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TMI Blog2015 (9) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... ilarly, under the Customs Tariff Act, no Customs duty/CVD is payable if such Solar Panels are imported. There is a second proviso to Clause 6 of Exemption Notification No.22/2003-CE, dt.31.03.2003, which reads as follows:- Provided further that where such articles (including rejects, waste, scrap and remnants) are either non-excisable or such articles (including rejects, waste, scrap and remnants), if imported, are leviable to nil rate of duty of customs specified under first Schedule to the Customs Tariff Act, 1975 (51 of 1975) and nil additional duty leviable under Section 3 of the said Customs Tariff Act, read with exemption notification in this regard, if any, no exemption in respect of inputs utilized for the purpose of processing, manufacture, production or packaging of such articles (including rejects, waste, scrap and remnants) shall be available under this notification. Proviso to Clause-3 of Notification No.52/2003-Cus, dt.31.03.2003 is as follows:- Provided further that where such finished goods (including rejects, waste, scrap and remnants) are either non-excisable or such finished goods (including rejects, waste, scrap and remnants), if imported, are leviable to nil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Abraham & Ors Vs UoI [2015-TIOL-159-SC-PX] (Para 26, 31 to 33) also the issue goes in favour of the Appellant. 3.2 It was also the case of the learned Advocate appearing on behalf of the Appellant that word or used in the relevant proviso to Notification No.22/2003-CE and No.52/2003 should be used conjunctively and not dis-conjunctively. That if the word or is not read conjunctively then such reading will lead to following serious and absurd situations:- (a) That finished products with Nil rate of Customs duties or exempted from Customs duties as non-excisable products which will be directly a contradiction to the definition of excisable goods given in Section 2(d) of the Central Excise Act, 1944. (b) That such deeming fiction to treat Nil rated or exempted finished goods as non-excisable goods has come about by virtue of Para 6.8 (j) of the Foreign Trade Policy. That a provision under the Foreign Trade Policy cannot create a deeming fiction under Central Excise Act, 1944 which is an altogether a separate independent enactment. (c) That the above said proviso will render infructuous in cases one where EOU supplies finished products to another EOU. The reading of the proviso as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that word or used in Rule 18 of the Central Excise Rules, 2002 cannot be read as and . It was strongly argued by learned Authorised Representative that both Nil and Free rate of duty denote same zero resultant effect which was so held by Madras High Court in the case of Century Flour Mills Ltd Vs UoI [2014 (301) ELT 73 (Mad.)] and that the intention behind the word non-excisable was to understand those finished goods where resultant duty is zero % whether by being Nil / Free rated or fully exempted under a notification. 4.1 Learned Authorised Representative further argued that as per CBEC Circular No.54/2004-Cus, dt.13.10.2004, that Nil rated goods (either tariff rate or effective rate) will be treated in the same manner as non-excisable goods. That this clarification provide the intention of the legislature to recover the duty foregone on inputs procured by a 100% EOU and used in the manufacture of finished goods which is cleared in DTA either at Nil rate of duty or exempted rate of duty. 4.2 That in the case of State Vs Parmeshwaran Surbamani [2009 (242) ELT 162 (SC), it has been held that intention of legislation has to be interpreted by the plain reading of the language ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught it fit to demand the Customs duty on the raw materials, which had gone into the finished goods, which includes rejects, waste, scrap, remnants and certain by-products. Therefore, in order to provide for such a situation, where the finished goods are non-excisable, there is a provision for demand of Customs Duty on the raw materials, which had gone into such finished products. Where the finished products are excisable, this proviso will not come into being. The Commissioner, while passing the impugned order against the assessees, has not appreciated or understood the Notification in its totality. She had taken out one paragraph of proviso of the Notification and started demanding Customs duty on the raw materials, which are relatable to the Aluminium Dross, which have been cleared to DTA on the ground that this Aluminium Dross is non-excisable. In order to hold that they are non-excisable, she had relied on the Hon ble Apex Court s decision. However, the Commissioner, Shri Ramprakash who passed the first order dated 29-7-2005, has correctly interpreted the Notification and has held that the proviso will be applicable only to a situation where finished goods are non-excisable. