1. These are three revenue appeals against the common orders in Appeal No. 97, 98, 99/97 dt. 19.3.97 passed by the Commissioner Appeals, Trichy, allowing the benefit of Notification No. 136/94 dt. 10.11.94, the items described in (a) to (b) below in respect of the three respondents.
(b) Diesel generator set with mobile refrigeration unit and cold storage unit.
The findings recorded by the Commissioner in paras 3 to 5 of his order are extracted below; 3. I have given my careful consideration to the submissions of the appellants and have also perused the impugned orders. The issue for consideration here is whether the appellants are entitled to the exemption from duty under Notification 136/94 or not. As discussed below, I am disposing of the main appeals without personal hearing.
4. Notification 136/94 dated 10.11.94 extends exemption from excise duty to an E.O.U. for certain specified goods subject to certain terms and conditions. The dispute centres around the question whether the above said goods are required "in connection with" the production or manufacture or packaging of materials specified in the notification. The AC has taken the view that these items are not Green House equipment or its accessories & so cannot be covered by the notification. From the records it is seen that all the appellants are floriculture units engaged in the export of flowers/cut flowers and have explained that the refrigerated atmosphere is an essential requirement for production/packing and export of flowers. I find force in the above plea of the appellants.
It is common knowledge the flowers are perishable items prone to wilting unless they are kept in the cold atmosphere. The Hon'ble Supreme Court while interpreting the expression in the manufacture in J.K. Cotton & Spinning & Weaving Mills case AIR 1965 SC 1310 (V 52 C 213) ruled that the expression in the manufacture of goods takes in within its compass all processes which are directly related to the actual production and that goods without which commercial production would be in expedient must be regarded as goods intended for use in the manufacture of goods'. Though this judgment was delivered in the context of the Sales Tax matter, the ratio of the above has been applied by the Tribunal in several cases. The notification 136/94 stipulates that the specified goods should be brought in connection with production or manufacture or packaging and this in my view has a wider connection. So long as the goods are associated in any of the processes till actual exportation, I would consider that the said goods should be allowed to be brought duty free in terms of the above notification. Given the nature of the exported product viz. flowers/cut flowers, I am of the view that the goods under dispute vide para 1 above like Air Conditioner chassis on which Mobile Refrigeration Unit is mounted, Transformer & DG sets (for maintaining uninterrupted power) are entitled to be brought duty free as accessories in terms of Notification 136/94 CE dt.
10.11.94. The AC's orders cannot therefore be sustained.
5. In the view I have taken as above all the three appeals are allowed. Revenue contends that while green house equipments and its accessories are specified in clear terms as the capital goods under S. No. 1 in Annex-I, transformer is not found covered in any of the description given in the notification. Therefore, the extension of benefit to the transformer under the notification is not justified.
It is contended that the ratio of the Supreme Court judgment rendered in the case of M/s. J.K. Cotton & Spinning & Weaving Mills is not applicable to the instant case for the reason that the Notification No. 136/94 extends exemption for such cases which are listed in the Annex-I to the said notification. Hence, the notification cannot be interpreted to include other goods, which are not included in the list of Annex-I.2. In the prayer portion in appeal 1615/97 the revenue is restricting the grant of benefit of notification to the transformers alone and there is no indication in the ground challenging the benefit to the other items indicated in respective orders in original which have been delineated in Annx-I supra.
3. Learned SDR contended that the transformer couldn't be considered to be capital goods for grant of the benefit of the notification. He pointed out to the notification which exempts excisable goods specified in the Annex-I to this notification when brought in connection with the production or manufacture or packaging of articles specified in Annex-ll to this notification, as the case may be, into a 100% export oriented undertaking from the whole of (i) the duty of excise leviable thereon under Section 3 of the Central Excises and Salt Act, 1944(1 to 1944); and (ii) the additional duty of excise leviable thereon under Sub-section (1) of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), subject to the following conditions, namely: (a) the undertaking is approved by the Board of Approval for 100% export oriented undertaking appointed by the Central Government in exercise of the powers conferred by Section 14 of the Industries (Development and Regulation) Act, 1951 (65 of 1951) and the rules made under that Act (hereinafter referred to as the Board); (b) the said goods are brought directly to the undertaking from the factory of production and are used in connection with the production or manufacture or packaging of goods meant solely for export; (c) such undertaking exports out of India 100% or such other percentage as may be fixed by the Board, of articles manufactured wholly or partly from the said goods for the period stipulated by the Board or such extended period as may be specified by the Board; (d) on clearance of the excisable articles produced or manufactured and allowed to be sold in India, such undertaking shall pay duty of excise leviable on such articles in terms of Section 3 of the said Central Excises and Salt Act; (e) the manufacturer of the said goods follows the procedure contained in Rules 156-A and 156-B of the Central Excise Rules, 1944 (hereinafter referred to as the said rules) as modified by Rule 173-N of the said rules; (f) the undertaking follows the procedure contained in Chapter X of the said rules with the modification that a certificate in form C.T. 3 as specified in Annexure-lll to this notification shall be used by the Central Excise officer in charge of the undertaking in place of a certificate in form C.T. 2 prescribed under the said rules; (g) on the clearance of capitai goods or office equipment, as may be allowed by the Board, such undertaking shall pay excise duty on depreciated value and at the rate in force at the time of payment of such excise duty.
