Siddheshwar Textile Mills Pvt. Ltd vs Commissioner Of Central Excise

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI

COURT No. II

APPEAL No.E/59 & 60/07

(Arising out of Order-in-Appeal No.P-III/BBP/195/2006 dated 23/11/2006 passed by Commissioner of Central Excise (Appeals), Pune)

For approval and signature:

Honble Mr. Anil Choudhary, Member (Judicial) Honble Mr. Raju, Member (Technical)

1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy :Seen of the Order?

4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================

Siddheshwar Textile Mills Pvt. Ltd., Appellant Vs. Commissioner of Central Excise, Respondent Pune

Appearance:

Shri.Gajendra Jain, Advocate for appellant Shri.Sanjay Hasija, Supdt. (AR), for respondent

CORAM:

Honble Mr.Anil Choudhary, Member (Judicial) Honble Mr. Raju, Member (Technical)

Date of Hearing : 11/08/2015 Date of Decision : 11/08/2015

ORDER NO

Per: Raju

1. The appellants have filed two appeals. The appellants are manufacturers of impregnated quoted fabrics. They had claimed the benefit of concessional rate of duty under notification 8/99 dated to 8.2.99. The said notification grants exemption from the following duties:

(a) the duty of excise specified thereon in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); and

(b) the special duty of excise specified thereon in the Second Schedule to the said Central Excise Tariff Act.

2. The said notification does not grant exemption in respect of additional duty leviable under additional duty of Excise (goods of special importance) act 1957. The applicants be claimed that the exemption 8/99 grants exemption from duty of Excise which includes additional duty leviable under additional duty of Excise (goods of special importance) act 1957. The appellants claimed this on the basis of a clarification dated 7.5.99 issued by member (budget). They could not produce the said clarification. In the order in appeal there is a reference to some news item wherein it was suggested that the said exemption is available. However no such clarification was produced. The relied on the decision in the own case, 2009 (248) ELT 290 where the demand on the said duty was set aside. It is noticed that in the said decision the demand was set aside on account of the revenue neutrality and not on account of merits. The evidence also relied on the decision of the Honble High Court of Karnataka in the case of Shree Renuka Mills 2014 (302)ELT 33. This decision lays down that cess being collected as additional duty of customs is eligible for credit. thus the issue is substantially different in this case. The appellants also relied on the decision of Honble Supreme Court in case of Orient fabrics 2003 (158)ELT 545 wherein the following has been held:

5.?In order to appreciate the issue, it is relevant to set out the sub-section (3) of Section 3 of the Act, as applicable in this matter and which runs as under :

SECTION 3 : Levy and collection of additional duties :

(1)?  (2)? (3)?The provisions of the Central Excises and Salt Act, 1944 and the rules made thereunder including those relating to refunds and exemptions from duty shall, so far as may be apply in relation to the levy and collection of the additional duties as they apply in relation to the levy and collection of duties as they apply in relation to the levy and collection of the duties of excise on the goods specified in sub-section (1).

6.?A perusal of the said provision shows that the breach of the provision of the Act has not been made penal or an offence and no power has been given to confiscate the goods. It only provides for application of the procedural provisions of the Central Excises and Salt Act, 1944 and the Rules made thereunder. It is no longer res integra that when the breach of the provision of the Act is penal in nature or a penalty is imposed by way of additional tax, the constitutional mandate requires a clear authority of law for imposition for the same. Article 265 of the Constitution provides that no tax shall be levied or collected except by authority of law. The authority has to be specific and explicit and expressly provided. The Act created liability for additional duty for excise, but created no liability for any penalty. That being so, the confiscation proceedings against the respondents were unwarranted and without authority of law.

7.?The Parliament by reason of Section 63(a) of the Finance Act, 1994 (Act No. 32 of 1994) substituted sub-section (3) of Section 3 of the said Act, which now reads as under :

3.?Levy and collection of Additional Duties :-

(1)? (2)? (3)?The provisions of the (Central Excise Act, 1944) (1 of 1944), and the rules made thereunder, including those relating to refunds, exemptions from duty, offences and penalties, shall, so far as may be, apply in relation to the levy and collection of the additional duties as they apply in relation to the levy and collection of the duties of excise on the goods specified in sub-section (1).

8.?A comparison of the amended provisions with the un-amended ones would clearly demonstrate that the words offences and penalties have consciously been inserted therein. The cause of action for imposing the penalty and directions of confiscation arose in the present case in the year 1987. The amended Act, therefore, has no application to the facts of this case.

3. It was argued that no interest or penalty can be demanded in the instant case as the provisions relating to interest and penalty have not been incorporated under that act.

4. The learned AR argued that Notification No.8/99 exempts only duties of Excise leviable under the specified acts. The additional duty of Excise (goods of special importance) act 1957 is not the specified under the said notification. The notification has to be read strictly. He relied on the Honble Supreme Court decision in the case of Modi rubber Limited 1986 (25) 849. The particularly relied on paragraph 8 and 9 of the said decision which read as follows:

8.?The first question that arises for consideration on these facts is as to what is the true import of the expression `duty of excise in the notifications dated 1st August 1974 and 1st March 1981. It is only if this expression is held to include duties of excise leviable not only under the Central Excises and Salt Act, 1944 but also under any other enactments that the question would arise whether the Central Laws (Amendment and Validation) Act, 1982 is constitutionally invalid. We, therefore, asked the learned counsel appearing on behalf of the parties to confine their arguments only to the first question of interpretation of the expression `duty of excise in the notifications dated 1st August 1974 and 1st March 1981.

