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TMI Blog2009 (7) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the Collector of Central Excise. The Central Government's impugned order was made on 26.06.1982, which held that Oleum was used by the petitioners for the manufacture of Caprolactum and not for fertilizers and therefore, not entitled to the exemption notification of 1966 issued under the provisions of the Central Excise and Salt Act, 1944 (hereinafter called "the Excise Act"). 2. The brief facts necessary for deciding the case are that the Schedule to the Excise, by Item 14G, ("TI 14-G) classifies Acids. These include "Nitric, Hydrochloric and Sulphuric Acids (including fuming acids and anhydrides thereof)". Gases on the other hand were classified under Tariff Item 14 H. By virtue of a notification dated 30.06.1966, the Central Government exempted sulphuric acid, falling in TI 14G of the First Schedule to the Excise Act, intended for use in the manufacture of fertilizers from the whole of the duty of excise. This was subject to the condition that the Assistant Collector of Central Excise was satisfied that such sulphuric acid was so used and in respect of such use elsewhere than in the factory of production, of sulphuric acid, the procedure set out in Chapter X of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Rules alleging that the petitioners had cleared 13.557 MT of Oleum which was excisable to the extent of 23% in terms of TI 14G without correctly following the provisions of the said Rules. The petitioner was required to respond to why penalty should not be imposed upon it. This show cause notice was responded by the petitioner through the reply dated 07.01.1976. It was contended that RT 12 Return for the month of July 1974 had clearly disclosed that the quantity of Oleum was cleared for internal use and utilized in the manufacture of ammonia sulphuric fertilizers. The petitioner also claimed that classification list furnished in February 1974 in respect of sulphuric acid and Oleum was duly approved by the Superintendent of Central Excise on 28.02.1974; which too clearly mentioned the use of Oleum 23% in the manufacture of fertilizers. It is contended that between the period July 1974 and August 1981, 66 show cause notices were issued to the petitioner in almost similar terms as the one dated 04.09.1974 invoking the same provisions of law. On 12th August, 1976 by a show cause notice, the petitioner was required to explain why duty under Rule 9 of the Excise Rules shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d anhydrides thereof. It is further contended that the authorities' accepted the contention that Oleum is a fuming acid that such being the case it is a sulphuric acid according to the technical material available on the record. It is argued that since the expression "sulphuric acid" is used to include fuming acid in TI 15G, the said expression in the two notifications also must have the same meaning as in the Excise Act and would logically therefore, include fuming acid. In support of this argument reliance is placed upon a canon of statutory interpretation that where an enactment uses the same expression in different parts of the same statute, there is a presumption that it has the same meaning. Reliance is placed for this purpose on the judgment of the Supreme Court reported as Steel Authority of India Limited Vs. Collector of Central Excise, 1997 (91) ELT 529. It is thus contended that the principal statute i.e. the Excise Act having given an extended meaning to the expression sulphuric acid, to include fuming acid, which in turn would comprehend Oleum a class of fuming acid, there would be no justification in cutting down the amplitude and effect of that expression identic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner contends that the Inventa manufacturing process is a continuous process whereby Caprolactum and ammonium sulphate are produced together. The latter is undisputedly a chemical fertilizer. The petitioner submits that the interpretation favoured by the respondent authorities restricts the scope of the notification and defeats the legislative intent which was to make fertilizer cheaper as it is an essential commodity used by farmers in agriculture production. It is lastly contended that the petitioner had undisputedly filed a classification list disclosing Oleum as a classifiable under TI 14G and claimed benefit of the notifications. The lists were finally approved by the quasi judicial orders which were not set aside. The authorities, therefore have approved recovery of dues without following the procedure established by law. 12. The respondent argues that though TI 14G talks about Nitric, Hydrochloric and Sulphuric Acids (including fuming acids and anhydrides thereof) of all sorts, significantly the exemption notification restricts itself only to the uses of Sulphuric Acid. The second limb of the exemption notification, say the respondents, makes its mandatory that the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eum unless it is specifically so mentioned as has been done in the Tariff description. This order of the Collector was upheld by the Revisional Authority which held interalia that the exemption notification does not refer to the words "all sorts" which appear in Item No.14G of the Tariff description. The Authority, it is contended also noticed that the Indian Standards Institution made a specific distinction between Oleum and Sulphuric Acid by publishing two separate standards for both of them. Similarly, the process description relied on by the petitioner establishes that the product is caprolactum, and the secondary or bye product is Ammonium Sulphate. Other documents are pointed out, such as the petitioner's training manual, and the collaboration agreement, with the foreign company, to say that the object of establishing the plant was caprolactum production, and not of fertilizer. 16. It is further submitted that any exemption notification has to be construed strictly. In this regard reliance is placed on State of Jharkhand ors. v. Ambay cement Anr. (JT 2004 10 SC 93); Novopan India Ltd. v. Collector of Central Excise (1994 73 ELT 769 SC) and M/S Healt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, the tariff description specifies Nitric, Hydrochloric and sulphuric acid as the particular substances which would fall within the broad heading. The tariff item further clarifies that sulphuric acids would include fuming acid and anhydrides of all sorts. It is well established that in interpreting taxing statute statutes, there is no room for intendment and the Court should give due regard to the clear meaning of the terms in question. (Refer Hansraj case (supra)). A rule of interpretation applicable to taxing statutes is that exemptions which serve as an exception and instruments or notifications containing such exemptions should be interpreted strictly and in their own terms. (See Union of India Vs. Wood Papers Limited 1990 (4) SCC 256; Bombay Chemical Pvt. Ltd. (supra); Sarabhai M Chemicals Vs. Collector of Central Excise, 2005 (2) SCC 168; State of Jharkhand Vs. Tata Cummins Limited 2006 (4) SCC 57). 