(h) on the clearance of goods other than those specified in connection (g) above, as may be allowed by the Board, such undertaking shall pay excise duty on the full value at the time of their clearance from the factory of manufacture and at rates in force on the date of payment of such excise duty.
4. Pointing out to the above terms of the notification, learned SDR contents that the transformer cannot be said to be brought in connection with the production or manufacture or packaging of articles specified in Annex-ll of the notification. Hence, the impugned order is required to be modified suitably.
5. Learned SDR likewise submitted that in revenue appeal No. 1616/97, the revenue is seeking for setting aside the entire order in appeal No.98/97 C.B.E. dt. 19.3.97, which extends benefit to the items like diesel generating sets, mobile refrigerating unit with cold storage unit on the same grounds as contended in the above appeal.
6. Revenue likewise have brought for setting aside the grant of benefit to the items refrigerated truck and diesel generating sets in appeal E 1615 against the SIP Industries.
7. None appeared on behalf of the SIP Industries, Bangalore, while Shri H. Karthik Seshadri, Advocate accompanied by M/s. Elizebeth appeared for M/s. Suvarna Florex Ltd., Bangalore and M/s. SPA Agro Ltd., Bangalore. They have filed written submissions on behalf of the respondents. They have contended that the order is correct and prayer the respondents ar Export Oriented Units (EOU) manufacture cut flowers for 100% export. They are two big features of this activity.
(a) The activity is a highly delicate and sensitive one and the flowers have to be maintained at the right atmospheric conditions through out the period of their growth.
The cut flowers after harvesting are to be maintained at a temperature of 2 to 5 degree centigrade throughout till they reach the overseas market. Therefore, it is essential that they are stored and transported (by road and air) in air-conditioned packing.
8. They have also pointed out that if care is not taken in the above two respects the manufacturing activity for the export market, would be worthless and commercially incomplete and unviable as the slightest defect in the look or fragrance of the flowers leads to their rejection in the overseas market. They contended that in terms of the rules of Tamil Nadu Electricity Board, they require a transformer to be used by all High Tension Consumers. Each green house is located over an area of 12,500 sq.m or 2.5 acres. It consists of a shed made of suitable building material. Each shed is divided into 19 parts or bays. Each bay has a roof designed with an opening and closing system. This is operated with the help of a motor on each bay root that draws power from the transformer.
9. They further contends that the opening and closing of the roofs is what gives the green house its peculiar character, as this enables the atmospheric conditions inside to be maintained or varied as required.
The roof is opened and closed several times a day depending on the wind, temperature,. humidity and other atmospheric conditions. It is submitted that without this system the green house is nothing more than a mere structure and the floriculture activity cannot be commercially carried out within. Apart from this the transformer is essential for providing the irrigation, fertilizing, spraying chemicals and other functions so essential to the functioning of the green house.
Therefore, the transformer is the green house equipment itself. It cannot be used within a green house as the heat generated will kill the flowers, but the green house is ineffective without the use of the transformer.
10. They further submits that the Board Circular No. 302/18/97-CE-MF dated 10.3.1997 clearly says that "Erected green house can itself, therefore, be construed as an equipment inasmuch as Green house is required for production of the export products like floriculture, etc.".... and for determining the eligibility of this Notification to any items, the criteria adopted should be its essentiality with reference to production/manufacture/packaging of an item specified in Annexure II to Notification No. 136/94-CE". "All pending disputes may be resolved in the light of the aforsaid clarification". Therefore, their alternative submission is that the transformer is an accessory of the green house which in itself is an equipment. It is indispensable to the proper functioning of the green house, it promotes the efficiency and is essential for the operation of the green house itself.
