Commissioner of Central Excise, Vadodara vs Indian Petrochemicals Corpn. Ltd. & Anr.

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 3623-3624 OF 2005

COMMISSIONER OF CENTRAL EXCISE, VADODARA ... Appellant

VERSUS

INDIAN PETROCHEMICALS CORPN.LTD.& ANR. ... Respondents

WITH

CIVIL APPEAL NO. 1034 OF 2007

CIVIL APPEAL NOS. 262-263 OF 2010

CIVIL APPEAL NO. 4264 OF 2011

J U D G M E N T

A. K. SIKRI, J.

These batch of appeals pertain to Indian Petrochemical

Corporation Limited (in short 'IPCL') and in the fourth

appeal, the assessee is Indian Oil Corporation.

IPCL is engaged in the manufacture of various types of

petrochemicals, falling under Chapter 27 and 29 of Central

Excise Tariff Act, 1985. It holds valid Central Excise

registration under Rule 174 of the Central Excise Rules Signature Not Verified Digitally signed by Gulshan Kumar Arora Date: 2015.06.02 17:02:32 IST Reason: 1944. One of the products which is manufactured by IPCL is

C4 Raffinate. On this, the IPCL has been paying 8 per cent

C.A. Nos. 3623-3624/2005 etc. 1 duty, as it has been claiming the benefit of Notification

No. 6/2000 dated 01.03.2000. We may mention that the normal

rate of duty of the aforesaid product is 16 per cent.

However, by virtue of the aforesaid notification, in respect

of certain products duty is halved. The question arose as

to whether the IPCL is entitled to the benefit of the

aforesaid notification and in that context, the issue of

classification of this product fell for consideration. The

IPCL has classified the product under chapter sub-heading

2711.19. Chapter Heading Entry 27.11 reads as under: -

27.11 Petroleum gases and other gaseous hydrocarbons

- Liquefied :

2711.11 - Natural gas 2711.12 - Ethylene, propylene, butylene and butadiene 2711.19 - Other

--In gaseous state:

2711.21 - Natural gas 2711.29 - Other

As per the Department, the aforesaid product should

have been classified under Chapter Heading 2711.12 as

butylene. On that basis, show cause notice was issued

demanding excise duty at the rate of 16 per cent ad valorem

and asking the IPCL to pay the differential duty as duty

paid by IPCL was at the rate of 8 per cent. The IPCL

replied to the show cause notice sticking to its position

that the as per the aforesaid exemption Notification, 50 per

cent of the duty of excise specified in the First Schedule,

was payable.

C.A. Nos. 3623-3624/2005 etc. 2 In the Order-in-Original passed by the Commissioner,

the demand of duty as claimed in the show cause notice was

confirmed rejecting the contention of the IPCL. However, in

an appeal filed before the Customs, Excise and Service Tax

Appellate Tribunal (hereinafter referred to as 'CESTAT'),

IPCL has emerged successful inasmuch as its contention is

accepted.

On going through the order of the Commissioner as well

as the CESTAT, we find that both the authorities below have

entered into the various facets of the dispute and gone into

the entire gamut of controversy. Many of the findings of

the Commissioner in his order have not found favour with the

CESTAT in the impugned decision rendered by it. We have

heard learned counsel for the parties on all the aspects and

have gone through the orders minutely through which we were

taken by the learned counsel appearing for the parties. We

are, however, of the opinion that it is not necessary to

even advert to all those aspects of the matter inasmuch as

the fulcrum of the dispute pertains to the interpretation

which is to be accorded to the language used in Notification

No. 6/2000 which confers, as mentioned above, partial

exemption. It reads as under: -

C.A. Nos. 3623-3624/2005 etc. 3

Chapter Description of Rate under Rate Condition or goods the First under No. heading Schedule the No. or Second sub-headi Schedule ng No. 27.11 Liquefied Fifty per - -

Petroleum Gases cent of the and other duty of gaseous excise hydrocarbons specified in other than the First natural gas, Schedule ethylene, propylene, butylene and butadiene

The basic contention of Mr. Yashank Adhyaru, learned

senior counsel appearing for the appellant, was that the

aforesaid notification exempts liquified petroleum gases

(LPG) as well as other gaseous hydro carbons and excludes

specifically natural gases, ethylene, propylene, butylene

and butadiene. On the other hand, learned counsel appearing

for the respondents have argued that the words “other than”

qualify only natural gases and according to him, if read in

this manner, the products which would fall within the

exempted category for payment of concessional rate of excise

duty would be LPG, other gaseous hydro carbons excluding

natural gas, ethylene, propylene, butylene and butadiene.

We find that the construction as sought to be given by

IPCL appears to be correct. This aspect has been dealt with

by the CESTAT in para 5.5 of the judgment and since we are

C.A. Nos. 3623-3624/2005 etc. 4 agreeing with the said interpretation given by the Tribunal,

we reproduce hereunder the said para in its entirety: -

“5.5 As regards the eligibility to the Notification Sr. No. 24 thereof, it is found -

(i) Sl. No. 24 of Notification NO. 6/2000-C.E., dated 1-3-2000 confers partial exemption to “Liquefied Petroleum gases and other gaseous hydrocarbons other than natural gas, ethylene, propylene, butylene and butadiene”. (emphasis supplied) In the aforesaid Sl. No. 24 of Notification No. 5/2000, there is no comma after the words 'gaseous hydrocarbons'. Therefore, the expression “other than” appearing after the words “gaseous hydro carbons” and before the words “natural gas” would qualify only the words “natural gas”. In other words, the following goods are covered by the aforesaid Sl. Nos.

(i) Liquefied petroleum gas and other gaseous hydrocarbons with exclusion of natural gas,

(ii) Ethylene,

(iii)Propylene,

(iv) Butylene and

(v) Butadiene.