20. In the present case the revenue's contention is that the exemption notifications only refer to sulphuric acid but do not make any further reference to the different classes of sulphuric acid. Consequently Oleum, which falls within the inclusive or extended def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be construed strictly, but once a goods is found to satisfy the test by which it falls in the exemption notification then it cannot be excluded from it by resorting to applying or construing such notification narrowly. Item 18 is an exemption notification. As stated earlier, it mentions broad categories of goods which are entitled to exemption. Once a goods is found to fall even narrowly in any of these categories, there appears no justification to exclude it. The test of strict construction of exemption notification applies at the entry, that is, whether a particular good is capable of falling in one or the other category but once it falls then the exemption notification has to be construed broadly and widely. Each of the words insecticides, pesticides, fungicides or weedicides are understood both in the technical and common parlance as having broad meaning. Therefore, if any goods or items satisfy the test of being covered in either of the expression, then it is entitled to exemption……….." In the Hindustan Platinum case (supra), the Supreme Court illustrated the application of the above rule, stating that: "…….The short question which the authorities below were required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stultified or truncated………." 23. Having regard to the terms of the notification and on an application of the principles enunciated by the Supreme Court in Hansraj Gordhandas case (supra), The Steel Authority of India's case (supra), the Hindustan Platinum case (supra) and the Gujarat State Fertilizers Case (supra), it is held that the sulphuric acid referred to in the two notifications is not confined only to sulphuric acid per se but includes the entire range of sulphuric acids that fall within tariff item, because of the specific reference to the tariff item itself, on account of the words "falling under this item". If the revenue's contention is accepted, two anomalies would emerge i.e. the Court would be left without guidance as to which class of sulphuric acid really qualifies for exemption thus enabling the authorities to pick and choose as between one and the other kind of sulphuric acid; and two, the specific reference to tariff item 14G, which includes all kinds of description of acids falling within the broad generic term "sulphuric acid", would be rendered meaningless. The Court's finding is also supported by the fact that not all products described in TI 14G qualif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iff description." 25. As is evident, reliance had been placed upon the Condensed Chemical Dictionary Gessner G. Hawley, it would be interesting to notice at this stage that the very same issue arose for consideration before the Customs Excise and Gold Control Appellate Tribunal (CGAT), a three Member decision in its judgment reported as Andhra Sugar Limited Vs. Collector of Central Excise, 1989 (42) ELT 613 rejected assesse's contention that Oleum was not sulphuric acid and therefore not covered by TI 14G. It was held that Oleum in that case in the sulphuric trioxide gas form was in anhydride form and classifiable under TI 14G. The show cause notice issued to the assesse in that case, which was finally upheld, described Oleum as sulphuric acid. Similarly, later in another decision of the Tribunal i.e. Dhanbad Chemical Pvt. Ltd. Vs. Commissioner of Central Excise, 1999 (105) ELT 80, it was held that "fuming sulphuric acid, broadly speaking well covered the description Oleum" also. It was also observed that merely because "Oleum has been broadly mentioned in tariff heading 287.00 it does not mean that it is not a variety of sulphuric acid known by the trade name "fuming s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Cyclohexanone Oxime is reacted with Oleum. The reaction mixture is later on reacted with ammonia. Thus the process of manufacture used by M/s. G.S.F.C. is the same as described above. 5. In this connection he also expressed the views, that in the above reaction of Oleum and Oxime, Oleum has undergone chemical change and lost its identity to form an intermediate reactive compound containing 'SO3 '. This intermediate compound later on reacts with ammonia forming the caprolactam and ammonium sulphate as a bye product. Moreover, during the entire series of reactions nowhere oleum is recovered. 6. He also contended that the very concept of catalyst means any substance of which a fractionally small percentage strongly effects the rate of chemical reaction. Though the catalyst under goes on chemical change, it is often altered physically by chemically absorbed molecules of the reactants. He is of opinion that no reference is available in technical literature where is mentioned that ammonium sulphate fertilizer is manufactured by using oleum a comparatively costlier raw material as a source of supplying SO4 radical in the final product." 28. The revenue's contention is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efit of the exemption notification, which contains no support for the distinction between "main product" and "bye-product" relied upon by the revenue. Consequently, this question too has to be answered against the revenue. 31. In this case, the revenue had relied on two judgments - The State of Jharkhand and Novopan (supra). The Court has already relied on the former decision, while holding that exemption notifications are to be construed strictly. As far as Novopan is concerned, the Supreme Court ruled in that case that tariff entries in taxing statutes are to be construed in their normal or commercial parlance. This Court has found that Oleum is described as fuming sulphuric acid, and found to be such in two ruling of the Excise Tribunal. It is not as if it has leaned in favour of the assessee out of two possible interpretations, in which case such course would be impermissible. 32. As a result of the above discussion, it is held that Oleum is classifiable under TI 14 G; the petitioner's use of that product leading to manufacture of ammonium sulphate entitles it to the benefit of the two exemption notifications. A direction is accordingly issued, quashing the impugned a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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