Collector of C. Ex. Vs. Nelliampathy Tea and Produce Co. - Court Judgment

Excerpt:
1. in this appeal filed by the revenue, the matter relates to the assembly of tea chests from unassembled tea chests by the respondent m/s. nelliampathy tea & produce co. ltd. the collector central excise (appeals), madras had held that the assembly of tea chests from unassembled tea chests by the tea factory could not be taken as a process of manufacture. the matter relates to the period from 1-3-1986 to 2-4-1986. on 3-4-1986 notification no. 227/86-c.e., dated 3-4-1986 was issued under which the articles of wood falling under tariff hdg.no. 4410.90 of the new central excise tariff were eligible for exemption. in appeal the revenue had contended that the assembly of tea chests from plywood panels was definitely a manufacturing process involving use of nails, aluminium foils etc. and that the plywood panels and tea chests are different in name, use, character and also the value.2. we have heard shri sanjeev srivastva, jdr appearing for the appellant revenue. on behalf of respondent shri k. kanan, co.representative is present. he prays for decision on merit.3. we have gone through the matter carefully and we find that the collector, central excise (appeals) had observed that what the appellants (respondents before us) were doing was the mere assembly of tea chests in their factory during the course of packing of tea by assembling tea chests purchased by them in unassembled conditions. he had held that the assembly of tea chests from unassembled tea chests was not a process of manufacture. the revenue had contended that what the assessee were bringing were unassembled panels for the tea chests and that the tea chests manufactured from such panels were goods were excisable and were leviable to duty during the period 1-3-1986 to 2-4-1986.4. we find that prior to introduction of the new central excise tariff w.e.f. 1-3-1986 tea chests enjoyed exemption from the payment of central excise duty under notification no. 87/80-c.e., dated 19-6-1980.on introduction of the new central excise tariff immediately, no exemption was provided in favour of the tea chests. however, linder notification no. 227/86-c.e., dated 3-4-1986 exemption was again provided to the tea chests among other articles of the woods. we find that under provision of the central duties of excise (retrospective exemption) act, 1986, retrospective effect was given to the exemption notification issued under rule 82(1) of the central excise rules, 1944.the notification providing exemption to the goods falling under tariff heading no. 4410.90 is dated 3-4-1986 and was covered by the provisions of the above retrospective exemption act.5. in view of the above we find even if the contention of the revenue is accepted the goods were otherwise eligible for exemption even during the period 1-3-1986 to 2-4-1986. in view of the above provision of the central duties of excise (retrospective exemption) act, 1986. paras 2 and 3 from the statement of objects and reasons to the bill as introduced in the parliament on 12-8-1986 are extracted below: 1. the central excise tariff act, 1985 (5 of 1986), which was passed by parliament in the winter session of 1985, came into force on the 28th february, 1986. this act provided for a new tariff nomenclature as also rates of duties of excise. simultaneously, two companion acts, namely, the additional duties of excise (goods of special importance) amendment act, 1985, and the additional duties of excise (textiles and textile articles) amendment act, 1985 effecting consequential changes in the levy of additional duties of excise were given effect to from the same date. 2. in the statement of objects and reasons relating to the said bills as well as at the time of consideration of these bills in both houses of parliament, it was stated that, as regards rates of duties, the bills sought to preserve, by and large, the then existing duty structure. it was further mentioned that where the statutory rates of duties were fixed at a level higher than the effective rates, an attempt would be made to continue the effective rates through exemption notifications issued under the central excise rules, 1944 and that any unintended change in the rates of duty would be duly corrected. 3. in keeping with the above objects, a number of exemption notifications were issued after the new tariff act became operative, so as to preserve, by and large, effective rates of duties of excise as they existed prior to the commencement of the said act. however, some of these exemption notifications could be issued only after the 1st day of march, 1986, when the impact of the duty changes came to be known to the government either from the trade and industry or from the field officers. these notifications also include the notifications issued for the purpose of correcting the unintended levy on certain excisable goods on account of changes made by the notifications issued along with the finance bill, 1986. 4. as the notifications issued after the 1st day of march, 1986, under sub-rule (1) of rule 8 of the central excise rules, 1944 cannot be applied retrospectively, it has become necessary to introduce this bill so as to give retrospective effect from the 1st day of march, 1986, to any such notification, issued by the central government on or after the 3rd day of march, 1986 but before the 8th day of august, 1986, which is for the purpose of, or has the object of, - (a) maintaining the effective rates of duties of excise at the level obtaining prior to the 28th day of february, 1986 notwithstanding the changes in the rates of duties of excise made by the central excise tariff act, 1985, the additional duties of excise (textiles and textile articles) amendment act, 1985 or the additional duties of excise (goods of special importance) amendment act, 1985; or (b) maintaining the effective rates of duties of excise at the level obtaining prior to the 1st day of march, 1986, notwithstanding the changes in the rates of duties of excise made by the finance bill, 1986.in view of the above we do not find any infirmity in the view taken by the ld. collector, central excise (appeals). there is no merit in this appeal filed by the revenue and the same is rejected.