11. They further pointed out that the use of Air-Conditioning Unit by which the cut flowers are maintained at a temperature of 2 to 5 degrees C till they are sorted, graded and packed. This could take between 12-24 hours, throughout which time the temperature is to be maintained with the use of the air-conditioning units. Therefore, it clearly comes within item 1 or item 7 of Annexure-I. Moreover, Diesel generator chassis with mobile refrigerating unit and cold storage units is NOT a mobile truck. This is only a temperature control system for the purpose of packing in the course of transit. It has its own power system, which is the diesel generator set. The unit is fitted onto a transport vehicle. Exemption is NOT sought for the transport vehicle. The diesel generator classis is different and independent of the vehicle chassis and must not be confused with this. Since the temperature must be maintained at 2 to 5 degrees throughout the journey to the airport and during the waiting period at the airport while the consignment is booked, etc., the mobile refrigerating unit is a packing material. It can be appreciated by visualising that the flowers are packed into small boxes, which are cooled individually with a set of batteries.
Several such boxes are loaded onto a vehicle and transported. Since, it is not commercially viable to have several small air-conditioned boxes, the flowers are packed into one big air-conditioned box, which is simply this unit. The battery that supplies it power is the diesel generator set. Therefore, this is covered under item 7 of Annexure-ll.
12. They further submits that by a reading of the Board Circular No.302/18/97 all the above three goods in dispute would be accessories of an erected green house itself under the definition of "accessories" as defined by the Supreme Court.
13. They contend that the respondents are entitled to avail of the benefits of the exemption granted in Notification No. 136/94. It is further contended that on a plain reading of the said Notification, it is very clear that the object behind the grant of the exemption is to encourage export of the products mentioned in Annexure-II to the Notification. It is very clear that all the products mentioned therein are related to Agricultural, Horticultural and animal husbandry. In order to make an impact on the export market exemptions have been given for units to carry on business in the manufacture of the products listed out in the Annexure-ll. The items mentioned in Annexure-I of the said Notification have to be construed in such a manner that they go to promote the export of the products mentioned in Annexure No. II. It is therefore, submitted that the words used must be given a meaningful interpretation in furtherance to the Notification No. 136/94. Any contrary interpretation would only lead to greater harm to several export oriented units involved in the export of items mentioned in Annexure-ll.
14. They submit that in the case of Vishal Footwear Ltd. and Anr. v.Commissioner of Customs, New Delhi 99 (35) RLT 45 (CEGAT) and in the case of Kuntal Granites (P) Ltd. and Anr. v. Commissioner of Central Excise, Belgaum 2001 (43) RLT 829 (CEGAT-Ban), the above two notifications were considered and it was held that the matters relating to EOUs ought to be referred to the Development Commissioner before adjudication. They referred to the Boards Circular No. 122/95-Cus, dated 28.11.95 wherein the Board expressed the view that in these type of matter the issue should be examined before issue of Show Cause Notices and legal position settled. They contended that the items in dispute have clearly been exempted from the payment of Excise duty by the Order of the Joint Development Commissioner. They further submit that under EXIM policy the definition of capital goods is wide enough to bring within its fold all the three items in dispute, and hence, the items are exempted from payment of duty.
15. On a careful consideration of the submissions made by both the sides, we are of the considered opinion that the learned Commissioner has carefully examined the issue in the light of the Apex Court judgment and has correctly applied the ratio while interpreting the terms of the notification is question and that there is no infirmity in the impugned order. We have also independently applied our mind and found that from the terms of the notification, the notification exempts excisable goods when brought in connection with the production or manufacture or packaging of articles specified in Annex-II of the notification. That too clearly beings within its ambit in terms of Section No. 3 cut flowers. There is not dispute with regard to the exported item falling within Annex-II. There is also no dispute about the items having been installed within the green house equipment described in Annex-I of the notification. The question raised by the revenue in these appeals is that the items in question do not in any way be considered to be connected with the production or manufacture or packaging of articles and cut flowers.
16. The learned Commissioner has noticed in this order that the cut flowers cannot be exported unless they are retained and maintained under a specific air-conditioning unit to maintain them fresh till they are transferred to the flight. The refrigerating unit takes the flowers to a distance of 40 to 50 kms. i.e. to the Airport and it has to wait till it is transferred to the flight and keep them fresh till such item as the cut flowers reaches their destination. The term "production or manufacture or packing of articles" is wide enough to bring within its ambit the items in question as the export cannot be completed unless these items are utilised in the process of production or manufacture or packing. The activity of export of cut flowers can be completed only when these items are utilised in carrying out the export activity.
