Full Judgment
2. The appellants are engaged in the manufacture of textile fabrics coated/laminated with preparation of low density polyethylene falling under sub-heading 5903.90 of the CETA and are not availing the facility of modvat scheme. They had cleared fabrics at Nil rate of basic duty and additional excise duty w.e.f. 1.4.95 upto exemption limit of Rs. 30 lakhs in terms of Notification No. 1/93 as amended by 75/95 dated 24.3.95. They were served with two show cause notices indicating that SSI exemption is applicable to BED only and not to AED and directed them to pay AED for clearing fabrics during the period Nov. 96 to March, 97 and April, 97 to June, 97. The penalty was also proposed to be imposed. The appellants contested the correctness of those notices mainly on the ground that the SSI exemption Notification No. 1/93 dated 28.2.93 was applicable to the goods leviable to AED also. Both the authorities below did not accept this plea of the appellants and confirmed the duty demand.
3. The sole issue involved in the present appeal is as to whether exemption Notification No. 1/93, dated 28.2.93 applies to the goods liable to AED for payment of AED or not. This issue, in our view, stands fully settled by the Apex Court judgment in Union of India v.Modi Rubber . In that case, exemption from duty of excise was provided by Notification Nos. 123/74-CE and 27/81-CE and the application of those notifications was claimed by the assessee in respect of the payment of additional excise of excise. The Apex Court was please to observe as under: Where a notification granting exemption is issued only under Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 without reference to any other statute making the provisions of the Central Excise Act and the Rules made there under applicable to the levy an collection of special, auxiliary or any other kind of excise duty levied under such statute, the exemption must be read as limited to the duty of excise payable under the Central Excise Act and cannot cover such special, auxiliary or other kind of duty of excise.
Exemption from duty of excise does not mean exemption also from special excise duty, additional excise duty or auxiliary duty. The expression 'duty of Excise' used in the Notfns. cannot be construed as comprehending also special duty of excise or additional duty of excise merely because source of power under which exemption issued is Rule 8(1) of the Central Excise Rules. In case exemption is for 'special excise duty' or additional duty of excise, the recital of the source of power in the exemption notification would invariably be Rule 8(1) but read with relevant the relevant provision of statute levying special duty of excise; or additional duty of excise, as the case may be.
4. In the instant case, Notification No. 1/93-CE, dated 28.2.93 had been issued only under Section 5A of the Central Excise Act, without having reference to the Additional Duty of Excise leviable under Section 3 of Additional Duty of Excise (Goods of Special Importance) Act, 1957. Therefore, this notification cannot be deemed to be applicable to the additional excise duty, special excise duty or auxiliary duty. The additional excise duty had been levied on fabrics in the instant case, under the Additional Duty of Excise (Goods of Special Importance) Act. The notification in question, therefore, cannot be construed so as to exempt goods liable to AED, from payment of AED, in the light of the law laid down by the Apex Court in the above referred case.
5. The ratio of law laid down in the Ujagar Prints etc. v., does not pertain to the matter in controversy in the present case. In that case, one of the issue was as to whether the definition of 'manufacture' as given in the Excise Act, could be extended to a case covered by the Additional Duty of Excise (Goods of Special Importance) Act. In that context, the Hon'ble Apex Court was pleased to observe that what applies to main levy also applies to the additional duties as well and as such, levy of additional duty on processing of fabrics was valid. The question as to whether the notification exempting the goods liable to BED could be made applicable to the goods leviable to AED under the Additional Duty of Excise (Goods of Special Importance) Act, or not was not in issue in that case. This question, infact, had been answered in the negative by the Apex Court in the above referred case Union of India v. Modi Rubber Limited (supra). Similarly, the observations of the Hon'ble Gujarat High Court in Maheshwari Mills Ltd. v. Union of India , that additional duty under the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 is not separate from the duty of excise but annexed to basic excise duty, are not of any help to the appellants in the instant case, being not directly on point in issue and also in view of the judgment of the Apex Court in the above referred case. The benefit of judgment of the Tribunal in MRF Ltd. v. CCE, Hyderabad , rendered by the South Zonal Bench, Chennai, referred by the counsel, allowing benefit of exemption in respect of AED, under exemption Notification No. 67/95-CE, cannot be extended to the appellants in the present case, in view of the law laid down by the Apex Court in Union of India v. Modi Rubber (Supra), which appears to had escaped the notice of the South Zonal Bench while deciding that case.
6. Both the authorities below have followed the judgment of the Apex Court (referred to above) and denied the benefit of exemption notification to the appellants in respect of the AED. Therefore, we do not find any legal infirmity or illegality in their orders.
Consequently, the impugned order of the Commissioner (Appeals) against the appellants, is upheld.7. The appeal of the appellants being without merit is ordered to be dismissed.