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TMI Blog2020 (3) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... f Manganese Ore by TISCO to UFAC for the purposes of processing the same and converting it into Silicon Manganese. Undisputedly, the same is also for a valuable consideration. This Court has held, that it is a settled principle in excise classification that the definition of one statute having a different object, purpose and scheme cannot be applied mechanically to another statute. It has further been held, that the conditions or restrictions contemplated by one statute having a different object and purpose should not be lightly and mechanically imported and applied to a fiscal statute - It is also equally well settled that the first principle of interpretation of plain and literal interpretation has to be adhered to. We are therefore of the considered view, that the narrower scope of the term sale as found in the Sale of Goods Act, 1930 cannot be applied in the present case. The term sale and purchase under the Central Excise Act, 1944, if construed literally, it would give a wider scope and also include transfer of possession for valuable consideration under the definition of the term sale . Whether under the EXIM Policy, UFAC was entitled to carry out the job-work f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Board stood modified to the said extent - failure on the part of the Commissioner, who passed the order-in-original, to notice the Circular dated 22.5.2000 has resulted in passing an erroneous order. It also appears, that after the show cause notice was issued to UFAC, the Commissioner had sought a clarification from the Sponsoring Authority i.e. the Development Commissioner, SEEPZ vide communication dated 6.11.2001. The combined reading of paragraph 9.9(b) of the EXIM Policy, the Circulars issued by the Board, particularly, the Circular dated 22.5.2000 and reply to the query of the Customs Authorities by the Development Commissioner, SEEPZ would clearly show, that the UFAC was entitled to carry out the job-work on behalf of TISCO on payment of duty as provided under Exemption Notification of 1997. If such an interpretation is accepted, the words unless specifically provided in such notification in subsection (1) of Section 5A will have to be ignored and the said words would be rendered otiose. It is a settled principle of law that while interpreting a provision due weightage will have to be given to each and every word used in the statute - the interpretation as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dmittedly, in the present case, the sales made by UFAC to TISCO are within the permissible limits and with the permission of the Development Commissioner. The CESTAT has not committed any error in reversing the orders-in-original passed by the Commissioner - appeal dismissed. - CIVIL APPEAL NOS. 848-852 OF 2009 - - - Dated:- 6-3-2020 - CJI. S. A. BOBDE, JUSTICE B. R. GAVAI And JUSTICE SURYA KANT For the Appellant : Mr. B. Krishna Prasad, AOR For the Respondent : M/S. S. Narain Co., AOR JUDGMENT 1. Being aggrieved by the judgments and orders dated 21.10.2005 and 7.7.2006 passed by the Customs, Excise, Service Tax Appellate Tribunal, West Zonal Bench at Mumbai (hereinafter referred to as CESTAT ) thereby, allowing the appeals filed by the respondent Assessee and its Chairman being Appeal Nos.E26912693/ 03 arising out of Order-in-Original No.1420 of 2003 dated 23.6.2003, Order-in-Original No.21 of 2003 dated 23.6.2003 and Appeal No. E/1976/04 arising out of Order-in-Original Nos.1920/ 2004 dated 15.3.2004 and dismissing the appeal filed by the Revenue being Appeal No. E/1607/06Mum arising out of order of the Commissioner (Appeals), Customs Central Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excise Rules. 5. The activities of the UFAC had come to a standstill for some period and it restarted its production in August, 1999 and was declared a sick company by the Board for Industrial and Financial Reconstruction (BIFR) under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). It is not in dispute that the UFAC carried out conversion of the raw materials supplied by TISCO, on TISCO making the payment of conversion charges of ₹ 14,090/PMT of Silicon Manganese. However, while dispatching the Silicon Manganese to TISCO, excise duty was paid on the value of ₹ 20,623/PMT which included cost of raw materials supplied by TISCO as well as the inputs used by UFAC from their own purchases. 6. The Commissioner, Central Excise Customs, Nagpur, issued a show cause notice to the UFAC dated 9.10.2001 in respect of the Silicon Manganese cleared during September 2000. It was stated in the said show cause notice, that the Circular No.67/98Cus dated 14.9.1998, issued by the Central Board of Excise Customs, New Delhi (hereinafter referred to as the Board ) had permitted the EOUs to undertake job-work on behalf of a DTA unit on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that since the Development Commissioner had clarified that the removals made by UFAC to TISCO were in accordance with the permission under the EXIM Policy, there was no occasion to proceed further. 