2001(05)LCX0048

IN THE CEGAT, WEST ZONAL BENCH, MUMBAI

S/Shri Gowri Shankar, Member (T) and P.S. Bajaj, Member (J)

MAHARASHTRA GLASS & AGRO LTD.

Versus

COMMR. OF CENTRAL EXCISE, PUNE

Order No. 1578/2001-WZB/C-I, dated 28-5-2001 in Appeal No. C/531/R/96-Bom.

J.K. Cotton & Spinning Mills v. Commissioner — 1964(10)LCX0001 Eq 1997 (091) ELT 0034 (S.C.)— Distinguished [Paras 6, 9]

Novopan India Ltd. v. Collector — 1994(09)LCX0128 Eq 1994 (073) ELT 0769 (S.C.) — Relied on ...................... [Para 7]

Rajasthan Spinning & Weaving Mills v. Collector — 1995(05)LCX0105 Eq 1995 (077) ELT 0474 (S.C.) — Relied on [Para 7]

Advocated By :   Shri Vipin Kumar Jain, C.A., for the Appellant.

Shri J.D. Bodade, JDR for the Respondent.

[Order per : P.S. Bajaj, Member (J)]. - This appeal arises out of the impugned order dated 21-6-1996 passed by the Commissioner (Appeals) vide which he had affirmed the order-in-original dated 2-5-1996 of the Assistant Commissioner who denied to the appellants the benefit of Notification No. 49/95 as amended by Notification No. 90/95-Cus., dated 1-5-1995 and held the classification of the imported goods (horizontal washing and drying machine) for the purposes of Customs duty under sub-heading 8479.89 of the CTA and for countervailing duty under sub-heading 8479.10 of the CTA.

2. The facts giving rise to this appeal may briefly be stated as under :

3. The appellants were engaged in the manufacture of various types of glass and glass articles including automobile glass. They imported horizontal washing and drying machine (imported machine) for the purpose of washing and drying the glass before sending for quality control test, packing etc. In the bill of entry filed by them with the Customs authorities they classified the imported machine under sub-heading 8422.20 of the CTA and also claimed benefit of Notification No. 49/95, dated 16-3-1995 as amended by Notification No. 90/95, dated 1-5-1995 on the ground that the imported machine was covered by Entry 17-A of that Notification being meant for production of the products. But the Assistant Commissioner held the classification of the imported machine under sub-heading 8479.89 for basic Customs duty and under sub-heading 8479.10 of CTA for countervailing duty. He also denied benefit of the Notification No. 49/95 referred to above, to them by holding that the imported machine was not meant for production of the commodities and as such was not covered by entry No. 17-A of the notification. This order-in-original of the Assistant Commissioner dated 2-5-1996 was upheld by the Commissioner (Appeals) through the impugned order.

4. Feeling dissatisfied with the impugned order of the Commissioner (Appeals), the appellants have come up in appeal before the Tribunal.

5. In order to appreciate the controversy involved in the present appeal which centres round the question as to whether the appellants imported machine was covered by entry No. 17-A of the Notification No. 49/95, dated 16-3-1995 it would be beneficial to reproduce the relevant portion of the notification and entry 17-A of the table appended to the notification:-

“Effective rate of duty for certain specified goods of Chapter 84, - In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods specified in column (3) of the Table hereto annexed and falling under the heading No. or sub-heading No. of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) specified in column (2) of the said table, when imported into India, from so much of that portion of the duty of customs leviable thereon, which is specified in the said First Schedule as is in excess of amount calculated at the rate of 25 per cent ad valorem:

TABLE

Admittedly, the machine in question imported by the appellants, was not meant for production of the commodities i.e. glass and glass articles including automobile glass in which they were engaged, but it was meant only for washing and drying the glass. Therefore, on the face of it, it is difficult to hold that the imported machine was meant for production of the commodities.

6. The learned counsel for the appellants has however, contested that the expression ‘production’ and ‘manufacture’ are interchangeable or synonymous and as such liberal interpretation has to be placed on this expression so as to include the machine though not directly meant for production/manufacture of the final product but used in or in relation thereto. The machine imported by the appellants must be taken to be machine for production of the commodities, in terms of entry 17-A of the table appended to the abovesaid notification. In support of his contention, the counsel has placed reliance on Apex Court judgment in J.K. Cotton & Spinning Mills, 1964(10)LCX0001 Eq 1997 (091) ELT 0034 (S.C.). In that case which was under the Central Sales Tax Act, the Apex Court observed that the meaning of expression ‘commodity’ for the manufacture of the goods should not be limited to a process of manufacture of the goods only. It takes in within its compass of processes which are directly related to actually production, designing is a part of process of manufacture.

