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TMI Blog2020 (2) TMI 1114X X X X Extracts X X X X X X X X Extracts X X X X ..... per to place the above application before the regular Bench for any order on the application. The Member (Judicial) has held that the appellants are eligible for the benefit of the Notification (supra) and has set aside the demand whereas, the Member (Technical) has held that the benefit of the exemption Notification (supra) is not available to the assessees and has accordingly confirmed the demand. The only question formulated by the Members on the Difference of Opinion is whether the appellants are eligible for the exemption Notification No. 04/2006-C.E, dated 01,03.2006 as held by Member (Judicial) or they are not eligible for the exemption as held by Member (Technical). In Union of India Vs. Elphinstone Spinning Weaving Co. Ltd., [ 2001 (1) TMI 966 - SUPREME COURT ], the Hon'ble Apex Court formulated what it termed the cardinal principle of construction in the following words: a statute is a command of the Legislature. The interpreter must, therefore, in interpreting and construing the statute, identify the intention of the Legislature; that in identifying the intention of the Legislature by the process of constructing, the Court will have to adopt both literal and purposiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lves entitled to exemption is in no manner relevant to whether exemption is to be granted at a subsequent stage to the finished goods. In any event, the cascading effect is effectively mitigated by CENVAT credit. The exemption notification must be applied only to the goods .it seeks to cover. The appellants are not eligible for the benefit of exemption notification No.4 ibid and accordingly, I concur with the conclusions drawn by the Member (Technical) - Registry is directed to place the matter before the Division Bench for recording majority/Final Orders accordingly. Majority order recorded - Appeals dismissed. - HON'BLE MS. SULEKHA BEEVI CLS., MEMBER (JUDICIAL) HON'BLE P. VENKATA SUBBA RAO, MEMBER(TECHNICAL) For the Appellant : Shri S. Renganathan, Advocate, Shri S. Venkatachalamr Advocate and Shri M. Kannan, Advocate For the Respondent : Shri S. Govindarajan, AC (AR) and Shri L. Nandakumar, AC (AR) ORDER PER: MS. SULEKHA BEEVI C.S- The issue involved in all these appeals being the same, they are heard together and are disposed by this common order. 2. Brief facts are that the appellants are engaged in packing of duty paid machine dipped match splints purchased from mec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od, cardboard textile yarn impregnated with stearin wax, paraffin wax etc. (wax matches or vestas) and of a head made of various inflammable chemical products . 3.3 As per Chapter Note 3 of Chapter 36, each matchstick ignited by striking should be deemed to be a match. So the matchsticks purchased are finished and excisable goods and has suffered appropriate duty at the hands of the manufacturer. The allegation of the department is that the processes undertaken by the appellant in packing the matches in boxes painted with red phosphorous, though done without aid of power is not eligible for exemption as per Notification No. 4/2006-CE because the raw materials, dipped match splints were manufactured by using aid of power. Admittedly, no power was used in the factory of the appellant. Only if power is used in the factory of the appellant in any one of the six processes mentioned in the notification, the appellant have to pay duty on the goods cleared by them. Since no power is used in the packing of matchsticks -in the appellant's factory, the benefit of the notification cannot be denied. 3.4 In this regard, the appellant relied on the Board Circular No. 1/93-CX-4 dated 2.121993. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of fireworks. After steel wires were cut to sizes and the paper was processed? the same were being returned to the factories of the assessee. In the present case, the appellants were purchasing duty paid match splints from various sources and packing it and removing the same as matches. The raw materials used by them were not sent outside for further processing with the aid of power. The Tribunal in the case of Omega Packaging P. Ltd. (supra) had occasion to consider a similar issue and has distinguished the facts in Standard Fireworks Industries (supra). 3.9 The Id. Counsel Shri S* Venkatachalam also argued that the process of packing the matchsticks in the boxes does not amount to manufacture. After referring to Note 3 of Chapter 36, he submitted that in the Chapter Note there is no mention to the effect that packing of matchsticks in the match boxes amount to manufacture. No new product has emerged in the factory of the appellant and no manufacturing activity is carried out in the unit so as to attract levy of excise duty. Only if power is used in any one of these processes mentioned in Notification 4/2006, the appellant has to pay duty. In the instant case, the appellants are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing at the factory of another manufacturer and suffered duty. The appellants therefore prayed that the confirmation of duty demand, interest and penalty amounts may be set aside. 