There is no dispute on the point that the respondents are undertaking exports out of India, 100% of the cut flowers, which are produced in the green house. The green house equipment comprises of this equipment also. It has been explained before us that the air-conditioned unit is kept also inside the green house equipment In order to run the air-conditioned unit, transformer is essential and the other items are brought in connection with the production of cut flowers and which is required to maintain the harvested flowers at a temperature of 2 to 5 degree centigrade throughout till they reach the overseas market, therefore, the goods which are used for such export are required to be considered as essential and to have been brought in connection with the production or manufacture or packaging or the articles. It is well settled by Hon'ble Apex Court in the case of Rajasthan Chemicals Ltd. , that the definitions of manufacture bring with its all the items used in the process of manufacture. The Apex Court held that goods used for any of the processes in connection with the manufacture, it has to be construed to have been used within the process of manufacture. This judgment has a clear applicability to the facts of the case. The learned Commissioner has also examined the other judgments, which are applicable to the facts of the case, and has rightly drawn its ratio for upholding the claim of the respondents.
There is no infirmity in the order as he also found that these are essential and necessary in connection with the production or manufacture or packing of the articles in question. In the view of the matter, there is no merit in these appeals and hence they are rejected.
17. I am not able to persuade myself to agree with the order proposed by my learned brother Shri S.L. Peeran, M(J).
18. The learned Commissioner (Appeals) vide order in Appeal No.97/98/98-99 (CBE) dated 13.9.97 has allowed the benefit of Notification No. 136/94 dated 10.11.94 on the following items: (2) Diesel Generating set with mobile refrigeration unit and cold storage unit.
Notification No. 136/94 dated 10.11.94 extends exemption from payment of Central Excise duty to 100% Export Oriented Units (EOU) for certain specified goods subject to certain terms and conditions. The dispute centres around the question whether the above said goods are required in connection with the production or manufacture or packaging of materials specified in the said Notification. Therefore, the items viz.
(i) One refrigerated truck and two diesel generator sets and (ii) Diesel generator set with mobile refrigeration unit and cold storage unit (iii) Transformer and Air Conditioning units have to satisfy that they are used in connection with the production or manufacture or packaging of goods specified in the Notification.
19. All the respondents-assessees are floriculturists of flowers/cut flowers and have taken the plea that refrigeration atmosphere is essential requirements for production/packaging and export of flowers on the ground that it is common knowledge that flowers are perishable item prone to wilting unless they are covered with cold atmosphere. I find that the Revenue in their appeal No. E/1617/97 against M/s.
Suvarna Florex Ltd. has limited their prayer for denial of the benefit of the Notification to the transformer only and sought for upholding the order in original for this item.
20. M/s. Suvarna Florex Ltd. (Respondents in Appeal No. E/1617/1997) a 100% EOU sought exemption from levy of Central Excise duty in terms of Notification No. 136/94-CE in respect of transformer and Air Conditioner unit to be procured from indigenous manufacturers.
Transformer is claimed as meant for use in their unit for sub-station and the AC is claimed as meant for use in their packing room where export product is packed. Notification No. 136/94 CE does not covers above goods as these cannot be regarded as green house equipment or its accessories of machinery or equipment for packaging. They have admitted that transformer is meant to be used in the sub-station installed at their unit, the purpose of which is to supply electric power to the green house and other equipments installed both within and outside the green house. Since these goods are not used within the green house they cannot be regarded as green house equipment or its accessories.
21. M/s. SPA Agro Ltd. (Respondents in Appeal No. E/1616/1997) have sought for exemption from levy of Central Excise duty in terms of Notification No. 136/94-CE in respect of Diesel Generator sets, Chassis of vehicle on which mobile Refrigeration Unit is mounted and Cold Storage units to be procured from an indigenous manufacturer against CT-3 certificate. They have admitted that as per Annexure 1 to the above Notification, Cold storage units (both stationery and mobile) have been excluded. However, they have claimed exemption on the ground that the items in question are very essential for cut flower production and also that the Ministry of Industries have permitted duty free procurement of such items. The DG set for which they sought for exemption from payment of duty vide Notification No. 136/94 is meant to be used in the sub-station outside the green house. The participation of DG sets is to generate electric power in the sub-station outside the green house and for supplying electricity to the green house and other equipment installed both within and outside the green house. Since they are not used within the green house they cannot be regarded as green house equipment or its accessory. The chassis of vehicle on which Mobile Refrigeration unit is mounted is meant for transport of Cut flowers after packing outside the green house upto the Airport and, therefore, it cannot be regarded as green house equipment or its accessory. Similarly the cold storage units are meant to be used for storage of finished product viz. Cut flowers after packing and the same cannot be regarded as Green house equipment or its accessory.