The above submissions is reinforced by a comparison with Sl. No. 30 of Notification No. 75/84-C.E., dated 3-3-1984 as introduced by Notification No. 120/86-C.E., dated 1-3-1986 which stood in the manner, dining the entire period from 1-3-1986 to 28-2-1994.

F.5 The said Sl. No. 30 of Notification No. 75/84 reads thus:

“Liquefied petroleum gases and other gaseous hydrocarbons, other than natural gas, ethylene, propylene, butylene and butadiene”.

as in the above Notification No. 75/84, there was a comma after gaseous hydrocarbons, unlike present Notification No. 6/2000, Sl. No. 24 thereof.

Therefore, even if C-4 Raffinate is treated as Butylene Sl. No. 24 of Notification No. 6/2000-C.E., would be applicable, specification of butylenes in the said Sl. No. 24 is not for the purpose of its exclusion, but for the purpose of its specific enumeration and inclusion.

(ii) Even if the description of goods against Sl.

C.A. Nos. 3623-3624/2005 etc. 5 No. 24 of Notification No. 6/2000-C.E., is interpreted to mean that ethylene, propylene, butylenes and butadiene are also excluded, then C-4 Raffinate is not excluded since it is not exclusively a or any 'butylene' but is a mix of 'butylenes'. In view of the findings arrived in paras supra. However, since C-4 Raffinate is liquefied petroleum gas it is covered by the description of the “Liquefied Petroleum gases and other gaseous hydrocarbons” under Sl. No. 24 of the above notification, Raffinate, even if it is assumed as butylene is not excluded from coverage of Sl. No. 24 of the Notification No. 6/2000, but would stand included in the first part of the Notification as liquefied petroleum gases.

(iii) The order of the Commissioner on the question of availability of exemption Notification No. 6/2000-C.E., dated 1-3-2000 and No. 3/2001-C.E., dated 1-3-2001 is purely based on the intention of the legislature on the basis of the Finance Minister's speech. However, it is well settled legal position that the notification has to be interpreted on the basis of plain meaning of words and intention behind the notification cannot be a basis to interpret the notification. Commissioner has not refuted any of the submissions made by the appellants, on the interpretation of the notification. If the interpretation of the department on Sr. No. 24 of Notification No. 6/2000-C.E., dated 1-3-2000 and Sr. No. 34 of Notification No. 3/2001-C.E., dated 1-3-2001 is accepted then the simple way of giving the description of the goods under the said Sr. Nos. of the Notifications, would have been “goods falling under sub-heading 2711.19”, if the Government wanted to extend the concessional rate of duty in respect of liquefied petroleum gas and other hydrocarbons except natural gas. Hence the interpretation as adopted by the Commissioner based on the intention of the legislature on the basis of Finance Minister's speech is wholly incorrect.”

Insofar as Indian Oil Corporation is concerned, the

only difference is that it is manufacturing a product known

as propylene. Since it is also one of the products which

qualifies for partial exemption from payment of duty by

Notification No. 6/2000 dated 01.03.2000, result in both the

C.A. Nos. 3623-3624/2005 etc. 6 cases would be the same.

Consequently, all these appeals preferred by the

Department are hereby dismissed.

........................., J.

[ A.K. SIKRI ]

........................., J.

[ ROHINTON FALI NARIMAN ]

New Delhi;

May 12, 2015.

C.A. Nos. 3623-3624/2005 etc. 7 ITEM NO.101 COURT NO.12 SECTION III

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Civil Appeal No(s). 3623-3624/2005

COMMISSIONER OF CENTRAL EXCISE,VADODARA Appellant(s)

VERSUS

INDIAN PETROCHEMICALS CORPN.LTD.& ANR. Respondent(s)

WITH

C.A. No. 1034/2007 (With Office Report)

C.A. No. 262-263/2010

(With appln.(s) for stay and Office Report)

C.A. No. 4264/2011

Date : 12/05/2015 These appeals were called on for hearing today.

CORAM :

HON'BLE MR. JUSTICE A.K. SIKRI HON'BLE MR. JUSTICE ROHINTON FALI NARIMAN

For Appellant(s) Mr. Yashank Adhyaru, Sr. Adv.

Mr. K. Radhakrishnan, Adv.

Ms. Nisha Bagchi, Adv.

Mr. Rupesh Kumar, Adv.

Mr. Arijit Prasad, Adv.

Ms. Sujeeta Srivastava, Adv.

Ms. Pooja Sharma, Adv.

Mr. B. Krishna Prasad, Adv.

For Respondent(s) Mr. V. Lakshmikumaran, Adv.

Mr. M. P. Devanath, Adv.

Mr. Vivek Sharma, Adv.

Ms. L. Charanaya, Adv.

Mr. R. Ramchandran, Adv.

Mr. Aditya Bhattacharya, Adv. Mr. Hemant Bajaj, Adv.

Mr. Anandh K., Adv.

Mr. Ambarish Pandey, Adv.

Mr. S. K. Bagaria, Sr. Adv.

Mr. Abhinav Agrawal, Adv.

Mr. Mahesh Agarwal, Adv.

C.A. Nos. 3623-3624/2005 etc. 8 Mr. Rishi Agrawala, Adv.

Mr. E. C. Agrawala, Adv.

Mr. Rohit Jolly, Adv.

UPON hearing the counsel the Court made the following O R D E R

The appeals are dismissed in terms of the signed reportable judgment.

(Nidhi Ahuja) (Suman Jain) COURT MASTER COURT MASTER

[Signed reportable judgment is placed on the file.]

C.A. Nos. 3623-3624/2005 etc. 9