10. However, the Commissioner while passing the Order-in-Original came to a finding that the conversion work performed by UFAC was nothing but the job work and that the said job work done by an EOU was governed by para 9.17(b) of the EXIM Policy. He found, that under para 9.17(b) of the EXIM Policy, an EOU was permitted to do job work for a DTA unit only for the purposes of exporting the finished goods directly from EOU. However, since after the job work the finished goods were not exported by the EOU but cleared to a DTA unit for home consumption, the UFAC had contravened the provisions of the EXIM Policy. He also came to a finding, that the sector in which UFAC had undertaken the job work was not covered by the Circular dated 14.9.1998 and as extended by another Circular dated 5.11.1999, issued by the Board. He also came to a conclusion that since there was no sale of the goods but only return of the goods after job work, it was not a sale and, as such, contrary to the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the excisable goods which are produced or manufactured by a 100% EOU and brought to any other place in India. He further submits, that in the transaction between the UFAC and TISCO, there is no transfer of property in goods to the UFAC and, as such, it cannot be considered to be a sale under Section 4 of the Sale of Goods Act, 1930. The learned Senior Counsel therefore submits, that the order passed by the CESTAT deserves to be set aside and the ordersinoriginal passed by the Commissioner (Appeals) need to be maintained. 15. It is further contended by Shri Radhakrishnan, learned Senior Counsel, that the words allowed to be sold in India in clause (ii) of proviso to subsection (1) of Section 5A of the Act have been substituted by words brought to any other place in India with effect from 11.5.2001. He therefore submits, that in view of change in law from 11.5.2001, the statutory force of the said Exemption Notification is lost from 11.5.2001. In his submission, the said Exemption Notification would stand impliedly repealed with effect from 11.5.2001. He relies on the judgments of this Court in the cases of (1) M. Karunanidhi vs. Union of India Anr. (1979) 3 SCC 431; (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n between UFAC and TISCO there is no transfer of property in goods, the same cannot be termed as sale and therefore would not be covered under paragraph 9.9 (b) of the EXIM Policy. Shri Radhakrishnan, in that respect, would rely on the provisions of the Sale of Goods Act, 1930. 19. We do not find any merit in the submission of Shri Radhakrishnan in this regard. It will be relevant to note that clause (h) of Section 2 of the Central Excise Act, 1944 specifically defines the terms sale and purchase . Section 2(h) of the Act reads thus: 2(h) sale and purchase , with their grammatical variations and cognate expressions, mean any transfer of the possession of goods by one person to another in the ordinary course of trade or business for cash or deferred payment or other valuable consideration; 20. The perusal of the definition makes it clear that when there is a transfer of possession of goods in the ordinary course of trade or business either for cash or for deferred payment or any other valuable consideration, the same would be covered by the terms sale and purchase within the meaning of the Central Excise Act, 1944. Undisputedly, in the present case, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pe of the term sale as found in the Sale of Goods Act, 1930 cannot be applied in the present case. The term sale and purchase under the Central Excise Act, 1944, if construed literally, it would give a wider scope and also include transfer of possession for valuable consideration under the definition of the term sale . 24. The next issue that requires consideration is as to whether under the EXIM Policy, UFAC was entitled to carry out the job-work for TISCO and whether it was entitled to exemption from payment of duty under the Exemption Notification. 25. It will be relevant to refer to the relevant clauses of Chapter 9 of the EXIM Policy. As per para 9.1 of the said EXIM Policy, units undertaking to export their entire production of goods may be set up under the EOU Scheme. As per para 9.9, the entire production of EOU units is required to be exported subject to the following: (a) Unless specifically prohibited in the LOP/LOI, rejects may be sold in the Domestic Tariff Area (DTA), on prior intimation to the Customs authority. Such sales shall be counted against DTA sale entitlement under paragraph 9.9(b) of the Policy. Sale of rejects shall be subject to payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y way of Brand Rate of duty drawback. 