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SUPREME COURT OF INDIA
B.P.Jeevan Reddy : K.S.Paripoornan : S.C.Sen
Novopan India Limited, Hyderabad
Versus
Collector Of Central Excise And Customs, Hyderabad
Case No. : 3556 of 1984
Date of Decision : 9/14/94
Advocates Appeared: Bajpai A.B. : Chari T.V.S.N. : Ganguli A.K. : Rao C.V.Subba : Sasiprabhu R.
central Excises and Salt Act, 1944 – Constitution of India - Article 142 - Recovery of the demand – Claim of compensation - Against the judgment - Appellant showed cause whereupon Collector dropped the proceedings - He held that MFPBs fell under Tariff Item 68 and not under Tariff Item 16-B - On this occasion, however appellant questioned order of Collector by filing a revision before the central government wherein he put forward a composite claim - According to it MFPBs were no doubt classifiable under Tariff Item 16-B but at the same time, they were entitled to the benefit of the Exemption Notification aforesaid - Idea evidently was to obtain total exemption from tax in this manner. The tribunal examined the said claim but rejected it - Tribunal agreed with Collector that MFPBs were properly classifiable and dutiable under Tariff Item – Held, Court are however of opinion that on principle decision of this court in Mangalore Chemicals and in Union of India v. Wood Papers referred to therein represents the correct view of law - Principle that in case of ambiguity, a taxing statute should be construed in of assuming that the said principle is good and sound does not apply to the construction of an exception or an exempting provision; they have to be construed strictly - A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Mangalore Chemicals and other decisions, viz., each such exception/exemption increases the tax burden on other members of the community correspondingly. Once, of course, the provision is found applicable to him, full effect must be given to it. As observed by a Constitution bench of this Court in Dave that such a notification has to be interpreted in the light of the words employed by it and not on any other basis - This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, plain terms of the exemption - IN facts and circumstances of this particular case court direct under Article 142 of Constitution that recovery of demand which is to tune of nearly a of rupees shall remain stayed on a condition that the appellant deposits 50% of the demand within three months from today and furnishes the bank guarantee for the balance within that time - learned counsel for the appellant states that the appellant has already furnished bank guarantee for much larger amount. If that be so, existing bank guarantee may be cancelled and a fresh bank guarantee to cover remaining demand shall be furnished - Bank guarantee shall, however, be kept renewed from time to time till disposal of this appeal - Appellant will pay interest demand in the event of appeal being dismissed - If appeal is allowed amount deposited by appellant shall be refunded with the same rate of interest – Appeal dismissal
Judgment
B.P. JEEVAN REDDY, J.
(1) THIS appeal is preferred against the judgment and order of the Customs, Excise and Gold (Control) Appellate tribunal, New Delhi dismissing the appeal preferred by the appellant-manufacturer.
(2) THE appellant is engaged in the manufacture of particle boards. It commenced the production in the year 1979. The first clearances were made in March of that year. The appellant sought to take advantage of the Exemption Notification No. 55 of 1979 issued by the central government under Rule 8(1 of the central Excise Rules, 1944. This notification exempted "plywood and boards specified in column (2 of the table hereto annexed and falling under Item 16-B of the First Schedule to the central Excises and Salt Act, 1944 (1 of 1944 from so much of the duty of excise leviable thereon as is in excess of the duty specified against the corresponding entry in column (3 of the said table." The table appended to the said notification reads as follows: "TABLE
S.No.
Description
Rate of Duty
(1)
(2)
(3)
1.
Commercial plywood
Twenty percent ad valorem.
2.
Batten boards and block boards
Twenty per cent ad
(including flush doors) having both
valorem.
faces of commercial plywood and
veneered shocks and panels made up of
strips of woods glued between two
outer veneers.
3.
Insulation boards and hard boards.
Ten per cent ad
valorem.
4.
Marine plywood and aircraft plywood
Ten per cent ad
valorem.
5.
Veneered particle boards excluding
Twenty per cent ad
particle boards with decorative veneers
valorem
on one or both faces.
6.
Unveneered particle boards.
Nil
7.
(Omitted as unnecessary)"
(3) THE appellants case was that the particle boards manufactured by it are "unveneered particle boards" within the meaning of Item 6 of the aforesaid table and, therefore, totally exempt from duty. This case was accepted by the department. A few months later, the appellant started manufacturing what are described as "melamine faced particle boards". The appellant claimed the benefit of the aforesaid exemption notification with respect to melamine faced particle boards as well, to which the authorities did not agree. According to them, the product fell and was dutiable under Tariff Item 68. The appellant accepted the said position and accordingly a classification list was filed and approved on 9/1/1980. On 17/6/1980, the Collector of central Excise issued a notice under Section 35-A of the Act proposing to revise the order of the Assistant Collector dated 9/1/1980. According to him, the melamine faced g particle boards (MFPBs) were classifiable under Tariff Item 16-B but were not entitled to the benefit of exemption provided by the Notification No. 55 of 1979 aforesaid with the result that the said boards became liable to a duty higher than the one prescribed under Tariff Item 68. The appellant showed cause whereupon the Collector dropped the proceedings. He held that the MFPBs fell under Tariff Item 68 and not under Tariff Item 16-B. On this occasion, however, the appellant questioned the order of the Collector by filing a revision before the central government wherein he put forward a composite claim. According to it, MFPBs were no doubt classifiable under Tariff Item 16-B but at the same time, they were entitled to the benefit of the Exemption Notification No. 55 of 1979 aforesaid. The idea evidently was to obtain total exemption from tax in this manner. The tribunal examined the said claim but rejected it. The tribunal agreed with the Collector that MFPBs were properly classifiable and dutiable under Tariff Item 68.
(4) THE short question in this appeal is whether MFPBs can be called "unveneered particle boards" within the meaning of Item 6 of the table appended to Notification No. 55 of 1979? The process of manufacture of particle boards is set out in the order of the tribunal in the following words:
"THE manner of manufacture of particle boards by the petitioner is as follows: (1 Wood is recei
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