Judgment:
1. The appellant received for repairs in its factory a water cooler which has been manufactured, not by it, but by another manufacturer. It received the cooler in October, 1986, repaired it and sent it out of the factory in September, 1987. It paid duty on the cooler when it was cleared. Subsequently, it claimed refund of the duty so paid, on the ground that no duty was required to be paid in terms of Rule 173H. The Assistant Collector rejected the claim on two grounds - that the claim was barred by limitation, and that proviso to Rule 173H would not apply to a case of this kind, where the goods which entered the factory for repair had been manufactured in another factory. In appeal, Collector (Appeals) held that the claim was not barred by limitation. He however upheld the finding of the Assistant Collector on the applicability of Rule 173H. Hence this appeal.
2. The appellant's contention has all along been, that, as it stood at the relevant time,the provisions of Rule 173H did not expressly, or by its implication restricts its applicability only to cases where the article which was brought into the factory for any of the purposes specified in Sub-rule (1) was not manufactured in that factory. It raised the contention before the Collector (Appeals) and challenged the finding of the Assistant Collector that this interpretation of Rule 173H was confirmed by the fact that the rule was amended in May, 1988 to specifically incorporate the words "the goods whether manufactured in his factory or any other factory". Collector (Appeals), in his order, took the view that the addition of these words was only clarificatory, and therefore the amendment would have retrospective operation. Collector (Appeals) did not agree with this view. He said that the addition of the clause would by itself lead to the view that the amendment is clarificatory but he noted that there was change in the caption or marginal note to the rule. Before amendment it read "retention or re-entry of duty paid goods" and after amendment "retention of bringing of duty paid goods".
3. This point was adopted by the Departmental Representative who argued that the amendment enlarged the scope of the rule so as to bring into its ambit the goods manufactured by other factory and that it therefore could not be considered to be clarificatory.
4. The rule as it stood on the date on which the goods were brought in, and on the date on which the goods were cleared on payment of duty read as follows: (1) "The assessee may, subject to such condition as may be specified by the Collector, may retain, or bring into, its factory or warehouse goods on which duty has been paid if such goods... need to be refined, reconditioned, repaired or subjected to any similar process in the factory." (2) "The goods retained in, or brought into, a factory or warehouse in accordance with the provisions of Sub-rule (1) (may, if not subjected to any process amounting to manufacture be removed) from the factory or warehouse without payment of duty subject to such conditions as may be defined by the Collector." 5. A plain reading of the rule does not support the contention that it would only apply to cases where the goods to be repaired, re-conditioned etc. had been manufactured in the factory into which they had been brought for repair. Sub-rule (1) provides that the assessee may retain or in bring into the factory the goods on which duty has been paid. It does not say that duty must have been paid by him. Nor is there anything in the words of Sub-rules (1) and (2) that implies such a view. This supports to the conclusion that the amendment was clarificatory, but that is not the matter that we are addressing.
On the date on which the goods were brought on repair, there was nothing in the rules that prohibited their being brought in.
6. This would be sufficient to dispose of the appeal. However, the Collector (Appeals) view that the marginal note can be referred to in construing the section is not supported by case law. On the contrary, there are decisions to say that marginal notes cannot be referred to for the purpose of construing the statute. (CIT v. Ahmed Umerbhai - AIR 1950 SC 134).
7. We are unable to appreciate the significance of the contention raised by the Departmental Representative that the Collector (Appeals) does not refer to marginal note but to "caption note". The book 'Interpretation of Statutes' by G.P. Singh which are referred to indicates that the grouping of word at the beginning of a section often appear in the margin in the statute book, are marginal notes. Use of an incorrect expression by the Collector (Appeals) has to be disregarded.