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PETITIONER:

COLLECTOR OF CENTRAL EXCISE ETC.

Vs.

RESPONDENT:

THE HIMALAYAN COOPERATIVE MILK PRODUCT UNION LIMITED ETC.

DATE OF JUDGMENT: 07/11/2000

BENCH:

U.C.Banerjee, Brijesh Kumar

JUDGMENT:

BRIJESH KUMAR, J.

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Since the above noted two appeals involve a common

question for determination, as to the interpretation of a

Notification issued by the Central Government under sub-rule

(1) of Rule 8 of the Central Excise Rules, 1944, exempting

goods falling under Item No.68 of the First Schedule to the

Central Excise and Salt Act 1944, on fulfilment of certain

conditions, the appeals are being disposed of by this common

judgment. As usual in such cases, the Revenue is trying to

bring manufacturers within its net to charge it with the

excise duty whereas the manufacturer-respondents trying to

get out of it claiming benefit under the aforesaid

Notification.

2. The brief facts of the case are that the

manufacturer-respondent, Himalayan Cooperative Milk Product

Union Limited manufactures butter and skimmed milk powder

etc. in its industrial complex. For purposes of chilling

plant of Dairy Unit, the respondent seems to have installed

a plant manufacturing liquid nitrogen which item,

undisputedly falls under Item 68 of the Excise Tariff. By

means of Notification No. 105/80-C.E. dated 19.6.1980 the

excise duty payable on goods falling under Item No.68, is

exempted in respect of the first clearances of the said

goods for home consumption by or on behalf of a manufacturer

from one or more factories up to a value not exceeding

rupees thirty lakhs inter alia on the condition that the

total of the value of the capital investment made from time

to time, on the machinery installed for manufacturing said

goods is not more than rupees ten lakhs. According to the

manufacturer-respondents the total capital investment in the

plant and machinery manufacturing liquid nitrogen is less

than rupees ten lakhs, therefore the benefit of exemption

from excise duty is admissible under the Notification in

question dated 19.6.1980. 3. The Assistant Collector,

Central Excise, Siliguri Division by order dated 5.9.1983

rejected the claim of the respondents and confirmed the

demand as raised by the Superintendent of Central Excise

under Central Excise Rules, observing that the respondents

are using all the plants and machinery for purposes of

manufacturing all kinds/varieties of excisable goods falling

under different Tariff items, the total value of capital

investment of all plants and machineries, installed in the

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said factory are to be taken into account and no exemption

on investment which was more than ten lakhs was admissible.

Thus according to the excise authorities the total value of

investments in all the plants manufacturing butter and

skimmed milk powder and other dairy products as well as for

manufacturing of liquid nitrogen was to be taken into

account. According to the respondents Himalayan Cooperative

Milk Product Union Limited the value of investment on liquid

nitrogen plant which alone is relevant is much less than

rupees ten lakhs. The appeal preferred against the order of

Assistant Collector was also dismissed by the Collector

(Appeals), Central Excise, Calcutta by order dated 9.1.1984.

Both the authorities have, however, held that liquid

nitrogen itself is a finished product and falls under Tariff

Item 68. 4. The respondents preferred an appeal before the

Customs, Excise and Gold (Control) Appellate Tribunal, New

Delhi. The Appellate Tribunal by its order dated 21.1.1988

allowed the appeal holding that the respondents would be

entitled for the benefit under the Notification of

exemption. On facts though the Tribunal remanded the matter

to the original adjudicating authority for computing the

capital investment on plant and machinery referable to

liquid nitrogen and the common plant and machinery in the

same industrial complex so as to ascertain the capital

investment on generator used for the chilling water. 5. We

feel it would be better to peruse the Notification dated

19.6.1980 exempting the payment of excise duty on goods

falling under Item 68 of the Tariff. It reads as follows:

In exercise of the powers conferred by sub-rule of rule (1)

of rule 8 of the Central Excise Rules, 1944, and in

supersession of the notification of the Govt. of India in

the Ministry of Finance (Department of Revenue)

No.89/79-Central Excises, dated the 1st March 1979, the

Central Government hereby exempts goods, falling under Item

No.68 of the First Schedule to the Central Excise and Salt

Act 1944 (1 of 1944), (hereinafter referred to as the said

goods), in respect of the first clearances of the said goods

for home consumption by or on behalf of a manufacturer from

one or more factories upto a value not exceeding rupees

thirty lakhs, cleared on or after the 1st day of April in

any financial year, from the whole of the duty of excise

leviable thereon:

Provided that during the period commencing on the 19th

day of June 1980 and ending on the 31st day of March, 1981,

the value of the clearances of the said goods eligible for

exemption under this notification shall be subject to the

following conditions, namely:-

(i) The aggregate of the value of clearances eligible

for exemption contained in this notification during the

aforesaid period, and the clearances, if any, already

effected by or on behalf of a manufacturer in terms of the

exemption contained in the notification No. 89/79-Central

Excises, dated the 1st March 1979 aforesaid, during the

period commencing on the 1st day of April 1980, shall not

exceed rupees thirty lakhs; and

(ii) The value of clearances eligible for exemption

contained in this notification during the aforesaid period

commencing on the 19th day of June, 1980 and ending on the

31st day of March, 1981 shall, in no case, exceed rupees

twenty four lakhs.

Provided further than an officer not below the rank of

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an Assistant Collector of Central Excise is satisfied that

the sum total of the value of the capital investment made

from time to time on plant and machinery installed in the

industrial unit in which the said goods, under clearance,

are manufactured, is not more than rupees ten lakhs.

(Underlines by us for emphasis)

2. Where a factory producing the said goods is run at

different times during a financial year by different

manufacturers, the total value of the clearances of the said

goods from such factory eligible for exemption under this

notification in such year shall not exceed rupees thirty

lakhs.

3. Nothing contained in this notification shall apply

to a manufacturer, if the total value of the said goods

cleared, if any, for home consumption by him or on his

behalf from one or more factories in the preceding financial

year exceeded rupees thirty lakhs.

Explanation 1 While determining the sum total of the

value of the capital investment, only the face value of the

investment at the time when such investment was made shall

be taken into account, but the value of the investment made

on plant and machinery which have been removed permanently

from the industrial unit or rendered unfit for any use shall

be excluded from such determination.

Explanation II. In this notification, the

expression factory has the meaning assigned to it in

clause (m) of section 2 of the Factories Act, 1948 (63 of

1948).

Explanation III. For the purpose of computing the

value of clearances under this notification, the clearances

of the said goods which are exempted from the whole of the

duty of excise leviable thereon by any other notification

issued under sub-rule (1) of rule 8 of the Central Excise

Rules, 1944, and for the time being in force, shall not be

taken into account.

A bare perusal of the Notification quoted above shows

that the Central Government under Rule 8(1) of the Excise

Rules exempts goods in respect of first clearance for home

consumption by or on behalf of the manufacturer from one or

more factories upto a value not exceeding rupees thirty

lakhs. The exemption would however be allowable on

fulfilment of a condition as contained in the proviso to

clause (ii) of the Notification which says that an officer

not below the rank of an Assistant Collector of Central

Excise is to be satisfied that the sum total of the value of

the capital investment made on the plant and machinery

installed in the industrial unit manufacturing said goods

under clearance is not more than rupees ten lakhs. On

perusal of the proviso under consideration, it would be

clear that it does not refer to any other goods under

clearance except the goods falling under Item 68 of the

First Schedule to the Central Excise and Salt Act, 1944. In

the beginning itself the Notification says that the goods

falling under Item 68 are to be referred to, in the

Notification, as `said goods. According to own findings of

the Assistant Collector, liquid nitrogen is itself a

finished product and falls under Tariff Item No.68. In that

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view of the matter the question of taking into account the

value of the capital investment made on plants and machinery

manufacturing goods other than covered under Item No.68 does

not arise. We find no force in the submissions made on

behalf of the appellants that value of all plants and

machinery manufacturing butter and skimmed milk powder etc.

has also to be added up so as to find out as to whether

total value of the capital investment in the plant and

machinery is rupees ten lakhs or more. In our view the

value of the capital investment has to be in respect of the

plant and machinery manufacturing the said goods viz.

goods covered under Item No.68 of the Tariff, clearances of

which alone is taken into account in exempting from payment

of excise duty under the Notification in question. The said

goods in the present case is only liquid nitrogen. Thus the

value of investment in the plants and machinery

manufacturing other goods not covered under Item 68 has no

relevance nor it is to be taken into account. 6. The

Tribunal while allowing the appeal followed a decision of

Bombay High Court reported in 1984 (16) E.L.T. 30 (Bom.)