31. The Order-in-Original states that since the UFAC has not exported the final product of Manganese raw material received by it from TISCO, it had violated the provisions of paragraph 9.17 (b) and 9.9(b) of the EXIM Policy. We will have to examine the correctness of the said finding. For that, it will also be relevant to examine as to whether under paragraph 9.9 (b) of the EXIM Policy, an EOU is entitled to carry a job-work on behalf of another unit in DTA. 32. The Order-in-Original refers to Circular No.67/98cus dated 14.9.1998 and Circular No.74/99cus dated 5.11.1999. However, the Commissioner, it appears, that while passing the order has not noticed the subsequent Circular No.49/2000Cus dated 22.5.2000. It will be relevant to refer to paragraph 10 and 11 of the said Circular dated 22.5.2000. 10. Under para 9.17(d), the EOU/EPZ units in specific sectors were allowed to undertake job work for export on behalf of DTA units. This paragraph has been amended to extend this facility to all sectors. It has also been provided that DTA units shall be entitled to brand rate of duty draw back. 11. The EOU /EPZ units in textiles, rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DTA Unit by an EOU on conversion basis Provisions of Para 9.17(b) of the EXIM Policy 19972002 Correspondence regarding. M/s Universal Ferro Ltd., Tumsar ********* Kindly refer to letter C.No. II(39)/25/CIU/2001, dated 6th November, 2001, addressed to Development Commissioner, SEEPZ SEZ. Ministry of Commerce has clarified that the EXIM Policy permits the kind of operation being undertaken by the unit and it should be permitted. 35. UFAC had also sought a clarification to this effect from the Sponsoring Authority. It will be relevant to refer to the communication dated 23.10.2001, addressed by the Joint Development Commissioner, SEEPZ, relevant part of which reads as under: Kindly refer to your query regarding DTA sale. The position clarified to Central Excise, Nagpur, is as follows: The general question raised was whether while selling in DTA under DTA sale permission issued in terms of Para 9.9 (b) of the EXIM Policy, a unit can take supply of raw material from a Company in the DTA and give back the finished product (its approved as per LOP and also covered by the DTA sale permission). The unit is free to procure raw material in terms of Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f payment of concessional duty under notification No. 2/95 Central Excise, dated 4-1-1995 even though the EOU had a valid DTA sale permission and had earned the DTA sale entitlement as provided under paragraph 6.8 of the Exim Policy 2002-2007 (Paragraph 9.9 of the Exim Policy 1997-2002) and fulfil other conditions specified in aforesaid notification. The benefit of concessional rate of duty was being denied on the ground that stock transfer of goods is not a sale and thus, not eligible for concessional rate of duty in terms of the above notification. 2. The matter has been examined by the Board. Notification 2/95 C.E., dated 1-4-1995 provided for 50% exemption on .. goods allowed to be sold in India under and in accordance with the provisions of subparagraphs (a), (b), (d) and (h) of para 6.8 (earlier para 9.9) of the Exim Policy . The notification, therefore, allowed concessional duty only when goods were sold into DTA in accordance with para 6.8 (or 9.9) of the policy. What is covered in para 6.8 (or 9.9) of the policy has been clarified by Ministry of Commerce in Appendix 14-IH of the Handbook of procedures, 2002 2007 (Appendix 42 of the Hand Book of Procedures Vol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anything contained in any other provision of this Act, be determined in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975 (51 of 1975). *** 5A. Power to grant exemption from duty to excise.( 1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after removal) as may be specified in the notification, excisable goods of any specified description from the whole or any part of the duty of excise leviable thereon: Provided that, unless specifically provided in such notification, no exemption therein shall apply to excisable goods which are produced or manufactured (i) In a free trade zone or a special economic zone and brought to any other place in India; or (ii) by a hundred per cent export-oriented undertaking and brought to any other place in India. Explanation In this proviso, free trade zone , special economic Zone and hundred per cent export-oriented undertaking shall have the same meanings as in Explanation 2 to subsect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de zone or a special economic zone and brought to any other place in India; or by a hundred per cent exportoriented undertaking and brought to any other place in India. 