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TMI Blog2001 (3) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption under Notification No. 1/93-C.E. dated 28-2-1993. A similar view has been taken by him in the order-in-appeal dated 24-12-1999. Para-4 of the order-in-appeal dated 6-10-1999 is extracted below :- "4. I have considered the matter. I find that it has very clearly been stated in the Rule 7A of CE Rules, 1944, that the molasses procured by the appellants are treated as if manufactured by the appellants. Since the Notification No. 1/93 CE does not debar the procurer-manufacturers from its benefit as is done in the case of inputs which are cleared by a manufacturer of final product and are treated as if manufactured by the manufacture of final products. Accordingly, I hold that the appellants are entitled to SSI exemption benefit if otherwise admissible keeping in view the value of molasses utilised in a financial year + value of other excisable goods manufactured by the appellants as also any other conditions of notification. The appeals are allowed subject to quantification of duty leviability after determination of applicability of SSI exemption notification in respect of conditions other than the one decided hereinbefore. The party be heard in person before redeterminatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the same officer, who had passed the impugned order-in-appeal, had passed orders for filing the present appeal and pleaded that on this ground alone, the appeals filed by the Revenue were not maintainable. With regard to the SDR's reliance on the Tribunal's earlier decision dated 12-01-2001, it was submitted that full and correct legal position was perhaps not placed before the Tribunal while passing orders-in-appeal nos. E/2844/2000 D, E/2845/2000 D and E/2694/2000 D. It was pleaded that when the procurer of khandsari molasses was deemed to be a manufacturer then his premises are deemed to be a factory also. Reference was made to the cross objections filed by the respondents. Reliance was placed on the following decisions:- (1) J.K. Spinning and Weaving Mills Ltd.v. Union of India - 1987 (32) E.L.T. 234 (S.C.). — A deeming provision is an admission of the non-existence of the fact deemed. The legislature is quite competent to enact a deeming provision for the purpose of assuming the existence of a fact, which does not really exist. (2) Collector of Central Excise v. Titaghar Paper Mills Co. Ltd. - 1989 (44) E.L.T. 667 (Tribunal) — Unless there were some new fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the use of the device known as a legal fiction - fictio juris - is for certain specific purposes by which the law deliberately departs from the truth of things. In the Principles of Statutory Interpretation - 3rd Edition - Chief Justice, Shri G. P. Singh has so explained the scope of legal fiction :- "In interpreting a provision creating a legal fiction, the Court is to ascertain for what purpose the fiction is created; [refer Ex Parte Walton, In re Levy, (1881) 17 Ch D 746, p 756, State of Travancore v. Shanmugha Vilas Cashewnut Factory, Quilon, AIR 1953 SC 333, pp 342, 343, State of Bombay v. Pandurang Vinayak, AIR 1953 SC 244, p 246; and after ascertaining this, the Court is to assume all those facts and consequences which are incidental or inevitable corollaries to the giving effect to the fiction, [refer East End Dwelling Co. Ltd. v. Finsbury Borough Council, (1951) 2 All ER 587, (HL) p599; State of Bombay v. Pandurang Vinayak, supra p 246; CIT, Delhi v. S. Teja Singh, AIR 1959 SC 352, p 355; Chief Inspector of Mines v. Karam Chand Thapar, AIR 1961 SC 838, p 845]. But in so construing the fiction it is not to be extended beyond the purpose for which it is created. [ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal fiction. A legal fiction pre-supposes the correctness of the state of facts on which it is based and all the consequences which flow from that state of facts have got to be worked out to their logical extent. But due regard must be had in this behalf to the purpose for which the legal fiction has been created. If the purpose of this legal fiction contained in the Explanation to Article 286(1)(a) is solely for the purpose of sub-clause (a) as expressly stated it would not be legitimate to travel beyond the scope of that purpose and read into the provision any other purpose howsoever attractive it may be. The legal fiction which was created here was only for the purpose of determining whether a particular sale was an outside sale or one which could be deemed to have taken place inside the State and that was the only scope of the provision. It would be an illegitimate extension of the purpose of the legal fiction to say that it was also created for the purpose of converting the inter-State character of the transaction into an intra-State one. This type of conversion could not have been in the contemplation of the Constitution-makers and is contrary to the express purpose for w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e charged to excise duty. Further, the khandsari producers are not required to pay any excise duty. The liability to pay duty has been put on the distilleries. The excise duty is to be paid by the distilleries on the date of receipt of khandsari molasses. Duty is to be collected on the entire quantity of molasses irrespective of the fact the alcohol manufactured by the distillery is for potable or industrial use. However, Modvat of duty paid on khandsari molasses is admissible to the event it is used for the manufacture of dutiable excisable goods." 6. The legal fiction to deem the procurer of khandsari molasses as a manufacturer was to give effect to the legislative intention to levy and collect duty at the consumption point (and not on the manufacturing point) on such khandsari molasses which were used in the manufacture of alcohol. Khandsari molasses used for manufacture of goods other than alcohol remained exempt vide Sl. No. 1 of the Table in Notification No. 4/97 CE dated 1-3-1997. No change in this context was made in the scheme of small scale industries exemption where the application of exemption continued to remain to the manufacturers and not to the procurers of khands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecified goods. Such clearances of specified goods used as inputs shall be deemed to be exempt from the whole of the duty of excise leviable thereon; (d) any clearances of strips of plastics used within the factory of production for weaving of fabrics or for manufacture of sacks or bags made of polymers of ethylene or propylene. (iv) Where a manufacturer clears the specified goods from one or more factories, the exemption in his case shall apply for the total value of clearances mentioned against each of the serial numbers in the said table and not separately for each factory. (v) Where the specified goods are cleared by one or more manufacturers from a factory the exemption shall apply for the total value of clearances mentioned against each of the serial numbers in the said Table and not separately for each manufacturer." 8. We consider that the matter has been discussed in considerable detail in that Tribunal's decision and there is no force in the arguments advanced by the respondents in this regard. 9. We again reiterate that the exemption notification No. 1/93 CE dated 28-2-1993 was a conditional exemption notification. The benefit of exemption notification could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legality or propriety of any such decision or order and may, by order, direct such Collector to apply to the Appellate Tribunal for the determination of such points arising out of the decision or order as may be specified by the Board in its order." The Tribunal had taken a view that the order of review passed by the Collector in his capacity as "Collector" was not reviewable by him on appointment as Member of the Board. In the present case, the power was exercised under the provisions of Section 35B(2) as already extracted above. We do not find any illegality in this regard. 12. The respondents were required to pay duty which they did not pay. The imposition of penalty was called for and in the facts and circumstances of these cases was justified. However, in the facts and circumstances of the case, the amount of penalty in Appeal No. E/3034/2000 D is reduced from Rs. 4,01,517/- to Rs. 2,00,000/- (Rupees Two lakhs only), and in Appeal No. E/3035/2000D from Rs. 4,00,000/- to Rs. 3,00,000/- (Rupees Three lakhs Only). As regards Appeal No. E/3077/2000D, a penalty of Rs. 50,000/- (Rupees Fifty Thousand only) was imposed when the duty liability was of Rs. l,23,555/-.No change ..... X X X X Extracts X X X X X X X X Extracts X X X X
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