2001(01)LCX0252
IN THE CEGAT, EASTERN BENCH, KOLKATA
Smt. Archana Wadhwa, Member (J) and Dr. S.N. Busi, Member (T)
HINDUSTAN LEVER LTD.
Versus
COMMISSIONER OF C. EX., CALCUTTA-I
Order No. A-53/KOL/2001, dated 11-1-2001 in Appeal No. E/450/97
Cases Quoted
Addl. Commissioner of Income Tax v. Surat Art Silk Manufacturers Association — AIR 1980 SC 387 — Referred [Para 3.4]
Akbar Badruddin Jiwani v. Collector — 1989(08)LCX0046 Eq 1990 (048) ELT 0441 (CEGAT) — Referred........ [Para 3.7]
Alembic Glass Industries Ltd. v. U.O.I. — 1992(01)LCX0020 Eq 1992 (059) ELT 0207 (Guj.) — Referred......... [Para 3.7]
Ashwini Vanaspati Industries (P) Ltd. v. Collector — 1991(05)LCX0034 Eq 1991 (056) ELT 0214 (CEGAT) — Referred [Para 3]
Bombay Chemical Pvt. Ltd. v. Collector — 1995(04)LCX0114 Eq 1995 (077) ELT 0003 (S.C.) — Referred............. [Para 3.6]
Central India Spinning and Weaving Manufacturing Co. Ltd. v. Municipal Committee — AIR 1958 SC 341 — Referred [Para 3.7]
Collector v. Chemphar Drugs and Liniments — 1989(02)LCX0024 Eq 1989 (040) ELT 0276 (S.C.) — Referred.... [Para 3]
Collector v. Mitsunny Electronic Works — 1984(06)LCX0036 Eq 1987 (030) ELT 0345 (Cal.) — Referred.......... [Para 3.6]
Collector v. Neoli Sugar Factory — 1993(03)LCX0027 Eq 1993 (065) ELT 0145 (S.C.) — Referred...................... [Para 3.1]
Collector v. Parle Exports (P) Ltd. — 1988(11)LCX0047 Eq 1988 (038) ELT 0741 (S.C.) — Referred.................. [Para 3.7]
Collector v. Uma Laminated Products (P) Ltd. — 1984(02)LCX0016 Eq 1984 (017) ELT 0187 (Tribunal) — Referred [Para 3.4]
Collector v. United Electrical Industries Ltd. — 1999(03)LCX0198 Eq 1999 (108) ELT 0609 (S.C.) — Referred [Para 3.7]
Commisisoner of Income-tax v. Smt. Godavari Devi Saraf — 1978 (2) ELT (J 624) (Bom.) — Referred [Para 3.1]
Commissioner v. Black Diamond Beverages Ltd. — 1998(06)LCX0110 Eq 1998 (103) ELT 0655 (CEGAT) — Referred [Para 3.7]
Coromandel Fertilizers Ltd. v. U.O.I. — 1979 (4) ELT J-501 (A.P.) — Referred............ [Para 3.5]
Deccan Sales Corporation v. R. Parthasarathy — 1982(09)LCX0025 Eq 1982 (010) ELT 0885 (Bom.) — Referred [Para 3.6]
Deshbandhu Gupta v. Delhi Stock Exchange Association Ltd. — AIR 1979 SC 1049 — Referred [Para 3.4]
Dewan Brothers v. Central Bank of India — AIR 1976 SC 1503 — Referred..................... [Para 3.6]
Ganges Soap Works Pvt. Ltd. v. U.O.I. — 1992 (43) ECR 707 (All.) —Followed .......... [Paras 3, 5]
Geep Flashlight Industries Ltd. v. U.O.I. — 1979 (4) ELT (J 391) (All.) — Referred...... [Para 3.1]
Geep Industrial Syndicate Ltd. v. Collector — 1999(08)LCX0198 Eq 1999 (114) ELT 0850 (CEGAT) — Referred [Para 3]
Haldyn Glassworks Pvt. Ltd. v. M.L. Badhwar — 1980 (6) ELT 0291 (Bom.) — Referred [Para 3.6]
Hemraj Gordhandas v. H.H. Dave — 1978 (2) ELT (J 350) (S.C.) — Referred............... [Para 3.1]
Hind Plastic v. Collector — 1994(04)LCX0033 Eq 1994 (071) ELT 0325 (S.C.) — Referred.................................. [Para 3.1]
Hindustan Lever Ltd. v. Collector — 1998(03)LCX0140 Eq 1998 (099) ELT 0243 (Tribunal) — Referred............ [Para 3.1]