4. Ld. AR Shri S. Govindarajan supported the findings in the impugned order. He referred to Notification 4/2006 and submitted that in SL No. 72, it is stated that to avail the benefit of notification none of the following processes is to be carried out with the aid of power, The various processes are:- a. frame filling b. dipping of splints in the composition for match heads c. filling of boxes with matches d. posting of labels on match boxes, veneers or cardboards packaging 4.1 Thus any process which is done in relation to the manufacture of matches, if done with the aid of power, notification benefit will not be applicable. In the present case, the appellants have purchased duty paid match splints and used for packing them in boxes. Though the appellants have not used any power for packing and painting the boxes with red phosphorous, the match splints used for packing have been manufactured using the aid of power. The notification clearly specifies that none of the specified processes should be carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers or cardboards, (v) packaging Nil ---- 6.1 It is not disputed that the appellants are not using power within their factory for painting the boxes with red phosphorous, packing, bundling etc. To be more specific, the processes undertaken by the appellants are confined to the activity of making / painting the boxes, packing, labelling etc. They clear the entire boxes containing the dipped match splints without payment of duty by availing the exemption of the above notification. The case of the department is that since the dipped splints packed in the boxes is manufactured by using the aid of power, the exemption as per the notification is not available to them. The notification does not say that the entire processes mentioned therein from sub-clause (i) to (v) have to be done by a single manufacturer. So also it does not say that all these processes have to be carried out in a single factory. Whenever a notification is interpreted it has to be taken into consideration in respect of the particular assessee/manufacturer who avails the benefit of notification. If a manufacturer does not use power in the process carried out by him, which results in the production of the goods cleared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d splints) manufactured using the aid of power has suffered duty, the appellants cannot be denied the exemption alleging that the raw materials have been manufactured with the aid of power. The facts as narrated in Standard Fireworks Industries (supra) are not analogous or identical to the facts of the present appeals and therefore distinguishable. 6.3 The Tribunal in the case of Omega Packing P. Ltd. (supra) had occasion to consider a similar situation wherein the exemption under Notifications No. 71/83-CE, 153/86-CE and 102/88 were analysed. It was held that when metal containers were manufactured by the assessee without the use of power in his factory using bought out tops and bottoms, the benefit of notification is eligible. The discussion of the Tribunal in para 5 of the said decision is noteworthy and reproduced as below:- 5. We have considered the submission of both the sides, Notification 71/83-CE dated 1-3-1983 provides Nil rate of duty in respect of meta/ containers if such. containers are produced without aid of power from sheets which had been tinned, printed, coated as lacqured by others with the aid of power. Similar exemption was provided by Notifications 153/86 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of power - Notification No, 49/86-C.E. Circular No. 1/93-CX.4, dated 2-12-1993 Government of India Central Board of Excise Customs New Delhi Subject : Power - Use of powerh manufacture of components - Effect Footwear manufactured without the use of power. but out of parts manufactured with the aid of power eligible to exemption under Notification No. 49/86-C.E. The matter has been examined and it is found that the instructions of June, 1969 (F. No. 8/19/67-CX.2, dated 27-6 1969) mentioned at Para 4 of your letter were issued with reference to the then existing Notification No. 94/67- C.E., of May, 1967 and had to be read with reference to Tariff heading existing then. This Notification was for a factory where both footwear and parts thereof were manufactured and thereafter parts were used in the manufacture of footwear in the same factory. The reliance of CCE, Delhi, on the instructions issued in 1960 and 1969 for footwear are not really relevant as the present Tariff is different from the earlier Tariff. In the present case parts are manufactured by a manufacturer with the aid of power. Such parts manufactured with the aid of power are purchased by another manufacturer of