7. But we are unable to subscribe to the contention of the counsel keeping in view the facts and circumstances of the case. Here we are not concerned with the interpretation of the expression ‘manufacture’ or ‘production’ but with the exemption notification and entry No.17-A of the table appended thereto. The law regarding the interpretation of notification is now well settled. The exemption notification has to be interpreted in the manner and the mode laid down by the Apex Court in Novopan India Ltd. v. Collector - 1994(09)LCX0128 Eq 1994 (073) ELT 0769 (S.C.) and Rajasthan Spinning & Weaving Mills v. Collector 1995 (077) ELT 474. In Novopan India Ltd. the Apex Court has observed as under :-

“The notification has to be construed strictly at the stage of determination whether the assessee falls within its terms or not and in case of doubt or ambiguity, benefit of it must go to the State.”

In the case of Rajasthan Spinning & Weaving Mills the Supreme Court has ruled as under :-

“Liberal construction of exemption notification which enlarges the terms and scope of notification is not permissible nor extended meaning assignable to exempted item. The exemption notification is to be construed strictly.”

8. By applying the aforesaid principle laid down by the Apex Court for the interpretation of the exemption Notification, it is difficult to accept the argument of the counsel that the machinery although not meant for production of the commodity but used in or in relation to production of the commodity, stands covered by entry 17-A of the notification in question referred to above. If we accept this argument of the counsel it will tantamount to enlarging the scope of the notification and the entry 17-A which otherwise is not permissible under the law. The wording of the notification in question and the entry 17-A is quite clear, unambiguous and leaves no doubt in one’s mind that it only takes within its compass machinery meant for production of commodities classifiable under sub-heading 8479.89 of the CTA. Under entry 17-A of the notification only that machinery which is meant for production of commodity stands covered and exempted from payment of duty under the Customs Tariff Act and not machinery used in or in relation to the manufacture of the commodity. If the intention of the legislature to include such a machinery also the wording of the entry 17-A of the notification would have been drafted accordingly. But that being not so, the Tribunal has no power to assign extended meaning to the exempted machinery so as to include not only the machinery meant for production of the commodities but also the machinery used in or in relation to the manufacture of the commodity. The machine imported by the appellants is not meant for the production of the commodity but only for washing and drying of the glass, the commodity manufactured by them. The argument of the counsel that washing and drying of the glass is integral part of the manufacture, cannot be accepted being misconceived. The imported machine is only used for washing and drying of the glass after the manufacture. No glass is manufactured through this machine by them. The glass after washing and drying remains the glass.

9. The observations of the Apex Court in J.K. Cotton and Spinning and Weaving Mills (supra) - on which the learned counsel has heavily leaned is not attracted to the facts of the present case. That was the case in which the interpretation of the words ‘in the manufacture of the goods’ appearing in Section 8(3) (b) of the Central Excise Act which corresponded to the Rules 57A and 57Q of the Central Excise Rules and issue of availability of modvat credit were involved and for the purposes of modvat credit, the Apex Court made the observations that the expression ‘in the manufacture of goods’ deserves liberal interpretation so as to include designing machine also as designing was a part of the process of manufacture, but such a liberal interpretation cannot be made in respect of the notification in question, as observed above.

10. So far as the classification of the imported machine under sub-heading 8479.89 of the CTA for the purposes of basic Customs duty and under sub-heading 8479.10 of the CTA for countervailing duty, as held by the Commissioner (Appeals) in the impugned order is concerned, has not been disputed before us.

11. In the light of the discussion made above, the benefit of the notification in question (49/95-Cus. dated 16-3-1995 as amended by Notification 90/95 dated 1-5-1995) has been rightly denied to the appellants in respect of the imported machine in question. Therefore, the impugned order of the Commissioner (Appeals) is perfectly valid and does not suffer from any legal infirmity so as to call for any interference. His order is accordingly upheld and the appeal of the appellants is ordered to be dismissed being without merit.

_______