Judgment:
1. In this appeal filed by the Revenue, the matter relates to the assembly of tea chests from unassembled Tea Chests by the respondent M/s. Nelliampathy Tea & Produce Co. Ltd. The Collector Central Excise (Appeals), Madras had held that the assembly of Tea Chests from unassembled Tea Chests by the tea factory could not be taken as a process of manufacture. The matter relates to the period from 1-3-1986 to 2-4-1986. On 3-4-1986 Notification No. 227/86-C.E., dated 3-4-1986 was issued under which the articles of wood falling under Tariff Hdg.

No. 4410.90 of the new Central Excise Tariff were eligible for exemption. In appeal the Revenue had contended that the assembly of Tea Chests from plywood panels was definitely a manufacturing process involving use of nails, aluminium foils etc. and that the plywood panels and Tea Chests are different in name, use, character and also the value.

2. We have heard Shri Sanjeev Srivastva, JDR appearing for the appellant Revenue. On behalf of respondent Shri K. Kanan, Co.

Representative is present. He prays for decision on merit.

3. We have gone through the matter carefully and we find that the Collector, Central Excise (Appeals) had observed that what the appellants (Respondents before us) were doing was the mere assembly of Tea Chests in their factory during the course of packing of tea by assembling Tea Chests purchased by them in unassembled conditions. He had held that the assembly of Tea Chests from unassembled Tea Chests was not a process of manufacture. The Revenue had contended that what the assessee were bringing were unassembled panels for the Tea Chests and that the Tea Chests manufactured from such panels were goods were excisable and were leviable to duty during the period 1-3-1986 to 2-4-1986.

4. We find that prior to introduction of the new Central Excise Tariff w.e.f. 1-3-1986 Tea Chests enjoyed exemption from the payment of Central Excise duty under Notification No. 87/80-C.E., dated 19-6-1980.

On introduction of the New Central Excise Tariff immediately, no exemption was provided in favour of the Tea Chests. However, linder Notification No. 227/86-C.E., dated 3-4-1986 exemption was again provided to the Tea Chests among other articles of the woods. We find that under provision of the Central Duties of Excise (Retrospective Exemption) Act, 1986, retrospective effect was given to the exemption notification issued under Rule 82(1) of the Central Excise Rules, 1944.

The notification providing exemption to the goods falling under Tariff Heading No. 4410.90 is dated 3-4-1986 and was covered by the provisions of the above Retrospective Exemption Act.

5. In view of the above we find even if the contention of the Revenue is accepted the goods were otherwise eligible for exemption even during the period 1-3-1986 to 2-4-1986. In view of the above provision of the Central Duties of Excise (Retrospective Exemption) Act, 1986. Paras 2 and 3 from the Statement of Objects and Reasons to the Bill as introduced in the Parliament on 12-8-1986 are extracted below: 1. The Central Excise Tariff Act, 1985 (5 of 1986), which was passed by Parliament in the Winter Session of 1985, came into force on the 28th February, 1986. This Act provided for a new tariff nomenclature as also rates of duties of excise. Simultaneously, two companion Acts, namely, the Additional Duties of Excise (Goods of Special Importance) Amendment Act, 1985, and the Additional Duties of Excise (Textiles and Textile Articles) Amendment Act, 1985 effecting consequential changes in the levy of additional duties of excise were given effect to from the same date.

2. In the Statement of Objects and Reasons relating to the said Bills as well as at the time of consideration of these Bills in both Houses of Parliament, it was stated that, as regards rates of duties, the Bills sought to preserve, by and large, the then existing duty structure. It was further mentioned that where the statutory rates of duties were fixed at a level higher than the effective rates, an attempt would be made to continue the effective rates through exemption notifications issued under the Central Excise Rules, 1944 and that any unintended change in the rates of duty would be duly corrected.

3. In keeping with the above objects, a number of exemption notifications were issued after the new Tariff Act became operative, so as to preserve, by and large, effective rates of duties of excise as they existed prior to the commencement of the said Act. However, some of these exemption notifications could be issued only after the 1st day of March, 1986, when the impact of the duty changes came to be known to the Government either from the trade and industry or from the field officers. These notifications also include the notifications issued for the purpose of correcting the unintended levy on certain excisable goods on account of changes made by the notifications issued along with the Finance Bill, 1986.

4. As the notifications issued after the 1st day of March, 1986, under sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 cannot be applied retrospectively, it has become necessary to introduce this Bill so as to give retrospective effect from the 1st day of March, 1986, to any such notification, issued by the Central Government on or after the 3rd day of March, 1986 but before the 8th day of August, 1986, which is for the purpose of, or has the object of, - (a) maintaining the effective rates of duties of excise at the level obtaining prior to the 28th day of February, 1986 notwithstanding the changes in the rates of duties of excise made by the Central Excise Tariff Act, 1985, the Additional Duties of Excise (Textiles and Textile Articles) Amendment Act, 1985 or the Additional Duties of Excise (Goods of Special Importance) Amendment Act, 1985; or (b) maintaining the effective rates of duties of excise at the level obtaining prior to the 1st day of March, 1986, notwithstanding the changes in the rates of duties of excise made by the Finance Bill, 1986.

In view of the above we do not find any infirmity in the view taken by the ld. Collector, Central Excise (Appeals). There is no merit in this appeal filed by the Revenue and the same is rejected.