footwear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants purchased raw materials and send it outside the factory to make dipped match splints using power. The duty paid splints are raw materials for them. 6.7 From the above discussions, we are of the view that the appellants having not used any power in the process carried out by them for manufacture of matches, the benefit of Notification 4/2006CE is eligible to them. 6.8 The Ed. Counsel Shri S. Venkatachalam has also put forward arguments that the process of painting the boxes with red phosphorous, packing the match splints in the boxes or bundling etc. does not amount to manufacture When the. assessee claims to have availed the benefit of notification and cleared the goods without payment of excise duty, their contention that the process carried out by them does not amount to manufacture is self-contradictory. The appellants have obtained central excise registration also. Further? as per section 2(f) of Central Excise Act, 1944, these activities amount to manufacture. The contentions put forward by the counsel stating that the activity does not amount to manufacture, therefore, does not find favour with us. 7. Following the decision in Omega Packing P. Ltd. (supra) as also app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 3605 00 90 Matches, in or in relation to the manufacture of which none the following processes is ordinarily carried on with the aid of power, namely: (i) the process of giving-the veneer flats or strips, the configuration of a match box including the outer slide or the inner slide with the use of match paper; (ii) frame filling; (iii) dipping of splints in the composition for match heads; (iv) filling of boxes with matches; (v) pasting of labels on match boxes or veneers or cardboards; (vi) packaging Nil -- A plain reading of the above notification shows that there is no stipulation in it that all the above processes have to take place within the same factory. It also does not stipulate that the benefit is available if the power is not used by the person claiming the benefit of the exemption notification or his job workers. Therefore, the place of use of power is irrelevant. The person who uses the power is also irrelevant. The only thing that is relevant is that the power should not have been used in any of the six processes mentioned therein. It does not matter if the power is used in any of the other processes in the manufacture of the matches, the benefit is still available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and read it as Matches, in or in relation to the manufacture of which none of the following processes is ordinarily carried on with the aid of power by the assessee or his job workers . Such enlargement of the scope of the notification is beyond the powers of this Tribunal. 6. The Constitution of India divides the powers between Legislature, Executive and Judiciary with legislation being solely domain of the Parliament. Subordinate legislation such as this notification is made by the Government which is answerable to the Parliament. Further each and every notification is placed before the Parliament whose Committee on Subordinate Legislation scrutinises the notification and directs any changes which it feels is necessary. It is for this reason, the power of making legislation is delegated to the Government which is answerable to the Parliament and not to other arms of the State. 7. It is therefore, not open for the Tribunal to enlarger the scope of the notification by reading into it the additional words that do not exist. Even if it is viewed that the exemption notification can also be interpreted to mean that the power should not be used by the assessee or his job workers only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derstand that the splints and the matches in boxes are different commodities as known to the market. The standard unit indicated in the tariff does not determine whether duty is payable or not. Match boxes are countable but they can also be weighed. Simply because they can be easily counted and the standard unit indicated in the tariff is kg it does not mean that no excise. duty is payable on matches in boxes. Several other goods in the same chapter which are equally countable such as safety fuses, detonators, signalling flares, etc., all have the standard unit as kg. This does not make them not dutiable. 10. It has also been argued on behalf of the appellants that with respect to an exemption notification no. 49/86-CE for footwear, CBEC issued circular no. 1/93-CX dated 2-12-1993 indicating that the particular exemption notification is available even in cases where the suppliers of the inputs used power. Therefore, the same logic should apply to them. T find that in the first place, CBEC's circular is binding on the department but not on the Tribunal. Secondly, the circular dealt with a different exemption notification and it cannot be treated as a binding ratio and extended t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Interim. Order and therefore, the same are not repeated here. The only issue to be decided by me is whether the appellants are eligible for the benefit of exemption of Notification No. 04/2006-C.E. dated 01.03.2006. 