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TMI Blog2023 (10) TMI 1083X X X X Extracts X X X X X X X X Extracts X X X X ..... ates in respect of other entries, it is specifically mentioned who has to manufacture and where to be utilized. The entries at column Nos. 4 to 7 indicate that certain specified goods are to be manufactured by M/s. HAL or other mentioned units including where they are to be used. In respect of entry No. 16 for items Pistol, Rifle and SLR falling under Chapter 93, the conditions specified include that the goods are to be manufactured by Bharat Dynamics Limited, Hyderabad and before clearance of the said goods, a certificate granting of exemption from the Deputy Secretary of Ministry of Home Affairs is required to be submitted. Whereas in the instant case there is no mention in the impugned Notification regarding who is competent to issue the above duty exemption certificate - it is opined that the Notification is deficient to this extent. It is not known how the practice of issuance of these exemption certificates by the officials of HAL came into practice. In the case of THE COMMISSIONER OF CENTRAL EXCISE BENGALURU-V VERSUS M/S. DATASOL INNOVATIVE LABS [ 2017 (2) TMI 1171 - KARNATAKA HIGH COURT] had held a similar issue in favor of assessee. Though the Department filed appeal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reflected in their ER-1 returns. 2.2 As the duty exemption under Notification No. 63/1995-CE dated 16.03.1995 is available only for the goods manufactured by HAL and other specified units and not for suppliers to HAL, a Show Cause Notice dated 12.09.2013 came to be issued for wrong availment of the exemption Notification benefit invoking extended period. After due process of adjudication, confirming the demand, interest and imposition of penalty vide Order-in-Original No. 4/2014 (CE) dated 25.03.2014 issued by the Commissioner of Central Excise, Chennai, the appellant came in appeal before this forum. 3.1 The main issue that is involved in this appeal is whether the appellant is eligible for the duty exemption benefit of Notification No. 63/1995-CE dated 16.03.1995 for their clearances of Armoured Panels and Stretcher Assembly to HAL, Bangalore. 3.2 Notification No. 63/1995-CE dated 16.03.1995 reads as follows:- Goods for defence purposes or other projects In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excises and Salt Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 7101.39 If manufactured in a mine. 6. Bolts, nuts and screws falling under sub-heading Nos. 7318.00, 7415.32, 7616.10 or 7907.00 If manufactured by the Hindustan Aeronautics Limited, and used within their units for the manufacture of aircrafts or as spare parts of aircrafts. 7. Billets, rods and sheets, of oxygen-free copper or beryllium copper falling under Chapter 74 If manufactured by the Defence Metallurgical Research Laboratory, Hyderabad out of copper supplied by the Hindustan Copper Limited. 8. Tools, jigs and fixtures falling under Chapter 82 If manufactured by Tool Rooms or Institutions specified below :- (i) Central Tool Room, Ludhiana. (ii) Central Tool Room and Training Centre, Calcutta. (iii) Central Institute of Tool Design, Hyderabad (iv) Institute for Designing of Electrical Measuring Instruments, Bombay (v) Central Institute of Hand Tools, Jallandhar (vi) Tool Room and Training Centre, Delhi (vii) Government Tool Ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olice Forces of the States or the Union Territories; and (ii) before the clearance of the said goods, in each case, an officer not below the rank of a Deputy Secretary in the Ministry of Home Affairs recommends grant of this exemption indicating the full description and quantity of the said goods to be supplied to the said force. Explanation. - For the purposes of this notification, the expression, - (i) prison means any jail or place used permanently or temporarily under the general or special orders of a State Government for the detention of prisoners and includes, - (a) any place which has been declared by a State Government by general or special order to be a subsidiary jail; and (b) any reformatory, borstal institution or other insitution of a like nature; (ii) mine has the meaning assigned to it in clause (j) of section 2 of the Mines Act, 1952 (35 of 1952); (iii) narcotic drugs and psychotropic substance shall have the meanings respectively assigned to them as defined in clause (xiv) and clause (xxiii) of section 2 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985); (iv) kits for testin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e would, apparently, amount to extending the scope of the Exemption Notification No. 63/95-C.E. As already seen above, it is not mere supply to the Ministry of Defence, but such supply should be for official purposes. Secondly, the exemption is available in relation to the finished goods and not in relation to the inputs supplied to the manufacturer of the finished goods. 3.5 In this connection, Board s Circular F.No. 201/22/2006 CX.6 dated 23.06.2006 was referred to which has clarified that if any goods are manufactured by any ancillary units or sub-contractors on job work basis, the Notification benefit would be available. As in this case, the appellant has manufactured the goods independently and have not complied with the job work procedure, the benefit of Notification was sought to be denied. 