Indye Chemicals v. Collector — 1985(10)LCX0024 Eq 1986 (025) ELT 0318 (CEGAT) — Referred..................... [Para 3.6]
Iron Master (India) Pvt. Ltd. v. U.O.I. — 1999(07)LCX0239 Eq 1999 (114) ELT 0792 (Del.) — Referred.......... [Para 3.6]
Jai Hind Process & Printing Depot v. Collector — 1984(04)LCX0027 Eq 1985 (022) ELT 0195 (Tribunal) — Referred [Para 3.4]
Jocil Ltd. v. Collector — 1996(09)LCX0156 Eq 1997 (089) ELT 0099 (Tribunal) — Referred.................................. [Para 3.1]
K.P. Vergese v. Income Tax Officer — AIR 1981 SC 1922 — Referred............................... [Para 3.4]
Khandelwal Metal & Engineering Co. v. U.O.I. — 1985(06)LCX0008 Eq 1985 (020) ELT 0222 (S.C.) — Referred [Para 3.4]
Mac Laboratories (P) Ltd. v. Collector —1984(08)LCX0028 Eq 1985 (019) ELT 0307 (CEGAT) — Referred.......... [Para 3]
Madhumilan Syntex Pvt. Ltd. v. U.O.I. — 1984(11)LCX0022 Eq 1985 (019) ELT 0329 (M.P.) — Referred............ [Para 3]
Maharashtra Glass & Agro Ltd. v. Commissioner — 1999(07)LCX0283 Eq 1999 (112) ELT 0847 (CEGAT) — Referred [Para 3.5]
Mangalore Chemicals & Fertilizers Ltd. v. Deputy Commissioner — 1991(08)LCX0031 Eq 1991 (055) ELT 0437 (S.C.) — Referred [Para 3.7]
Mechanical Packing Industries Ltd. v. C.L. Nangia — 1981 (8) ELT 0144 (Bom.) — Referred [Para 3.6]
P.K. Nimel v. Assistant Collector — 1988(03)LCX0071 Eq 1988 (036) ELT 0482 (Ker.) — Referred.................... [Para 3.7]
Padmini Products v. Collector — 1989(08)LCX0031 Eq 1989 (043) ELT 0195 (S.C.) — Referred............................ [Para 3]
Petron Engineering Construction Pvt. Ltd. v. Central Board of Direct Taxes — AIR 1989 SC 501 — Referred [Para 3.6]
Polestar Co. Ltd. v. Addl. Commissioner of Sales Tax — AIR 1978 SC 897 — Referred.. [Para 3.1]
Poulose and Mathen v. Collector — 1997(02)LCX0119 Eq 1997 (090) ELT 0264 (S.C.) — Referred..................... [Para 3.6]
Punjab Rubber & Allied Industries v. U.O.I. — 1981(09)LCX0002 Eq 1983 (012) ELT 0054 (P & H) — Referred [Para 3.7]
Pushpam Pharmaceuticals Company v. Collector — 1995(03)LCX0088 Eq 1995 (078) ELT 0401 (S.C.) — Referred [Para 3]
Rajasthan Spg. & Wvg. Mills Ltd. v. Collector — 1995(05)LCX0105 Eq 1995 (077) ELT 0474 (S.C.) — Referred [Para 3.1]
Sun Export Corporation v. Collector — 1997(07)LCX0044 Eq 1997 (093) ELT 0641 (S.C.) — Referred............... [Para 3.6]
Superintendent v. R.K. Chemical Industries Pvt. Ltd. — 1984(04)LCX0035 Eq 1987 (030) ELT 0641 (Cal.) — Referred [Para 3.5]
Swadeshi Polytex Ltd. v. Collector — 1989(11)LCX0070 Eq 1989 (044) ELT 0794 (S.C.) — Referred.................. [Para 3.7]
T.I. Miller Ltd. v. U.O.I. — 1983(07)LCX0030 Eq 1987 (031) ELT 0344 (Bom.) — Referred................................. [Para 3.6]
Tata Iron & Steel Company Ltd. v. U.O.I. — 1988(05)LCX0068 Eq 1988 (035) ELT 0605 (S.C.) — Referred......... [Para 3]
Tata Oil Mills Co. Ltd. v. Collector — 1989(08)LCX0023 Eq 1989 (043) ELT 0183 (S.C.) — Referred................. [Para 3.1]
TTK Pharma Ltd. v. Collector — 1992(08)LCX0022 Eq 1993 (063) ELT 0446 (CEGAT) — Referred................... [Para 3.7]