22. M/s. SIP Industries Ltd. (Respondents in Appeal No. E/1615/97) are having their Floriculture 100% EOU at House. They have sought for exemption from payment of Central Excise duty in terms of Modification No. 1236/94-CE in respect of one Refrigerated Truck and two Diesel Generator sets to be procured from indigenous manufacturers against CT-3 certificate. The Refrigerated Truck is claimed to be meant for transport of cut flowers and the Diesel Generator sets are meant to be used for sub-station outside the green house. They have admitted that the Refrigerated Truck is meant for transport of Cut flowers after packing outside the Green house. The Refrigerated truck is not meant for use within the green house and it cannot be regarded as green house equipment. So far as the DG sets are concerned, these are meant to be used in sub-station outside the green house. The purpose of the DG sets is to generate electric power in the sub-station outside the green house and for supplying the electricity to the Green house and other equipments and installations both within and outside the Green house.
It is not used within the Green house and hence it cannot be regarded as green house equipment or its accessory.
23. The original authority by different orders in originals have ruled in favour of the Revenue by rejecting the assessees' contention.
Aggrieved by the orders in original the assessee moved the Commissioner (Appeals) with their appeals and the Commissioner (Appeals) by the common impugned order allowed their appeals and hence these appeals by the Revenue.
24. The Commissioner (Appeals) has misdirected himself in applying the ratio of the Hon'ble Apex Court judgment in the case of JK Cotton & Spinning Mils wherein the Apex Court has held that the expression "in the manufacture of goods" takes within its compass all processors which are directly related to the actual production without which commercial production would be inexpedient. I am of the view that the ratio of this decision is not applicable to the instant case for the reason that the Notification extends exemption to such goods which are listed in the Annexure 1 to the said Notification.
25. I would also like to observe that the Hon'ble Supreme Court in the case of Mehra Brothers v. Jt. CTO as had occasion to interpret the word "accessory" and the Apex Court held that accessory means "anything which is joined to another thing as an ornament, or render it more perfect, or which accompanies it, or is connected with it as an incident, or as subordinate to it, or which belongs to or with it, adjunct or accompaniment. A thing of subordinate importance. Aiding or contributing in secondary way of assisting or contributing to as subordinate".
26. Further, I find that according to the Chambers English Dictionary 'Green House' is defined as "a Glasshouse for plants, esp. one with little or no artificial heating....
27. Now coming to the exemption Notification, a perusal of Annexure 1 to Notification 136/94 CE dated 10.11.94 would reveal that at Serial No. 1 of Annexure 1 green house equipment and accessories are covered.
Packing materials including machinery and equipments for packaging are mentioned at Serial 7 to Annexure 1 of the said Notification. It is well settled that Notification has to be strictly interpreted and nothing can be added or subtracted and nothing can be read therein except what is stated therein.
28. The Respondent have also pressed into service the Central Board of Excise & Customs Circular No. 302/18/97-CE dated 10.3.1997. I find that this Circular is about clarification regarding eligibility to the benefit of Notification 136/94 in respect of 'Erected Green House' which is construed as an equipment. It also clarifies that Ultra Violet Plastic Sheet which is necessary for making/erecting green house will also be covered by the said Notification. The said circular also clarifies that the activity of cultivation should be construed as production activity falling within the purview of the said Notification. The Circular does not deal with other items involved in these appeals.
29. It would therefore be seen that the criteria adopted for extending the benefit of Notification should be the essentiality of an item with reference to the production/manufacture/packaging of the items specified in Annexure II to the Notification (supra) and the items covered by Annexure I to the Notification for production/manufacture/packaging, are green house equipment, accessories, heated rooting tables, propagation trays, seeding machines, and packaging materials including machinery and equipment of packaging. Learned Member (J) has referred to the Apex Court judgment in the case of Rajasthan Chemicals Ltd. wherein it was held that the definition of manufacture brings with it all the items used in the process of manufacture. The Apex Court held that goods used for any process in connection with the manufacture, has to be construed to have been used within the process of manufacture.