9.?Both these notifications, as the opening part shows, are issued under Rule 8(1) of the Central Excise Rules, 1944 and since the definition of `duty in Rule, cl. (v) must necessarily be projected in Rule 8(1) and the expression `duty of excise in Rule 8(1) must be read in the light of that definition, the same expression used in these two notifications issued under Rule 8(1) must also be interpreted in the same sense, namely, duty of excise payable under the Central Excises and Salt Act, 1944 and the exemption granted under both these notifications must be regarded as limited only to such duty of excise. But the respondents contended that the expression `duty of excise was one of large amplitude and in the absence of any restrictive or limitative words indicating that it was intended to refer only to duty of excise leviable under the Central Excises and Salt Act, 1944, it must be held to cover all duties of excise whether leviable under the Central Excises and Salt Act, 1944 or under any other enactment. The respondents sought to support this contention by pointing out that whenever the Central Government wanted to confine the exemption granted under a notification to the duty of excise leviable under the Central Excises and Salt Act, 1944, the Central Government made its intention abundantly clear by using appropriate words of limitation such as duty of excise leviable.... under Section 3 of the Central Excises and Salt Act, 1944" or duty of excise leviable ..... under the Central Excises and Salt Act, 1944" or duty of excise leviable..... under the said Act as in the Notification No. CER-8(2)/55-C.E., dated 17th September, 1955, Notification No. 255/77-C.E., dated 20th July, 1977, Notification No. CER-8(1)/55-C.E., dated 2nd September, 1955, Notification No. CER-8(9)/55-C.E., dated 31st December, 1955, Notification No. 95/61-C.E., dated 1st April 1961, Notification No. 23/55-C.E., dated 29th April 1955 and similar other notifications.

But, here said the respondents, no such words of limitation are used in the two notifications in question and the expression duty of excise must, therefore, be read according to its plain natural meaning as including all duties of excise, including special duty of excise and auxiliary duty of excise. Now, it is no doubt true that in these various notifications referred to above, the Central Government has, while granting exemption under Rule 8(1), used specific language indicating that the exemption, total or partial, granted under each such notification is in respect of excise duty leviable under the Central Excises and Salt Act, 1944. But, merely because, as a matter of drafting, the Central Government has in some notifications specifically referred to the excise duty in respect of which exemption is granted as `duty of excise leviable under the Central Excises and Salt Act, 1944, it does not follow that in the absence of such words of specificity, the expression `duty of excise standing by itself must be read as referring to all duties of excise. It is not uncommon to find out that the legislature sometimes, with a view to making its intention clear beyond doubt, uses language ex abundanticautela though it may not be strictly necessary and even without it the same intention can be spelt out as a matter of judicial construction and this would be more so in case of subordinate legislation by Executive.

The officer drafting a particular piece of subordinate legislation in the Executive Department may employ words with a view to leaving no scope for possible doubt as to its intention or sometimes even for greater completeness, though these words may not add anything to the meaning and scope of the subordinate legislation. Here, in the present notifications, the words `duty of excise leviable under the Central Excises and Salt Act, 1944 do not find a place as in the other notifications relied upon by the respondents. But, that does not necessarily lead to the inference that the expression `duty of excise in these notifications was intended to refer to all duties of excise including special and auxiliary duties of excise. The absence of these words does not absolve us from the obligation to interpret the expression `duty of excise in these Notifications. We have still to construe this expression what is its meaning and import and that has to be done bearing in mind the context in which it occurs. We have already pointed out that these notifications having been issued under Rule 8(1), the expression `duty of excise in these notifications must bear the same meaning which it has in Rule 8(1) and that meaning clearly is excise duty payable under the Central Excises and Salt Act, 1944 as envisaged in Rule 2 clause (v).

It cannot in the circumstances bear an extended meaning so as to include special excise duty and auxiliary excise duty.

5. He also pointed out that no interest has been demanded in the order in original.

6. We have carefully considered the arguments and the case records. We find that so far as availability of exemption is concerned the matter is settled by the decision of Honble Supreme Court in case of Modi rubber Limited (supra) in favour of the revenue. We also find that so far as invocation of provisions relating to penalty are concerned the law has been laid down by Honble Supreme Court in case of Orient fabrics (supra) against the revenue. In view above we uphold the demand of duty and set aside the imposition of penalty.

7. The 2nd appeal No.E/60/07 deals with adjustment of the above demand and penalty against a sanctioned refund. In view of the vacation of penalty the appellants succeed in their appeal insofar as adjustment of penalty against the sanction of refund is concerned. Theyve become entitled to refund of the penalty amount adjusted earlier.

8. Both the appeals are disposed of on above terms.

(Pronounced in Court)

(Anil Choudhary) Member (Judicial) (Raju) Member (Technical)

pj

1 2 Appeal No.E/59 & 60/07