U.O.I. v. Pillaiyar Soda Factory — 1991(02)LCX0030 Eq 1992 (057) ELT 0261 (Mad.) — Referred..................... [Para 3.5]
U.O.I. v. Wood Papers Ltd. — 1990(04)LCX0075 Eq 1990 (047) ELT 0500 (S.C.) — Referred............................. [Para 3.1]
Wipro Ltd. v. Collector — 1996(09)LCX0225 Eq 1997 (092) ELT 0663 (CEGAT) — Followed........................ [Paras 3.1, 5]
Advocated By : Shri A. Bose, Advocate, for the Appellant.
Shri R.K. Roy, JDR, for the Respondent.
[Order per : S.N. Busi, Member (T)]. - This appeal is directed against the order dated 16-7-1997 of Commissioner of Central Excise, Calcutta Commissionerate I wherein she disallowed money credit of Rs. 99,64,075/- under Rule 57P of Central Excise Rules, 1944 and ordered its recovery, and also imposed penalty of Rs. 10,00,000/- under Rule 173Q(bb) ibid on M/s. Hindustan Lever Ltd., Calcutta.
2. The facts in brief are that the appellants are engaged in the manufacture of “Soap Lifebuoy Soap tablets”. They availed benefit of Rule 56B up to 30-11-1987. However, since December, 1987, the appellants switched over to money credit procedure under Rule 57K ibid and started clearing the soap noodles after availing credit on vegetable oils/minor oils used in the manufacture of the soap noodles. Simultaneously, the processor filed a declaration under Rule 57G for availing Modvat credit on the lifebuoy soap noodles as input and availed Modvat credit since then. As per the agreement, the processor receives duty paid soap noodles and carry out certain processes to convert the same into cake and remove the same to the appellant on payment of Central Excise duty under the authorisation of Notification No. 305/77. The processes undertaken by the processor include plodding, extruding, cutting, stamping, wrapping in wrappers and packing in corrugated boxes.
2.1 The appellants were issued a show cause notice dated 31-3-1993 alleging that during the period from January, 1988 to December, 1992 they availed money credit irregularly for an amount of Rs. 99,64,075.08 on minor oils used in the manufacture of soap noodles in contravention of Rules 57K, 57M and 57-O read with Notification Nos. 192/87, dated 12-8-1987 and 46/89, dated 11-10-1989 and the said amount was sought to be recovered. The money credit was sought to be disallowed on the ground that - (i) the soap noodles were not “finished products” but “semi-finished products” when cleared from the appellant’s factory; and (ii) all the processes relating to the manufacture of soap starting from vegetable oil (minor oils used) were not done in the same factory. The appellants explained that “Soap noodles” are nothing but “soap” and same are rightly classifiable under sub-heading 3401.10. This explanation did not convince the Commissioner and accordingly disallowed the money credit of Rs. 99,64,075.08 and ordered recovery of the said amount. A penalty of Rs. 10,00,000/- was also imposed on the appellants under Rule 173Q(bb) ibid. Hence, this appeal before us.
