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PETITIONER: COLLECTOR OF CENTRAL EXCISE ETC.

       Vs.

RESPONDENT: THE HIMALAYAN COOPERATIVE MILK PRODUCT UNION LIMITED ETC.

DATE OF JUDGMENT:       07/11/2000

BENCH: U.C.Banerjee, Brijesh Kumar

JUDGMENT:

BRIJESH KUMAR, J. L.....I.........T.......T.......T.......T.......T.......T..J

     Since  the  above noted two appeals involve  a  common question  for  determination, as to the interpretation of  a Notification issued by the Central Government under sub-rule (1)  of Rule 8 of the Central Excise Rules, 1944,  exempting goods  falling under Item No.68 of the First Schedule to the Central  Excise and Salt Act 1944, on fulfilment of  certain conditions, the appeals are being disposed of by this common judgment.   As usual in such cases, the Revenue is trying to bring  manufacturers  within its net to charge it  with  the excise  duty whereas the manufacturer-respondents trying  to get  out  of  it  claiming   benefit  under  the   aforesaid Notification.

     2.   The  brief  facts  of   the  case  are  that  the manufacturer-respondent,  Himalayan Cooperative Milk Product Union  Limited  manufactures butter and skimmed milk  powder etc.   in its industrial complex.  For purposes of  chilling plant  of Dairy Unit, the respondent seems to have installed a   plant   manufacturing  liquid   nitrogen   which   item, undisputedly  falls under Item 68 of the Excise Tariff.   By means  of Notification No.  105/80-C.E.  dated 19.6.1980 the excise  duty  payable on goods falling under Item No.68,  is exempted  in  respect  of the first clearances of  the  said goods for home consumption by or on behalf of a manufacturer from  one  or  more factories up to a  value  not  exceeding rupees  thirty  lakhs inter alia on the condition  that  the total  of the value of the capital investment made from time to  time, on the machinery installed for manufacturing  said goods  is not more than rupees ten lakhs.  According to  the manufacturer-respondents the total capital investment in the plant  and  machinery manufacturing liquid nitrogen is  less than  rupees  ten lakhs, therefore the benefit of  exemption from  excise  duty is admissible under the  Notification  in question  dated  19.6.1980.   3.  The  Assistant  Collector, Central  Excise,  Siliguri Division by order dated  5.9.1983 rejected  the  claim  of the respondents and  confirmed  the demand  as  raised by the Superintendent of  Central  Excise under  Central Excise Rules, observing that the  respondents are  using  all  the plants and machinery  for  purposes  of manufacturing all kinds/varieties of excisable goods falling under  different  Tariff items, the total value  of  capital investment  of all plants and machineries, installed in  the

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said  factory are to be taken into account and no  exemption on  investment which was more than ten lakhs was admissible. Thus  according to the excise authorities the total value of investments  in  all  the plants  manufacturing  butter  and skimmed  milk powder and other dairy products as well as for manufacturing  of  liquid  nitrogen  was to  be  taken  into account.  According to the respondents Himalayan Cooperative Milk Product Union Limited the value of investment on liquid nitrogen  plant  which alone is relevant is much  less  than rupees ten lakhs.  The appeal preferred against the order of Assistant  Collector  was  also dismissed by  the  Collector (Appeals), Central Excise, Calcutta by order dated 9.1.1984. Both  the  authorities  have,   however,  held  that  liquid nitrogen itself is a finished product and falls under Tariff Item 68.  4.  The respondents preferred an appeal before the Customs,  Excise and Gold (Control) Appellate Tribunal,  New Delhi.   The Appellate Tribunal by its order dated 21.1.1988 allowed  the  appeal holding that the respondents  would  be entitled   for  the  benefit   under  the  Notification   of exemption.  On facts though the Tribunal remanded the matter to  the  original adjudicating authority for  computing  the capital  investment  on  plant and  machinery  referable  to liquid  nitrogen  and the common plant and machinery in  the same  industrial  complex  so as to  ascertain  the  capital investment on generator used for the chilling water.  5.  We feel  it  would be better to peruse the  Notification  dated 19.6.1980  exempting  the  payment of excise duty  on  goods falling  under Item 68 of the Tariff.  It reads as  follows: In exercise of the powers conferred by sub-rule of rule (1) of  rule  8  of  the  Central Excise  Rules,  1944,  and  in supersession  of the notification of the Govt.  of India  in the   Ministry   of   Finance    (Department   of   Revenue) No.89/79-Central  Excises,  dated  the 1st March  1979,  the Central  Government hereby exempts goods, falling under Item No.68  of the First Schedule to the Central Excise and  Salt Act  1944 (1 of 1944), (hereinafter referred to as the  said goods), in respect of the first clearances of the said goods for  home consumption by or on behalf of a manufacturer from one  or  more  factories upto a value not  exceeding  rupees thirty  lakhs,  cleared on or after the 1st day of April  in any  financial  year, from the whole of the duty  of  excise leviable thereon:

     Provided that during the period commencing on the 19th day  of June 1980 and ending on the 31st day of March, 1981, the  value of the clearances of the said goods eligible  for exemption  under  this notification shall be subject to  the following conditions, namely:-

     (i)  The aggregate of the value of clearances eligible for  exemption  contained  in this notification  during  the aforesaid  period,  and  the  clearances,  if  any,  already effected  by or on behalf of a manufacturer in terms of  the exemption  contained in the notification No.   89/79-Central Excises,  dated  the  1st March 1979 aforesaid,  during  the period  commencing  on the 1st day of April 1980, shall  not exceed rupees thirty lakhs;  and

     (ii)  The  value of clearances eligible for  exemption contained  in this notification during the aforesaid  period commencing  on the 19th day of June, 1980 and ending on  the 31st  day  of March, 1981 shall, in no case,  exceed  rupees twenty four lakhs.

     Provided further than an officer not below the rank of

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an  Assistant Collector of Central Excise is satisfied  that the  sum  total of the value of the capital investment  made from  time  to time on plant and machinery installed in  the industrial  unit  in which the said goods, under  clearance, are  manufactured,  is  not  more  than  rupees  ten  lakhs. (Underlines by us for emphasis)

     2.  Where a factory producing the said goods is run at different  times  during  a   financial  year  by  different manufacturers, the total value of the clearances of the said goods  from  such factory eligible for exemption under  this notification  in  such year shall not exceed  rupees  thirty lakhs.

     3.  Nothing contained in this notification shall apply to  a  manufacturer,  if the total value of the  said  goods cleared,  if  any,  for home consumption by him  or  on  his behalf from one or more factories in the preceding financial year exceeded rupees thirty lakhs.

     Explanation 1  While determining the sum total of the value  of the capital investment, only the face value of the investment  at the time when such investment was made  shall be  taken into account, but the value of the investment made on  plant and machinery which have been removed  permanently from the industrial unit or rendered unfit for any use shall be excluded from such determination.

     Explanation   II.     In   this   notification,   the expression  factory  has  the meaning assigned  to  it  in clause  (m)  of section 2 of the Factories Act, 1948 (63  of 1948).

     Explanation  III.   For the purpose of computing  the value  of clearances under this notification, the clearances of  the said goods which are exempted from the whole of  the duty  of  excise leviable thereon by any other  notification issued  under  sub-rule (1) of rule 8 of the Central  Excise Rules,  1944, and for the time being in force, shall not  be taken into account.

     A  bare perusal of the Notification quoted above shows that  the  Central Government under Rule 8(1) of the  Excise Rules  exempts goods in respect of first clearance for  home consumption  by or on behalf of the manufacturer from one or more  factories  upto  a value not exceeding  rupees  thirty lakhs.    The  exemption  would   however  be  allowable  on fulfilment  of  a condition as contained in the  proviso  to clause  (ii) of the Notification which says that an  officer not  below  the  rank of an Assistant Collector  of  Central Excise is to be satisfied that the sum total of the value of the  capital  investment  made on the  plant  and  machinery installed  in the industrial unit manufacturing said  goods under  clearance  is  not more than rupees ten  lakhs.   On perusal  of  the  proviso under consideration, it  would  be clear  that  it  does  not refer to any  other  goods  under clearance  except  the  goods falling under Item 68  of  the First Schedule to the Central Excise and Salt Act, 1944.  In the  beginning  itself the Notification says that the  goods falling  under  Item  68  are  to be  referred  to,  in  the Notification, as ‘said goods.  According to own findings of the  Assistant  Collector,  liquid   nitrogen  is  itself  a finished product and falls under Tariff Item No.68.  In that

