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2012 Supreme(SC) 137
2012 (4) SCC 771
SUPREME COURT OF INDIA
H.L. DATTU & ANIL R. DAVE, JJ.
M/S. BONANZO ENGINEERING & CHEMICAL PRIVATE LIMITED - Appellant
VERSUS
COMMISSIONER OF CENTRAL EXCISE - Respondent
Civil Appeal No. 6433 of 2003
Decided on : 14-02-2012.
IMPORTANT POINT
Mere payment of excise duty on exempted goods does not make them exigible to duty.
Headnote:Interpretation of statute – Central Excise Tariff Act, 1985 – Exemption notification – Assessee paying duty on exempted goods, may by mistake – Does not mean that the goods would become exigible to duty under the Act – Secondly, the assessee not claiming refund of such duty – Not a bar on claiming benefit of the Notification No.175/86-CE dated 1.3.86. (Para 13)
(1990) 4 SCC 256; (2004) 7 SCC 642 – Relied upon
Facts of the case:
The appellant is a manufacturer of goods falling under Chapter Headings 32 and 84 of the first schedule to the Central Excise Tariff Act, 1985.
The Notification No.175/86-CE dated 1.3.1986 exempts the excisable goods of the description specified in the annexure appended to the Notification as enumerated under various Chapters of the Schedule to the Act. The assessee availing the benefit of the exemption notification has to satisfy two specific conditions for claiming exemption from payment of duty under the Act.
The assessee has filed its declaration before the adjudicating authority informing him that the assessee would be claiming exemption from payment of excise duty for a sum of Rs.20 lacs under Chapter heading 32 of the Act and upto Rs.10 lacs under Chapter heading 84 of the Act.
In the show cause notices, the assessing authority stated that the assessee has exceeded the aggregate value of Rs.30 lacs as specified in the Notification dated 1.3.1986 and, therefore, other clearances made by him would attract the levy of duty. It was also mentioned in the notice that since the assessee had paid the duty on the excess clearances of more than the value of Rs.30 lacs, the assessee is liable to pay duty with penalty.
The assessee brought to the notice of the adjudicating authority that it is a manufacturer of items which would fall under chapter heading 84 of the Act and, therefore, the Notification dated 1.3.1988 requires to be applied and therefore the excise duty paid by the assessee under the aforesaid notification cannot be added for the purpose of computing the aggregate value, while granting benefit of the Notification No.175/86-CE dated 1.3.1986.
The adjudicating authority vide Order dated 7.1.2000 while rejecting the assessee’s claim had confirmed the duty demanded and also imposed the penalty.
The Tribunal rejected the claim of the assessee.
Finding of the Court:
Impugned judgment cannot be sustained.
Result: Appeal allowed.
ORDER
1. This appeal is directed against the judgment and order passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (for short 'the Tribunal') in Appeal No.E/1352/2002-B dated 25.10.2002. By the impugned judgment and order, the Tribunal has sustained the original order passed by the Adjudicating Authority.
2. The undisputed facts are: the appellant is a manufacturer of goods falling under Chapter Headings 32 and 84 of the first schedule to the Central Excise Tariff Act, 1985 ('the Act' for short). The description of the goods under those chapters for the purpose of disposal of this appeal may not be necessary, since we are called upon in this appeal to give a purposive construction to the language employed in the Notification No.175/86-CE dated 1.3.1986 and Notification No.111/88-CE dated 1.3.1988.
3. The Notification No.175/86-CE dated 1.3.1986 exempts the excisable goods of the description specified in the annexure appended to the Notification as enumerated under various Chapters of the Schedule to the Act. The assessee availing the benefit of the exemption notification has to satisfy two specific conditions for claiming exemption from payment of duty under the Act. We need to notice Sub-clauses (a), (a)(ii) and proviso to Clause 1, and the Explanation II to the Notification. They read as under:
"(a) in the case of the first clearance of the specified goods upto an aggregate value not exceeding rupees thirty lakhs,-
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(ii) in any other case from the whole of the duty of excise leviable thereon: Provided that the aggregate value of clearances of the specified goods under Sub-clause (ii) of this clause in respect of any one Chapter of the said Schedule, shall not exceed rupees twenty lakhs [w.e.f. 1.4.1990]...."
"Explanation II For the purposes of Computing the aggregate value of clearances under this Notification, the clearances of any excisable goods, which are chargeable to nil rate of duty or which are exempted from the whole of the duty of excise leviable thereon by any other Notification [not being a notification where exemption from the whole of the duty of excise leviable thereon is granted based upon the value or quantity of clearances made in a financial year] issued under Sub-rule[1] of Rule 8 of the said rules, or under Sub-section [1] of Section 5A of the Central Excises and Salt Act, 1944 [1 of 1944], shall not be taken into account."
4. A bare perusal of Sub-clause (a) of Clause 1 of the said Notification demonstrates that the goods enumerated in the Schedule to the Notification are exempted from payment of the central excise duty for the first clearances of the specified goods upto the aggregate value not exceeding rupees thirty lacs. Clause (a)(ii) provides that such clearances should not exceed rupees twenty lacs in any one of the chapter. The Notification also say that for the purpose of computing the aggregate value of the clearances under the said Notification, the value of clearances of any excisable goods which are exempted from the whole of duty by any other Notification shall not be taken into account.
5. Having seen the first Notification, namely, the Notification dated 1.3.1986, let us also refer to the Notification No.111/88-CE dated 1.3.1988. This Notification is issued by the Central Government in exercise of its powers under sub-rule (1) of Rule 8 of the Central Excise Rules, 1944. By the said Notification, the Central Government exempts the goods of the description specified in column 3 of the table appended to the Notification, from the whole of the excise duty leviable on the said goods. It is an admitted fact that the assessee is the manufacturer of specific goods falling under Serial No. 12 of the table appended to the Notification.
6. We once again make it clear that the assessee in the instant case is a manufacturer of goods falling under both chapters 32 and 84 of the Act.
7. The assessee has filed its declaration before the adjudicating authority,