3. Shri Anoop Bose, learned Advocate, appearing for the appellants, at the outset, submits that the Show-cause Notice which culminated in the impugned order did not disclose the provision under which the money credit availed by the appellants was sought to be disallowed and it did not contain any specific allegation whatsoever of any fraud, collusion, wilful misstatement or suppression of facts or contravention of any of the provisions of Central Excise Act and the Rules made thereunder with intent to evade payment of duty. He further submits that in any event the appellants are not guilty of wilful suppression and/or mis-statement and there was no surreptitious of clandestine activity on the part of the appellants. He contends that every activity relating to the manufacture and clearance of the impugned goods was known to the Department. The appellants, filed proper declarations under Rule 57-O, submitted classification lists which were only approved and the concerned RT-12 returns were assessed without any objection. He, therefore, contends that the demand was time-barred and as such ought to be dropped. In support of his contention, he relies on the following case-law :
(i) Tata Iron & Steel Company Ltd. v. U.O.I., 1988(05)LCX0068 Eq 1988 (035) ELT 0605 (S.C.);
(ii) Collector of Central Excise, Hyderabad v. M/s. Chemphar Drugs and Liniments, 1989(02)LCX0024 Eq 1989 (040) ELT 0276 (S.C.);
(iii) Padmini Products v. C.C.E., Bangalore, 1989(08)LCX0031 Eq 1989 (043) ELT 0195 (S.C.);
(iv) Pushpam Pharmaceuticals Company v. C.C.E., Bombay, 1995(03)LCX0088 Eq 1995 (078) ELT 0401 (S.C.);
(v) Madhumilan Syntex Pvt. Ltd. v. U.O.I., 1984(11)LCX0022 Eq 1985 (019) ELT 0329 (M.P.);
(vi) Mac Laboratories (P) Ltd. v. C.C.E, Bombay, 1984(08)LCX0028 Eq 1985 (019) ELT 0307 (CEGAT);
(vii) Ashwini Vanaspati Industries (P) Ltd. v. Collector of Central Excise, 1991(05)LCX0034 Eq 1991 (056) ELT 0214 (CEGAT); and
(viii) Geep Industrial Syndicate Ltd. v. Collector of Central Excise, Allahabad, 1999(08)LCX0198 Eq 1999 (114) ELT 0850 (CEGAT).
3.1 Advancing his arguments on merits of the case, the learned Advocate contends that the expression “soap in any form” used in sub-heading 3401.10 of the Central Excise Tariff is used without any qualification and must be taken to include all kinds of soap. According to him, the tariff sub-heading must be interpreted strictly in accordance with the well-known rule of strict interpretation of statutes, which states that a taxation statute has to be interpreted strictly in accordance with the express language of the statute. He submits there is no room for any intendment or implication of the words. He refers to the judgment of Hon’ble High Court of Allahabad in the case of Ganges Soap Works Pvt. Ltd. v. U.O.I., 1992 (43) ECR 707 (All.), which held that the soap noodles fall within the purview of sub-heading 3401.10 and further held that the assessee company was entitled to avail the benefit of Notification No. 46/89-C.E. The Hon’ble Allahabad High Court observed that if a commodity is made excisable or a concession is available for the commodity, its shape, size, and form or mould could be immaterial so long as it remains the very same commodity. There is no contrary decision of any High Court on this point and accordingly the decision of the Hon’ble Allahabad High Court has a binding effect. It is well settled that the law declared by the High Court, though of another State, under a statute of All-India application, is the final law of land, unless contrary decision is given by any other High Court. He relies upon the following case laws in support of the above contentions :
