IMPORTANT POINT
Where exemption notification stated that if capital investment on planted machinery for manufacture of such goods does not exceed Rs. 10 lakhs, goods manufacture would be exempt from excise duty, department cannot take into account value of plant and machinery other than such goods for calculation of value capital for purposes of granting exemption.

Headnote:Central Excise and Salt Act, 1944-Item No. 68, First Schedule-Exemption Notification 105/80-CE dated 19.6.1980-Nitrogen-Respondent manufacturer of butter and skimmed milk products-Plant manufacturing nitrogen installed for purpose of chilling-Nitrogen falls under Item 68, First Schedule-Notification granting exemption in respect of first clearance for home consumption provided total capital investment on machinery installed for manufacturing said goods is not more than Rs. 10 lakhs-Department taking into account capital investment of all plants and machineries installed in factory and rejecting claim for exemption on ground capital investment was more than Rs. 10 lakhs-Not justified-Investment on Nitrogen plant alone relevant-"Said goods" is only nitrogen and cannot include all other goods manufactured-Exemption cannot be denied since capital investment on plant and machinery for manufacture was less than Rs. 10 lakhs.
On perusal of the proviso to notification 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 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. The "said goods" signifies or identifies the goods which are covered under Item 68 in respect of which exemption has been granted. 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." 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 itsome meaning other than what is clearly an plainly flowing from it. (Paras 5, 6 & 8)

JUDGMENT

Brijesh Kumar, J.-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 upto 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 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 Co-operative 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 excise of the powers conferred by sub-rule (1) o

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2000 Supreme(SC) 1746

Cases Referred (1)