4.1 The Ld. Advocate Shri S. Durairaj representing the appellant has submitted that the order of the Tribunal Delhi in the case of National Engineering Industries Ltd. (supra) was reversed by the Hon ble Rajasthan High Court wherein the Hon ble High Court has interpreted the Circular dated 23.06.2006 in favor of the assessee and held that the assessee is eligible for the benefit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of duty. 5.1 The Ld. Authorised Representative Shri M. Ambe representing the Department has affirmed the findings of the impugned order. He has submitted that the Board s Circular F.No. 201/22/2006 CX.6 dated 23.06.2006 referred to by the Hon ble Rajasthan High Court is not applicable in the instant case as one of the units mentioned in the list of the Notification instead of supplying goods directly to the Ministry of Defence made their supplies to another unit mentioned in the said list. However, both these units are covered under the said Notification and goods are ultimately supplied for use by Ministry of Defence. Whereas, in the instant case, the appellant has supplied the goods to HAL which is a specified unit but not the appellant. 5.2 He has argued that the clarification only answers that if both the units are covered under the said notification and if the goods manufactured by the first unit that is specified in the notification list are supplied to the second unit specified in the notification list (Eg. M/s. BEML to M/s. HAL, M/s. BEL to M/s. HAL and so on), though one unit specified in the notification list cannot be a job worker to another unit specified in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unit. 5.6 Finally, he has justified invocation of extended period and prayed for dismissal of appeal. 6. We have considered the submissions made by both sides and perused the records as available in this appeal. 7.1 The facts indicate that the appellants have cleared Armour Panels and Stretcher Assembly which are parts of helicopter to M/s. Hindustan Aeronautics Ltd., based on the duty exemption certificates provided by M/s. HAL availing exemption benefit under Notification No. 63/1995-CE dated 16.03.1995. For clarity, a copy of the excise duty exemption certificate issued by HAL Helicopter Division, Bangalore to the appellants is extracted below:- 7.2 This exemption certificate clearly indicates (i) name and address of the supplier (ii) description of the goods to be manufactured and supplied (iii) the items that are required for the production of Advanced Light Helicopter (ALH) against the order of Ministry of Defence, Government of India, and, (iv) these goods are exempted from payment of excise duty leviable under Notification No. 63/1995-CE dated 16.03.1995. 7.3 A perusal of the exemption certificate will make it clear that, M/s. HAL, Bangalore, one of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 16.03.1995 from Central Excise duty on the goods supplied to Bharat Earth Movers Ltd. (BEML) for further supplying to Ministry of Defence and is liable for payment of Central Excise duty amounting to Rs.22,49,354/- such conclusion is legally sustainable in the eye of law? 7.4.2 Referring to the Board s Circular F.No. 201/22/2006-Cx.6 dated 23.06.2006 as extracted below, the Hon ble High Court of Rajasthan in the case of National Engineering Ind. Ltd (supra) has held as follows:- 4. Taking into consideration the notification of 2006 which squarely covered the case of the appellant and in view of certificate issued by competent authority, the appellant is entitled for the benefit. 7.4.3 Thus, the Hon ble High Court of Rajasthan has reversed the decision of the Tribunal in the case of National Engineering Ind. Ltd. (supra) which was relied upon for denial of the exemption benefit of the Notification (supra) by the adjudicating authority. 7.5.1 Further in the case of Datasol Innovative Labs Vs. Commissioner of Central Excise, Bangalore, the Tribunal vide F.O. dated 08.02.2017 had held a similar issue in favor of assessee. Though the Department filed appeal against s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts are added up to 7 whereas, in the Notification dated 1-3-1986, the number of units were only 4. It is apparent that there is no change in the language used in both the notifications for the purpose of grant of exemption. Not only that but for the very language used, in the earlier notification dated 1-3-1986, the interpretation thereafter is already made by the Central Board of [Excise Customs] vide Circular dated 27-6-1992 referred to hereinabove, that when the goods are manufactured by other ancillary units and other contractors for this purpose are sent to the units for which the exemption is available, there is no reason for denying them the benefit of exemption. Under these circumstances, the contention raised that the intention to evade duty cannot be accepted. 13 . In our view, if there was change in the language of the Notification dated 16-3-1995, possibly the matter m ay stand on a different footing and different consideration. But when the very language is kept intact and there is only addition in the number of units, it cannot be said that the clarification of the Central Board of [Excise Customs], dated 27-6-1992 referred to hereinabove shall be wiped of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion must be construed having regard to the purpose and object it seeks to achieve. The Government sought for increase in industrial development in the State. Such a benevolent act on the part of the State, unless there exists any statutory interdict, should be given full effect. (See Vadilal Chemicals Ltd. v. State of A.P. - (2005) 6 SCC 292). 20 . Likewise, even under the Customs Act, this Court in Commr. of Customs (Preventive) v. M. Ambalal Co. - (2011) 2 SCC 74 = 2010 (260) E.L.T. 487 (S.C.) made a clear distinction between exemptions which are to be strictly interpreted as opposed to beneficial exemptions having as their purpose - encouragement or promotion of certain activities. This case felicitously put the law thus follows : 16. It is settled law that the notification has to be read as a whole. If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification. The rule regarding exemptions is that exemptions should generally be strictly interpreted but beneficial exemptions having their purpose as encouragement or promotion of certain activities should be liberally interpreted. This comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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