(i) Polestar Co. Ltd. v. Addl. Commissioner of Sales Tax, New Delhi, 1978 SC 897;
(ii) Hemraj Govardhandas v. H.H Dave, 1978 (2) ELT (J-350);
(iii) U.O.I. v. Wood Papers Ltd., 1990(04)LCX0075 Eq 1990 (047) ELT 0500 (S.C.);
(iv) Collector of Central Excise v. Neoli Sugar Factory, 1993(03)LCX0027 Eq 1993 (065) ELT 0145 (S.C.);
(v) Hind Plastics v. C.C., 1994(04)LCX0033 Eq 1994 (071) ELT 0325 (S.C.);
(vi) Rajasthan Spg. & Wvg. Mills Ltd. v. Central Excise, 1995 (077) ELT 474;
(vii) The Tata Oil Mills Co. Ltd. v. Collector of Central Excise, 1989(08)LCX0023 Eq 1989 (043) ELT 0183 (S.C.);
(viii) Commissioner of Income Tax v. Smt. Godavari Devi Saraf, 1978 (2) ELT J 624;
(ix) Geep Flashlight Industries Ltd. v. U.O.I., 1979 (4) ELT J-391 (All.);
(x) Hindustan Lever Ltd. v. C.C.E., Calcutta-I, 1998(03)LCX0140 Eq 1998 (099) ELT 0243 (T) = 1998 (75) ECR 721 (CEGAT)
(xi) Jocil Ltd. v. Collector of Central Excise, Guntur, 1997 (089) ELT 99; and
(xii) Wipro Ltd. v. C.C.E., Bangalore, 1996(09)LCX0225 Eq 1997 (092) ELT 0663 (CEGAT).
3.2. The learned Advocate invites attention to Rule 2 (a) of the Rules of Interpretation which specifically provides that “Any reference in a heading to goods shall be taken to include a reference to those goods incomplete or unfinished goods have the essential character of the complete or finished goods”. Based on classification as contained in the said rule, the learned Advocate contends that even if the stand taken by the excise authorities to the effect that soap noodles are semi-finished or intermediate products is accepted for the sake of argument only, it cannot by any stretch of imagination be contended that soap noodles do not have the essential character of the complete or finished goods, viz., soap. He has also advanced an alternative argument to the effect that the soap noodles being “most akin” to soap, the soap noodles shall be classified under the heading appropriate to the soap and thus fall under the sub-heading 3401.10.
3.3 Continuing his arguments, the learned Advocate refers to Note 1 of the General Explanatory Notes which forms part of the Schedule to the Central Excise Tariff Act which provides that “Where in column (3) of this Schedule, the description of an article or group of articles under a heading is preceded by ‘-’, the said article or group of articles shall be taken to be sub-classification of the article or group of articles covered by the said heading.” The word “Soap in any form” are preceded by a ‘-’. Accordingly, if soap noodles fall within the purview of the words “soap in any form”, as is the stand of the appellants, soap noodles must be taken to be a sub-classification of the articles or group of articles covered by the main heading, viz., “soap, organic surface active products and preparations for use as soap, in the form of bars, cakes moulded pieces or shapes, whether or not containing soap, paper, wadding, felt and non-wovens, impregnated, coated or covered with soap or detergent”. Further, Note 2 of the Notes to Chapter 34 of the Tariff Act clearly lays down that “for the purposes of heading No 34.01, ‘soap’ applies only to soap soluble in water. It is an undisputed position that soap noodles are soluble in water. The learned Advocate, therefore, emphatically argues that soap noodles clearly fall within the scope of sub-heading 3401.10.