30. As already discussed above, the use of various items involved in these appeals are as under: (1) Transformer is used in the sub-station for generation of electricity to supply electricity both inside and outside the green house.
(2) Refrigerated truck is meant for transport of Cut flowers after the process of packing is over.
(3) DG sets are meant to be used in the sub-station outside the green house for supply of electric power to the green house and other equipments and installations both within and outside the green house.
(4) Chassis of vehicle on which mobile Refrigeration unit is mounted is meant for transport of cut flowers after the process of packing is over. The vehicle used for transport of the cut flower cannot be regarded as used for production or packaging of the product.
(5) Cold storage units are meant for storing the finished product viz. Cut flower after the process of packing is over.
31. I find that the Revenue in their Appeal No. E/1617/97 (and not in the Appeal No. E/1615/97 as mentioned by learned M(J) in para 2 of his order) in the prayer portion has limited their prayer for setting aside the benefit in respect of Transformer only and not for AC unit.
32. In view of the above discussion, all these items (except AC Unit) though may be necessary for the preservation of the flowers/cut flowers after they are produced and packed, they do not go into the production or manufacture or packing of flowers. Therefore, I am of the considered opinion that the order in appeal passed by the Commissioner (Appeals) is not proper and legal in so far as it relates to all the items except AC unit and the order should be set aside with this modification and the orders passed by the Assistant Commissioner should be restored by allowing the Revenue appeals. Accordingly the impugned order in appeal is set aside with the modification that Air Conditioner would be eligible for the benefit of Notification 136/94. Subject to the above modification, the appeals filed by the Revenue are allowed.
33. In view of the difference of opinion between the Members the matter is required to be placed before the 3rd Member by Hon'ble President for deciding the following question that arise from the differing orders: Whether the revenue appeal is required to be rejected by upholding the impugned order passed by Commissioner (Appeals) as held by Member (Judicial) in his order.
Whether the impugned order of the Commissioner (Appeals) is required to be set aside in so far as all the items except the AC Unit in terms of the order recorded by Member (Technical) in his differing order.
34. This is a difference of opinion matter. The difference of opinion has arisen between the two learned Members. The following questions are referred to me for resolving the difference: Whether the Revenue appeals are required to be rejected by upholding the impugned order passed by the Commissioner (Appeals) as held by Member (J) in his order.
Whether the impugned orders of the Commissioner (Appeals) are required to be set aside so far as all the items except the AC unit, in terms of the orders passed by the Member (Technical) in his differing order.
35. I have heard Shri C. Mani, learned DR for the Revenue and S/Shir R.Parthasarathy, learned Advocate for M/s. SIP Industries Ltd. and Karthik Seshadri, learned Advocate for the other two respondents viz.
M/s. Suvarna Florex Ltd. and M/s. SAP Agro Ltd. 36. I have carefully considered the submissions made before me. The facts of the case are given in details in the respective orders recorded by the learned Members which need not be repeated. The respondents are running a 100% EOU and export the cut flowers. The issue relates to the availability of exemption to the respondents under Notification No. 136/94 CE dated 10.11.94 on the procurement of certain machines/machinery and equipment used in the manufacture/production and export of such goods. The golden rule for interpreting the exemption Notification is that it should be interpreted strictly as per the language used in the notification. However, while considering the eligibility to exemption of the goods under consideration, one also has to keep in view the Board's Circular No. 302/18/97-CE MF dated 10.3.1997 in paras 4 & 5 of which is clarified as follows: 4.It is further clarified that the activity of cultivation should be construed as production activity falling within the purview of the said Notification and for determining the eligibility of this Notification to any item, the criteria adopted should be its essentially with reference to production/manufacture/packaging of an item specified in Annexure II to Notification No. 136/94-CE. 5. All pending disputes may be resolved in the light of the aforesaid clarification.
37. Keeping in view the text of the impugned Notification and the Board's aforementioned instructions, I am of the view that the respondents are entitled to the exemption under this Notification for the machines/machinery and equipment etc. required by them. I, would, therefore, support the view that the Revenue appeals are required to be rejected by upholding the impugned orders passed by the Commissioner (Appeals).
The matter may now be placed before the original Bench for passing the necessary final orders.
In terms of the majority order the impugned order passed by Commissioner (Appeals) is confirmed and the revenue appeals are rejected.