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rior to that date the duty on inputs was payable if the finished goods sold in the DTA were non-excisable. After that date, input duty is payable if the finished goods are either not excisable or are exempted or charged to nil rate of duty. 2. Admittedly, the finished goods are excisable but were exempted or charged to nil rate of duty. Hence, we are of the view that for the period prior to 6-9-2004, the appellants are not required to pay the input duty. However, the same is payable on and after 6-9-2004. We take note of the fact that the appellants have paid the duty for the subsequent period from 6-9-2004. Since the issue involves interpretation of the Notification and also the assessments in respect of the EOU is provisional, we are of the view that there is no case of imposition of penalty on the appellants. Accordingly, we modify the impugned order in the above terms and allow the appeal partly. Though in this case law, CESTAT has not passed an elaborate order, but it has been held that finished goods, though excisable but exempted or charged to Nil rate of duty, will be liable to pay input duty for the period after 06.09.2004. 6. No question of law was framed in the referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Advocate appearing on behalf of the Appellant is not well founded because the whole idea of the CBEC Circular dt.13.10.2007, relied upon by the Revenue, is only to take care of the duties foregone on the duty free inputs procured on the understanding that resultant finished goods manufactured by the Appellant will be exported. But, if the inputs procured by the Appellant are unconditionally exempted under an exemption notification or are chargeable to Nil or free rate of duty, under the tariffs then there is no question of duty foregone on procurement of such inputs. The provisos for our consideration only denies exemption to inputs procured under Notification No.22/2003-CE or Notification No.52/2003-Cus, but do not prohibit that benefit of all other applicable exemption notifications with respect to inputs procured stand denied. The concept contained under the second proviso to Clause 6 of Notification No.22/2003-CE and Proviso to Clause 3 of Notification No.52/2003-Cus is the same what is applicable to intermediate goods which come into existence in a manufacturer s factory when finished goods are exempted or chargeable to Nil or Free rate of duty. In such a situatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ully exempted or Nil/Zero rate under the tariffs or no rate is mentioned against a tariff entry. Similarly, the language and words used in another exemption notification cannot be made applicable to the exemption notifications under consideration when the intentions behind both the exemption notifications are different. For example, reliance on the wordings of Sr.No.1 of Notification No.21/2012-Cus dt.17.03.2012 for exemption of CVD on goods when imported, cannot be used for interpreting the impugned notifications for DTA clearances by 100% EOU. Secondly, the word non-excisable is not used in both the notifications compared by the Appellant. Further, to take a view that all goods defined as per Section 2(d) of the Central Excise Act, 1944 has to be treated as excisable goods for the purpose of interpreting Notification No.22/2003-CE dt.31.03.2003 or Notification No.52/2003-Cus, dt.31.03.2003, will defeat the very purpose of charging duty from 100% EOU when the finished goods are chargeable to Nil / Free rate of duty or Fully exempted or no rate is specified in the tariff. In view of the above observations, we are of the opinion that words non-excisable used in second proviso to Cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xception has to be construed strictly. An exemption notification has to be interpreted in the light of the words employed by it and not on any other basis. A person who claims exemption or concession must establish clearly that he is covered by the provision(s) concerned and, in case of doubt or ambiguity, the benefit of it must go to the State. 15. The observations made by the Constitution Bench of this Court are binding on us. 16. Furthermore, this Court in Associated Cement Companies Ltd. v. State of Bihar & Ors., (2004) 7 SCC 642, while explaining the nature of the exemption notification and also the manner in which it should be interpreted has held : 12. Literally exemption is freedom from liability, tax or duty. Fiscally it may assume varying shapes, specially, in a growing economy. In fact, an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burden of progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes applicable no rule or principle requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it was for this purpose that proviso to Section 3(1) and Notification 125/84 was introduced. Since there were only two modes of clearance in which the 100% EOUs could have cleared the goods i.e. one by export and the other by domestic sale after obtaining the permission of the Development Commissioner, in respect of domestic sales the words allowed to be sold in India were incorporated in both the provisos. The fact however remains that 100% EOUs were never treated at par with other domestic units and for all practical purpose they were considered as units located outside India and accordingly Central Excise duty equal to amount of duties of customs leviable on like or similar goods manufactured outside India when imported into India was made applicable. In fact a different procedure was carved out and a separate Chapter VA was inserted in Central Excise Rules relating to removal of goods from free trade zone and 100% EOU for home consumption and many provisions of the Central Excise Rules were made inapplicable. Even exemption notifications issued under Rule 8 were made inapplicable unless notification itself said so. The intention of the legislature and the purpose of introdu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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