3.4 The learned Advocate elaborately explains the legislative intent in introducing Section AAA encompassing Rules 57K to 57P of the Central Excise Rules and Notification Nos. 192/87-C.E., dated 12-8-1987 and 86/89-C.E., dated 11-10-1989 which grant a rebate to manufacturers of soap by way of an incentive to encourage greater utilization and consumption of non-traditional oils in the manufacture of soap by applying the well-known rule of contemporanea expositia. He contends that the real object and purpose of introducing the new Section AAA and issuing the Notifications, as ascertained from the highly persuasive speech of the Union Finance Minister while introducing the Union Budget for the year 1987-88, would be defeated and frustrated if the interpretation sought to be taken by the department in the instant case is accepted. He further argues that if such interpretations were to be accepted, the money credit envisaged for the benefit of manufacturers soap by way of an incentive for greater consumption and utilization of non-conventional oils in the manufacture of soap would be rendered wholly illusory and would be reduced to a mere “paper” credit. In this connection, he relies on the under mentioned case law :
(i) Deshbandhu Gupta v. Delhi Stock Exchange Association Ltd., AIR 1979 SC 1049;
(ii) Addl. Commissioner of Income Tax v. Surat Art Silk Manufacturers Association, AIR 1980 SC 387;
(iii) K.P. Vergese v. Income Tax Officer, Ernakulam, AIR 1981 SC 1922;
(iv) Khandelwal Metal & Engineering Co. v. U.O.I., 1985(06)LCX0008 Eq 1985 (020) ELT 0222 (S.C.) = AIR 1985 SC 1211;
(v) Collector of Central Excise, Hyderabad v. Uma Laminated Products (P) Ltd., Hyderabad, 1984(02)LCX0016 Eq 1984 (017) ELT 0187 (T) = 1984 ECR 2028 (CEGAT); and
(vi) Jai Hind Process & Printing Depot, Rajkot v. Collector of Customs & Central Excise, Ahmedabad, 1984(04)LCX0027 Eq 1985 (022) ELT 0195 (Tribunal) = 1985 ECR 457 (CEGAT).
3.5 The learned Advocate argues that an exemption Notification has to be construed strictly according to the express language of such Notification. In both the Notifications, the expression “final product” (and not “finished product”) is used without any qualification and its scope is of the widest amplitude. Soap Noodles are clearly of the nature of “final product” entitled to the benefit of the Notifications. Accordingly, the expression “final product” cannot be restricted or narrowed down so as to make the availment of the money credit impossible in the case of soap noodles. Applying the rule of strict interpretation, the appellants are entitled to avail the benefit of the Notifications in the case of soap noodles manufactured by them. The plea that soap noodles were semi-finished or intermediate goods has been raised only to frustrate the valid and legitimate availment of the money credit in strict compliance of the mandatory requirements thereof. The transplantation of such a plea into the plain, unambiguous language of the Notifications by presumption or assumption would be wholly unjustified and untenable in law. In this connection, he relies upon the judgments in the case of Coromandel Fertilizers Ltd. v. U.O.I. : 1979 (4) ELT (J-501) (A.P.), Superintendent of Central Excise v. R.K. Chemical Industries Pvt. Ltd., 1984(04)LCX0035 Eq 1987 (030) ELT 0641 (Cal.), UOI v. Pillaiyar Soda Factory, 1991(02)LCX0030 Eq 1992 (057) ELT 0261 (Mad.) = 1994 (52) ECR 479 (Madras); and Maharashtra Glass & Agro Ltd. v. Commissioner of Central Excise, Pune - 1999(07)LCX0283 Eq 1999 (112) ELT 0847 (CEGAT).