Devidayal Electronics & Wires Ltd. and another versus Union

of India and another. The similar notification in respect

of an earlier year was under consideration before the Court.

It had been noticed that two words have been used in the

Notification namely, the `factory and `industrial unit.

The two expressions would be presumed to have been used for

different meaning. It was held that industrial unit would

mean something other than the factory, which would be a

separate isolate part of the plant which is exclusively used

for manufacture of goods for which exemption is claimed.

Learned counsel for the appellants tried to distinguish the

case on facts. We, however, find that in principle what has

been held in Devidayal (supra) as followed by the Tribunal,

cannot be said to be an incorrect view. The factual

deviation would be a matter on facts of each case. The

other case which the Tribunal has referred to is reported in

1987 (27) E.L.T. 273 (A.P.) Golden Press versus Deputy

Collector of Central Excise, Hyderabad and Another. In this

case a notice was issued on the manufacturer of cartons as

to why penalty be not imposed since the goods manufactured

were removed without payment of duty. It was pleaded that

cartons were exempted under a notification exempting all

products of printing industry. The Court, however, held

that cartons though may be printed, cannot be held to be

product of printing industry. They will be relatable to

packaging industry. Hence, the benefit, as pleaded, was not

admissible. In so far as the other arguments raised about

the value of the investment made for manufacture of printed

cartons, it was held that cost of cutting machines etc.

could not be excluded which according to the manufacturer

was not used for printed cartons. The argument that the

value of the investment in the plant and machinery

manufacturing a particular item under a separate tariff

would alone be taken into consideration was not accepted.

The language of the exemption notification as involved in

that case was quoted which was to the effect: The sum

total of the value of the capital investment made from time

to time on plant and machinery installed in the industrial

unit in which the goods under clearance are manufactured, is

not more than rupees ten lakhs. (As quoted in Para 22 (b)

of the judgment).

It is then observed that according to the said

notification total value of the entire machinery in the

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industrial unit should be taken into account as there was no

occasion for allocating the machinery between various goods

manufactured therein and by way of an example, it was

observed that it may create complications where a factory

manufacturing goods falling under more than one tariff item

but has only one generator of power plant, so in such cases

in what manner generator or power plant was to be allocated

between two items. The plea raised was negatived and it was

held that total value of the entire machinery in the

industrial unit should be taken into account. At this

stage, it would be appropriate to point out the difference

in the language used in two notifications. We find that in

the Notification dated 19.6.1980, with which we are

presently concerned, the proviso to clause (ii) of the

Notification says the capital investment made from time

to time on plant and machinery installed in the industrial

unit in which the said goods under clearance are

manufactured.. The expression said goods is not used in

the Notification interpreted in the case of Golden Press

(supra). The said goods signifies or identifies the goods

which are covered under Item 68 in respect of which

exemption has been granted. But the word said is not used

in the Notification under consideration in the case of

Golden Press (supra) as indicated above says industrial

unit in which the goods under clearance are

manufactured. The goods have not been specified by

using the expression said goods. In the Notification

dated 19.6.1980, as already indicated earlier, the goods

falling under Item 68 are to be referred as said goods.

Therefore, in our view it will not be possible to take into

consideration the value of investment of all the plants and

machinery manufacturing different items viz. goods other

than the said goods.

7. In our view the Tribunal rightly preferred the

view taken in the case of Devidayal (supra). The factual

hurdles like a common generator may be in use by different

units in the factory complex as indicated in the case of

Golden Press (supra) can well be worked out by devising

proper method while apportioning the value of different

plants proportionately. In no way such hurdle, as posed,

would change the meaning of a Notification which on the face

of it and by the plain language used therein has unambiguous

and clear meaning. 8. Such Notifications by which

exemption or other benefits are provided by the Government

in exercise of its statutory power, normally have some

purpose and policy decision behind it. Such benefits are

meant to be provided to the investors and manufacturers.

Therefore, such purpose is not to be defeated nor those who

may be entitled for it are to be deprived by interpreting

the notification which may give it some meaning other than

what is clearly and plainly flowing from it. 9. 9. In

view of the discussion held above, we find no merit in the

appeals and they are hereby dismissed. No order as to

costs.