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view  of the matter the question of taking into account  the value of the capital investment made on plants and machinery manufacturing goods other than covered under Item No.68 does not  arise.   We  find no force in the submissions  made  on behalf  of  the  appellants  that value of  all  plants  and machinery  manufacturing butter and skimmed milk powder etc. has  also  to  be added up so as to find out as  to  whether total  value  of  the capital investment in  the  plant  and machinery  is  rupees  ten lakhs or more.  In our  view  the value  of the capital investment has to be in respect of the plant  and  machinery  manufacturing the said  goods  viz. goods  covered under Item No.68 of the Tariff, clearances of which  alone is taken into account in exempting from payment of excise duty under the Notification in question.  The said goods in the present case is only liquid nitrogen.  Thus the value   of   investment   in   the  plants   and   machinery manufacturing  other goods not covered under Item 68 has  no relevance  nor  it  is to be taken into  account.   6.   The Tribunal  while  allowing the appeal followed a decision  of Bombay  High  Court reported in 1984 (16) E.L.T.  30  (Bom.) Devidayal Electronics & Wires Ltd.  and another versus Union of  India and another.  The similar notification in  respect of an earlier year was under consideration before the Court. It  had  been noticed that two words have been used  in  the Notification  namely,  the ‘factory and ‘industrial  unit. The  two expressions would be presumed to have been used for different  meaning.  It was held that industrial unit  would mean  something  other  than the factory, which would  be  a separate isolate part of the plant which is exclusively used for  manufacture  of goods for which exemption  is  claimed. Learned  counsel for the appellants tried to distinguish the case on facts.  We, however, find that in principle what has been  held in Devidayal (supra) as followed by the Tribunal, cannot  be  said  to  be an  incorrect  view.   The  factual deviation  would  be  a matter on facts of each  case.   The other case which the Tribunal has referred to is reported in 1987  (27)  E.L.T.   273 (A.P.) Golden Press  versus  Deputy Collector of Central Excise, Hyderabad and Another.  In this case  a notice was issued on the manufacturer of cartons  as to  why penalty be not imposed since the goods  manufactured were  removed without payment of duty.  It was pleaded  that cartons  were  exempted under a notification  exempting  all products  of  printing industry.  The Court,  however,  held that  cartons  though may be printed, cannot be held  to  be product  of  printing industry.  They will be  relatable  to packaging industry.  Hence, the benefit, as pleaded, was not admissible.   In so far as the other arguments raised  about the  value of the investment made for manufacture of printed cartons,  it  was  held that cost of cutting  machines  etc. could  not  be excluded which according to the  manufacturer was  not  used for printed cartons.  The argument  that  the value  of  the  investment  in   the  plant  and   machinery manufacturing  a  particular  item under a  separate  tariff would  alone  be taken into consideration was not  accepted. The  language  of the exemption notification as involved  in that  case  was  quoted which was to the effect:   The  sum total  of the value of the capital investment made from time to  time on plant and machinery installed in the  industrial unit in which the goods under clearance are manufactured, is not  more than rupees ten lakhs. (As quoted in Para 22  (b) of the judgment).

     It  is  then  observed  that  according  to  the  said notification  total  value  of the entire machinery  in  the

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industrial unit should be taken into account as there was no occasion  for allocating the machinery between various goods manufactured  therein  and  by  way of an  example,  it  was observed  that  it may create complications where a  factory manufacturing  goods falling under more than one tariff item but  has only one generator of power plant, so in such cases in  what manner generator or power plant was to be allocated between two items.  The plea raised was negatived and it was held  that  total  value  of the  entire  machinery  in  the industrial  unit  should  be taken into  account.   At  this stage,  it would be appropriate to point out the  difference in  the language used in two notifications.  We find that in the   Notification  dated  19.6.1980,   with  which  we  are presently  concerned,  the  proviso to clause  (ii)  of  the Notification  says  the capital investment made from  time to  time on plant and machinery installed in the  industrial unit   in  which  the  said   goods  under   clearance   are manufactured..  The expression said goods is not used in the  Notification  interpreted in the case of  Golden  Press (supra).  The said goods signifies or identifies the goods which  are  covered  under  Item  68  in  respect  of  which exemption has been granted.  But the word said is not used in  the  Notification  under consideration in  the  case  of Golden  Press (supra) as indicated above says industrial unit    in   which   the     goods   under   clearance   are manufactured.   The  goods  have not been  specified  by using  the  expression  said goods.  In  the  Notification dated  19.6.1980,  as already indicated earlier,  the  goods falling  under  Item 68 are to be referred as said  goods. Therefore,  in our view it will not be possible to take into consideration  the value of investment of all the plants and machinery  manufacturing  different items viz.  goods  other than the said goods.

     7.   In  our view the Tribunal rightly  preferred  the view  taken  in the case of Devidayal (supra).  The  factual hurdles  like a common generator may be in use by  different units  in  the factory complex as indicated in the  case  of Golden  Press  (supra)  can well be worked out  by  devising proper  method  while  apportioning the value  of  different plants  proportionately.   In no way such hurdle, as  posed, would change the meaning of a Notification which on the face of it and by the plain language used therein has unambiguous and   clear  meaning.   8.    Such  Notifications  by  which exemption  or other benefits are provided by the  Government in  exercise  of  its statutory power,  normally  have  some purpose  and  policy decision behind it.  Such benefits  are meant  to  be provided to the investors  and  manufacturers. Therefore,  such purpose is not to be defeated nor those who may  be  entitled for it are to be deprived by  interpreting the  notification which may give it some meaning other  than what  is  clearly and plainly flowing from it.  9.   9.   In view  of the discussion held above, we find no merit in  the appeals  and  they  are hereby dismissed.  No  order  as  to costs.