3.6 The learned Advocate pleads that an exemption Notification should be construed literally. He states that it is improper to read an exemption in a limited sense so as to deprive the appellants of the advantage of the notification. It is well settled that an exemption notification must be construed strictly and once the produce falls within the ambit of an exemption notification by applying the rule of strict interpretation. The test of strict construction applies at the entry, that is whether a particular product is capable of falling within its scope, but once it falls within such scope, the notification has to be construed broadly and widely. In support of this plea, he relies upon the decision in the case of Bombay Chemical Pvt. Ltd. v. CCE, 1995(04)LCX0114 Eq 1995 (077) ELT 0003 (S.C.), Haldyn Glassworks Pvt. Ltd v. M.L. Badhwar, 1980 (6) ELT 0291 (Bom.), and Mechanical Packing Industries Ltd. v. C.L. Nangia, 1981 (8) ELT 0144 (Bom.). He further argues that in taxation matters, if two interpretations are possible, the interpretation, which is beneficial to the assessee, must be adopted even if it results in an advantage to the assessee. Applying this principle, where an exemption notification is capable of more than one interpretation or there is doubt in relation to its interpretation, the interpretation which would reduce the incidence of tax or enlarge the ambit of the exemption should be adopted and the benefit must go to the assessee so that his tax burden is lessened. The learned Advocate takes support for the above plea from the decisions in the cases of Dewan Brothers v. Central Bank of India, AIR 1976 SC 1503, Petron Engineering Construction Pvt. Ltd. v. Central Board of Direct Taxes, AIR 1989 SC 501; Poulose and Mathen v. C.C.E., 1997(02)LCX0119 Eq 1997 (090) ELT 0264 (S.C.); Sun Export Corporation v. C.C., Bombay, 1997(07)LCX0044 Eq 1997 (093) ELT 0641(S.C.); C.C., Calcutta v. Mitsunny Electronic Works, 1984(06)LCX0036 Eq 1987 (030) ELT 0345 (Cal.); Deccan Sales Corporation v. R. Parthasarathy, 1982(09)LCX0025 Eq 1982 (010) ELT 0885 (Bom.); T.I. Miller Ltd. v. UOI, 1983(07)LCX0030 Eq 1987 (031) ELT 0344 (Bom.); Iron Master (India) Pvt. Ltd. v. UOI, 1999(07)LCX0239 Eq 1999 (114) ELT 0792 (Del.); and Indye Chemicals v. Collector of Central Excise, 1985(10)LCX0024 Eq 1986 (025) ELT 0318 (CEGAT).
3.7 Arguing that it is not open to the Revenue authorities to change their stand in the matter of classification without any cogent reasons, the learned Advocate submits that it leads to a divergent classification in other Commissionerates resulting in unfair discrimination of taxes in respect of the same goods. If the stand now taken by the excise authorities is accepted, a manufacturer of soap noodles would never have been able to avail the benefit of the above notifications. In this connection, he relies upon the decisions/judgments in the case of the Central India Spinning and Weaving Manufacturing Co. Ltd. and the Express Mills, Nagpur v. Municipal Committee, Wardha, AIR 1958 SC 341; C.C.E. v. Parle Exports (P) Ltd., 1988(11)LCX0047 Eq 1988 (038) ELT 0741 (SC); and Swadeshi Polytex Ltd. v. C.C.E., 1989(11)LCX0070 Eq 1989 (044) ELT 0794 (SC); C.C., Bombay v. United Electrical Industries Ltd., 1999(03)LCX0198 Eq 1999 (108) ELT 0609 (SC); Mangalore Chemicals & Fertilizers Ltd. v. Deputy Commissioner, 1991(08)LCX0031 Eq 1991 (055) ELT 0437 (SC); Punjab Rubber & Allied Industries v. UOI, 1981(09)LCX0002 Eq 1983 (012) ELT 0054 (P & H); P.K. Nimel v. Assistant Collector of Central Excise, 1988(03)LCX0071 Eq 1988 (036) ELT 0482 (Kerala); Alembic Glass Industries Ltd. v. Union of India, 1992 (059) ELT 207; Akbar Badruddin Jiwani v. C.C., 1989(08)LCX0046 Eq 1990 (048) ELT 0441 (CEGAT); TTK Pharma Ltd. v. C.C.E., 1992(08)LCX0022 Eq 1993 (063) ELT 0446 (CEGAT); and C.C.E., Calcutta-I & II, v. Black Diamond Beverages Ltd., 1998(06)LCX0110 Eq 1998 (103) ELT 0655 (CEGAT).
3.8 As regards penalty imposed on the appellants, the learned Advocate argues there is no shred of evidence to justify imposition of penalty under Rule 173Q(1) (bb) ibid. Moreover, there is nothing on record to show that there was any mala fide intention on the part of the appellants or the appellants acted deliberately in defiance of law or were guilty of dishonest or contumacious conduct. In the absence of any mens rea, as in fact there is none in the instant case according to the learned Advocate, penalty cannot be imposed on the appellants.
