in Caterpillar India Pvt. Ltd. case, the facts of the case, as described in the said order itself, were as under :- "2. Briefly stated the facts are that the Appellants cleared the impugned goods claiming exemption from payment of duty under Notification No. 108/95; that a show-cause notice dated 2-12-1996 was issued to them for denying the benefit of the said notification and for demanding central excise duty amounting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of notification. It is settled law that no matter can be decided on a ground other than the grounds raised in the show cause notice. The impugned order is to be set aside on this court itself." 21. Obviously, the decision does not in any way refer to the interpretation of the notification, but rather on the undisputed facts. 22. In Spic Organics Ltd., which was relied upon in IBM India Pvt. Ltd. case, there was no dispute that the goods supplied would be owned by the beneficiary, UNICEF Project. Besides, the goods were also entitled for exemption under another notification being No. 49/94-C.E. (N.T.) dated 22-9-94, which was issued under Rule 13 of the Central Excise Rules providing exemption for clearance of the goods sold to the manufacturer, who uses the same as input in the manufacture of the final product, which are exported and in the background of all those facts, it was held thus :- 5. We have gone through the records of the case carefully. The fact that the goods have been sent to M/s. Inalsa who in turn manufactured the vaccine carriers and supplied to the UNICEF is not in dispute. There is no strong reason for denying the benefit of Notification No. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bviously, the power, which is generated in excess of the requirements of EOUs, if allowed to be utilised in a sensible manner, the same would be in public interest. No court or Tribunal can interpret any notification in a manner prejudicial to the interest of the nation. Bearing in mind if the Tribunal while interpreting the Notification No. 13/81 held that the excess power generated if utilised for domestic consumption instead of allowing to go waste, certainly it cannot be said that the Tribunal had either mis-interpret the notification or added something to the notification. That is not the case in relation to the goods, which are essentially exempt when supplied for a project financed by Public Institutions like World Bank. It can not be allowed to be used for private benefit of a contractor. Interpretation which will defeat the very purpose of the notification can never be allowed. 24. As regards the decision of the Tribunal in the case of Escorts Construction Equipments is concerned, the same was delivered after taking into consideration the decision in the matters of IBM and Catterpillar. Both the decisions were clearly distinguished while delivering the decision in Es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llants. It relates to the contention that the Tribunal was not justified in calling the earlier decisions particularly in IBM and Caterpillar matters to be per incuriam in view of the law on the point of principle of per incuriam settled by the Apex Court in Central Board of Dawoodi Bohra Community v. State of Maharashtra reported in 2010 (254) E.L.T. 196 (S.C.). The contention is that the Tribunal in Escort Construction case and Action Construction case had labelled the decision in IBM and Caterpillar cases to be per incuriam on the ground that they were decided merely by following the incorrect law laid down by the Larger Bench in Toyo Engg. India Ltd. case. 28. At the outset, it is to be noted that the contention in this regard has been canvassed without proper homework and without proper reading of our decisions in the matters of Escorts Construction and in Action Construction. Neither in the decision in the matter of Escorts Construction case nor in the case of Action Construction, we had declared the decisions in IBM case and Caterpillar case and for that matter in Spic Organics Ltd. case as well as Automatic Electric Ltd. case to be per incuriam because those decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all goods falling under the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the said goods) when supplied to the United Nations or an international organisation for their official use or supplied to the projects financed by the said United Nations or an international organisation and approved by the Government of India, from the whole of- (i) the duty of excise leviable thereon under Section 3 of the Central Excise 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) : Provided that before clearance of the said goods, the manufacturer produces before the Assistant Commissioner of Central Excise having jurisdiction over his factory, - (a) in case the said goods are intended for the official us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said project, and the said project has duly been approved by the Government of India for implementation by the concerned State Government. Explanation. - For the purpose of this notification, (a) "international organization" means an international organization to which the Central Government has declared, in pursuance of section 3 of the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), that the provisions of the Schedule to the said Act shall apply. (b) "Line Ministry" means a Ministry in the Government of India which has been so nominated with respect to a project, by the Government of India, in the Ministry of Finance (Department of Economic Affairs). Annexure 1. United Nations Development Programme, 2. United Nations International Children's Fund, 3. Food & Agriculture Organization, 4. International Labour Organization, 5. World Health Organization, 6. United Nations Population Fund, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings are attached, etc." 35. As already seen above, the exemption under the notification clearly requires the goods to be supplied "to" the United Nations or International Organisations for their official use or "to" the projects financed by United Nations or International Organisations and approved by the Government of India. Obviously, therefore, the person to whom the goods are required to be supplied in order to avail exemption are clearly identified in the notification. It is settled law that the Courts and the Tribunals under the guise of interpretation, are neither entitled to expand the scope of the exemption notification nor to reduce the same when the language used in the notification is very clear. Once the notification clearly identifies the persons or the institutions, to whom the goods are required to be supplied in order to avail the benefit of exemption notification, it is not permissible to add some other person or institution other than those specified therein. The exemption notification not only identifies the institutions to whom the goods are required to be supplied, but it also specifies the purpose "for" which the goods are required to be supplied. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usive" with reference to the identity of the institution to whom the goods are to be supplied nor with reference to the use of the goods. However, once it is settled law that the exemption notification is to be understood as per its plain language and without any addition thereto or subtraction therefrom, by applying the principle of ascertaining legislative intention not only by looking into the words used but also from the words omitted, the absence of the word "exclusive" cannot be construed to mean that the notification can be so read that it would defeat the very purpose behind the notification nor it is permissible to enlarge the scope of the benefit under the notification. To construe the notification to mean that the exemption thereunder would also be available in cases where the goods are supplied to the contractor or sub-contractor, it would virtually result in reading down the notification by extending the scope thereof. Being so, merely because the notification does not use the word "exclusive" with reference to the identity of the institution to whom the goods to be supplied or the use or the location thereof, the same cannot enure to the benefit of the appellant to cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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