45. It is the submission of Shri Radhakrishnan that a combined reading of proviso to subsection (1) of Section 3 of the Act and proviso to subsection (1) of Section 5A of the Act, would not entitle the Central Government to grant any exemption to an EOU when it brings the goods to any other place in India (i.e. DTA) and the duty that would be leviable would be as if the said goods were imported in India. 46. We are of the considered view, that if such an interpretation is accepted, the words unless specifically provided in such notification in subsection (1) of Section 5A will have to be ignored and the said words would be rendered otiose. It is a settled principle of law that while interpreting a provision due weightage will have to be given to each and every word used in the statute. 47. In this respect, we may gainfully refer to the following observations of the Constitution Bench of this Court in the case of Hardeep Singh vs. State of Punjab and others (2014) 3 SCC 92: 42. To say that powers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4] , Sultana Begum v. Prem Chand Jain [(1997) 1 SCC 373] , State of Bihar v. Bihar Distillery Ltd. [(1997) 2 SCC 453 : AIR 1997 SC 1511] , Institute of Chartered Accountants of India v. Price Waterhouse [(1997) 6 SCC 312] and South Central Railway Employees Coop. Credit Society Employees' Union v. Registrar of Coop. Societies [(1998) 2 SCC 580 : 1998 SCC (L S) 703 : AIR 1998 SC 703] .) 48. We therefore find, that the interpretation as sought to be placed by Shri Radhakrishnan would render the term unless specifically provided in such notification in subsection (1) of Section 5A otiose or useless. Such an interpretation would not be permissible. We find, that the harmonious construction of subSection (1) of Section 5A of the Act and the proviso thereto would be, that an EOU which brings the excisable goods to any other place in India would not be entitled for a general exemption notification unless it is so specifically provided in such a notification. 49. In this respect, it will be relevant to refer to Exemption Notification of 1997 as amended by Notification No.21/97C. E. dated 11.4.1997, relevant part of which reads thus: Effective rate of duty on certain g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are in excess of what is leviable under subsection (1) of Section 3 of the Central Excise Act, 1944 on like goods, produced or manufactured in India. In our considered view, since the said Exemption Notification specifically mentions, that the goods produced or manufactured by an 100% EOU, which are allowed to be sold in India in accordance with para 9.9(b) of the EXIM Policy, the proviso would be inapplicable thereby, requiring the duties to be paid, as are required to be paid under subSection (1) of Section 3 of the said Act. The conditions which can be culled out for enabling to get the benefit of the said Exemption Notification are as under: (i) The finished products, rejects and waste or scrap specified in the Schedule to the Central Excise Tariff Act, 1985 should be produced or manufactured in the 100% export-oriented undertaking or a free trade zone; (ii) The said finished products should be manufactured wholly from the raw materials produced or manufactured in India; (iii) They are allowed to be sold in India under and in accordance with the provisions of subparagraphs (a), (b), (c), (d) and (f) of paragraph 9.9 or of paragraph 9.20 of the EXIM Policy. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the said judgment would rather support the case of the respondent Assessee. It would be relevant to refer to the following observation in paragraph 18 of the said judgment, which reads thus: Thus it is apparent that debonding and permission to sell in India are two different things having no connection with each other. It also becomes apparent that in view of the EOU Scheme as modified from time to time and corresponding amendments to Section 3 of the Act the expression allowed to be sold in India in the proviso to Section 3(1) of the Act is applicable only to sales made up to 25% of production by 100% EOU in DTA and with the permission of the Development Commissioner. No permission is required to sell goods manufactured by 100% EOU lying with it at the time approval is granted to debond. 57. It is to be noted that the case that fell for consideration before this Court was with regard to debonding. What this Court has held is, that no permission is required to sell goods manufactured by 100% EOU lying with it, at the time approval is granted to debond. It has been held, that the expression allowed to be sold in India in the proviso to Section 3(1) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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