3.2 The Member (Judicial) has held that the appellants are eligible for the benefit of the Notification (supra) and has set aside the demand whereas, the Member (Technical) has held that the benefit of the exemption Notification (supra) is not available to the assessees and has accordingly confirmed the demand. The only question formulated by the Members on the Difference of Opinion is whether the appellants are eligible for the exemption Notification No. 04/2006-C.E, dated 01,03.2006 as held by Member (Judicial) or they are not eligible for the exemption as held by Member (Technical). 4.1 During the hearing on 16.10.2019, Shri. S. Renganathan, Shri. K. Ramachandran and Shri. S. Venkatachalam, Ld. Advocates, appeared for the appellants and inter alia contended that in Chapter Note 3 of Chapter 36, there is no mention as regards packing of match sticks amounting to manufacture; that the appellants are purchasing duty paid match splints and that if dipped splints are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpedient to first set out some principles of interpretation that will guide me in this exercise. In Union of India Vs. Elphinstone Spinning Weaving Co. Ltd., reported in AIR 2001 SC 724, the Hon'ble Apex Court formulated what it termed the cardinal principle of construction in the following words: ...a statute is a command of the Legislature. The interpreter must, therefore, in interpreting and construing the statute, identify the intention of the Legislature; that in identifying the intention of the Legislature by the process of constructing, the Court will have to adopt both literal and purposive approaches. This would mean that the true or legal meaning of an enactment is derived by construing the meanings of the words used in the enactment in the light of any discernible purpose or object which comprehends the mischief of its remedy to which the enactment is directed. 8.2 In State of Uttar Pradesh Vs. Vijay Anand reported in AIR 63 SC 946, the Hon'ble Apex Court inter alia when the language is plain and unambiguous and admits of only one meaning, no question of construction of a statute arises, for the Act 8.3 Thus, when the meaning is plain and unambiguous, no process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of Matches with no caveat to either of the 9.4 Secondly, the use of the word ordinarily in Sl. No. 72 in the exemption notification no. 4/2006-CE is thus of particular significance and cannot be ignored, It has the effect of further widening the scope of the restrictions. The restriction that the processes must not be carried out with the aid of power applies not just to the specific goods under consideration but the same goods whenever manufactured- In other words, if the specified processes in relation to such goods are, in the ordinary course of commerce, carried out with the aid of power, the restrictions would apply and the exemption would not be available. This conclusion may be reached dehors the facts of the specific cases at hand. Thus, in order to succeed in its claim for exemption, the burden on the assessee is heavy - it must prove that the specified or listed processes are not ordinarily carried out with the aid of power and not merely that power was not used in its specific case. This burden has not been discharged. I may also point out that in the case of Omega Packing relied on by the Member(Judicial), this tribunal has clearly noted that thd condition in the no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be no generality. 14. The notification under consideration refers to many activities i.e., processes, right from procurement of inputs/raw. materials, that culminate in or in relation to manufacture of Matches and hence, there is no scope to ignore/omit any. process/es to claim the benefit. As regards raw materials, I need not burden myself with that issue as the exemption notification doesn t lt whisper anything about it, since the same is qua processes and not even qua manufacture or the manufacturer. Moreover, it v is none of the processes that is ordinarily carried on with the aid of power AND NOT the manufacture per ser that is carried on with or without the aid of power. That is, the center of gravity is the 'processes' and not manufacture . 15. In its judgment in the case of M/S. Standard fireworks (supra), Hon'ble Supreme court has inter alia held as under: The Notification purports to allow exemption from duty only when in relation to the manufacture of the goods no process is ordinarily carried on with the aid of power. It is not disputed that the cutting of the steel wires or the treatment of paper is a process for the manufacture of goods in question. Since ..... X X X X Extracts X X X X X X X X Extracts X X X X
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