4. Shri R.K. Roy, learned JDR appearing for the appellants, reiterates the reasoning contained in the impugned order.
5. We have carefully considered the submissions from both sides and perused the relevant evidence on record. The principal issue for consideration is whether the “soap noodles” merit to be considered as the “final product” so as to be eligible for the money credit scheme. Whereas the appellants contend that the “soap noodles” being nothing but “soap” and as such are eligible “final product”, the department holds that the same are “semi-finished products” by reason of which disentitle them to avail the money credit under the provisions of Rule 57K ibid. The appellant’s argument is that in both the notifications the expression “final product” (and not “finished product”) is used without any qualification and its scope is of the widest amplitude. In their view, the soap noodles are clearly of the nature of “final product” entitled to the benefit of the said notifications. They allege that the department has come out with the plea of soap noodles being semi-finished goods only with an intention to frustrate the valid and legitimate availment of the money credit by the appellants. In this connection, we have perused the tariff entry 34.01 and notice that the expression “soap in any form” has been mentioned therein. We observe that in both the afore-mentioned notifications the goods to which the benefit of money credit is available are referred to as the “final products” with an amplification “namely, soap”. As the ‘final product’ in the said notifications have been expressly specified to be ‘soap’, the discussion whether ‘final products’ mentioned therein would mean “finished products” is strictly irrelevant. The “final products” having been specifically identified as “soap”, the benefit of the above notifications has to be made available to the products, which fall within the scope of the expression “soap”. A little while ago we observed that the tariff entry 34.01 relates to the “soap in any form”. In the instant case, the form in which the soap is manufactured and cleared by the appellants is “noodles” and the classification of it in that form as “soap” was duly approved by the Department. This unassailable factual position militates against the department’s changed stand that the goods cleared from the appellant’s factory were in semi-finished form. We are of the opinion that there is no rational basis to deny the benefit of the said notifications in respect of the impugned goods. Our opinion draws support from the judgment of Hon’ble High Court of Allahabad in the case of Ganges Soap Works Pvt. Ltd. and Another v. U.O.I. and Others, 1992 (43) ECR 707; wherein it was held that money credit cannot be denied to minor oils used in the manufacture of soap in the form of noodles. The Hon’ble High Court of Allahabad observed :
“We are of the view that the opposite parties erred in disallowing the utilization of cash credit under the above noted notifications on the ground that some consumers use the product as their raw material for preparing some better quality soap cake and bar. The basic fact remains that the petitioners use specified vegetables oils as input in manufacture of “soap noodles”, excisable as final product covered under the expression “soap in any form”. Such a product is entitled to the benefit of the notification. The use of the word “noodles” only indicates the form or shape of the product, on the basis of which no distinction can be made. It may also be pointed out that in such fiscal statutes or provisions it is not possible to draw inferences or to go behind a provision which is clear on the face of it, to find out the intention of the legislature. In this connection, we may further point out that if the Government has any different intention than one expressed in the notifications, it can always amend the tariff, its heading, sub-heads or notification, but so long the provision stands as it is, it would not be possible to give any different meaning inferring some other intention of the legislature of the Government, as was submitted on behalf of the opposite parties.”
We draw support also from the decisions of the Hon’ble Tribunal in a similar case of Wipro Ltd. v. C.C.E., Bangalore; 1996(09)LCX0225 Eq 1997 (092) ELT 0663 (Tribunal) wherein it was held that the benefit of notification has to be made available so long as it is shown that the processes which give rise to the product which answers to the description of the soap have been carried out in the appellant’s factory. In the instant case, as in the case of Wipro Ltd., the “noodles” which emerged answer to the description of “soap” and all the processes relating to the manufacture of soap, starting from vegetable oils, have been carried out in the appellant’s factory. This factual position makes it abundantly clear that the benefit of the said notifications cannot be denied to the appellants. The clearance of “soap noodles” to their job worker for conversion into soap cake and bar does not alter the position as the same are operations done on manufactured goods.
6. In view of the above findings, we find force in the arguments advanced on behalf of the appellants and hence accept the same. Consequently, the appeal deserves to be allowed. Accordingly, we do so.
6. In the result, the appeal is allowed with consequential relief, if any, to the Appellants.
Equivalent 2001 (135) ELT 0915 (Tri. - Kolkata)