2020 Supreme(SC) 251

SUPREME COURT OF INDIA
S.A. BOBDE, CJI., B.R. GAVAI, SURYA KANT, J.
Commissioner of Central Excise, Nagpur – Appellant
Versus
M/s Universal Ferro & Allied Chemicals Ltd. & Anr. – Respondent
Civil Appeal Nos. 848-852 of 2009
Decided On : 06-03-2020

IMPORTANT POINTS
Narrower scope of term ‘sale’ as found in the Sale of Goods Act, 1930 cannot be applied in a case under Central Excise Act, 1944.
When goods are produced and manufactured by a 100% export-oriented unit wholly from the raw materials produced or manufactured in India and the goods have been allowed to be sold in India in accordance with the provisions of paragraph 9.9(b) of the EXIM Policy, the EOU would be entitled to exemption.
One provision in a statute should not be interpreted in such a manner as to render another provision otiose.

Headnote:

(a) Central Excise Act, 1944 - Section 2(h) - Sale and purchase - Manganese Ore transferred by TISCO to UFAC for processing and converting it into Silicon Manganese for a valuable consideration - Covered by definition of sale and purchase - Narrower scope of term ‘sale’ as found in the Sale of Goods Act, 1930 cannot be applied in the present case. (Para 20, 23)

(b) EXIM Policy - Para 9.9 and 9.17 - Paragraph 9.9(b) and 9.17(b) of the EXIM Policy operate in totally different fields - Under paragraph 9.9 (b), an EOU is entitled to sell upto 50% of the FOB value of exports to DTA subject to payment of applicable duties and fulfilment of minimum NFEP - Under paragraph 9.17(b), an EOU is entitled to undertake job-work for export, on behalf of DTA units, with the permission of Assistant Commissioner of Customs, provided the goods are exported direct from the EOU/EPZ units. (Para 30)

(c) EXIM Policy - Para 9.17 r/w Circulars dated 22.5.2000 and 6.5.2003 - UFAC was entitled to carry out the job-work on behalf of TISCO on payment of duty. (Para 38)

(d) Central Excise Act, 1944 - Section 3(1) and 5A - Interpretation of Section 3(1) and proviso to section 5A(1) that it would disentitle Central Government to grant any exemption to an EOU when it brings the goods to any other place in India (i.e. DTA) and the duty that would be leviable would be as if the said goods were imported in India rejected - Such interpretation would render the words “unless specifically provided in such notification” in Section 5A(1) otiose - Reading harmoniously these provisions would mean that an EOU bringing excisable goods to any other place in India would not be entitled for a general exemption notification unless it is so specifically provided in such a notification - Instantly goods are produced and manufactured by UFAC, an 100% export-oriented unit; secondly they are manufactured wholly from the raw materials produced or manufactured in India and, thirdly, they have been allowed to be sold in India in accordance with the provisions of paragraph 9.9(b) of the EXIM Policy - UFAC entitled to exemption. (Para 45, 46, 48, 52)

(e) Interpretation of statute - Section 5A, Central excise Act, 1944 and exemption notification - Repugnancy - There is no conflict between the two. (Para 55)

Facts of the case:

The Central Intelligence Unit of the Central Excise Headquarters visited the unit of UFAC on 19.9.2001 on getting information from the Central Excise Audit party that UFAC being an EOU was indulging in the job-work activity of conversion of raw material supplied by M/s Tata Iron & Steel Company Ltd., Jamshedpur. In the view of the Revenue, the same was not allowed in terms of EXIM Policy of 1997-2002.

The Commissioner Excise, confirmed the demand for Rs.11,56,08,497/- along with interest. He also imposed penalty of Rs.50 lakhs on UFAC. He further held, that the goods i.e. 15792.85 MTs of Silicon Manganese valued at Rs.32,31,30,000/- were liable for confiscation. However, since the said goods were not available for confiscation, redemption fine of Rs.50 lakhs in lieu of confiscation was imposed. Two more similar orders confirming demand as raised under subsequent show cause notices were also passed. In the second order being Order-in-Original, personal penalty of Rs. 5 lakh was also imposed on the Chairman of UFAC.

The demand orders against UFAC were reversed by the CESTAT. Also, the CESTAT dismissed the Revenue’s Appeal No. E/1607/2006, referring to its order and judgment in UFAC’s appeal.

Finding of the Court:

There is no error in impugned judgment.

Result: Appeals dismissed.