C.C.E. Vs. Gujarat Co-op. Oil Seeds Growers - Court Judgment

Excerpt:
1. the above appeal has been filed by the revenue against the order of collector of central excise (appeals).2. the brief facts of the case are that the respondents herein are engaged in the manufacture of vanaspati ghee falling under sub-heading 1504.00 of the ceta, 1985 and availing the benefit of concessional rate of duty of rs. 1900/- pmt in terms of notification 12/89-c.e., dated 1-3-1989 for goods specified against sl. no. 2 of the table annexed to the notification. since the department was of the view that the concessional rate of duty under the above mentioned notification was applicable to certain products of inedible grade, while the product manufactured by the respondents was admittedly of edible grade, a show cause notice demanding differential duty of rs. 43,83,671.40 on goods cleared during the period september, 1989 to february, 1990 was issued and the assistant collector confirmed the duty demand. the lower appellate authority, however, set aside the order of the assistant collector holding that the respondents were entitled to the benefit of the notification at sl. no. 2 thereof on the ground that sl. no. 2 covered the goods other than hardened technical oil (inedible grade) holding that the expression "inedible grade" would apply only to hardened technical oil and since the product in dispute was other than hardened technical oil, even though of edible grade, it was entitled to the benefit of sl. no. 2 of the notification.3. we have heard shri a.k. madan, learned sdr and shri udai joshi, learned advocate.4. the table annexed to notification 12/89 during the relevant period reads as under:--------------------------------------------------------------------------sl. no.sub-heading no. goods rate--------------------------------------------------------------------------1. 1504.00 hardened technical oil (inedible nil grade)2. 1504.00 goods other than hardened rs. 1900/- technical oil (inedible grade)b per tonne 5. we agree with the learned dr that the words "inedible grade" governs all goods of inedible grade other than hardened technical oil and does not apply only to hardened technical oil (inedible grade) i.e. in other words, we hold that only goods of inedible grade other than hardened technical oil are covered by sl. no. 2 of the notification, while sl.no. 1 covers inedible grade of hardened technical oil. the exemption notification on a plain reading, leads us to take this view and if the respondents' contention is to be accepted then sl. no. 2 of the notification would have read as "goods (other than hardened technical oil inedible grade)". in this view of the matter, we. hold that the vanaspati ghee of edible grade which was later made eligible to concessional rate of duty by issue of notification 13/90-c.e., dated 20-3-1990, was not covered by sl. no. 2 of the notification 12/89, dated 1-3-1989 and that, therefore, duty was rightly leviable on this product for the period in dispute.6. as regards time bar, though a plea was initially raised by the learned counsel for the respondents that the demand was partly time barred as the show cause notice was issued on 4-4-1990 for the period from september, 1989 to february, 1990, he subsequently gave up the claim when it was pointed out to him that since rt 12 returns for the month of september, 1989 were filed on 5th october, 1989, the entire demand was within the normal period of limitation.7. in the light of the above discussion, we hold that the vanaspati ghee of edible grade manufactured by the respondents herein is not entitled to the benefit of concessional rate of duty of rs. 1900/- pmt in terms of sl. no. 2 of the table annexed to notification 12/89, set aside the impugned order and allow the appeal of the revenue.i observe that the impugned order-in-appeal nos. 102-103/91 covers two order-in-original in respect of the same issue and the same product covering the periods september, 1989 to february, 1990 and 1-3-1990 to 19-3-1990 respectively. the appeal memorandum has been filed w.r.t. the order of the collector as a whole but this particular appeal deals only with the first order-in-original dated 28-8-1990 relating to the period september, 1989 to february, 1990.9. ld. dr has in this respect reiterated the department's view as contained in the appeal memorandum emphasising that the notification no. 12/89, dated 1-3-1989 covered only goods of inedible grade falling under heading 1504.00 and serial no. 2 of the table annexed to the notification covered such goods other than hardened technical oil which was already covered by sl. no. 1. it was his submission that when goods are mentioned separately and specifically in the table then notwithstanding that they form part of the general nomenclature such goods of inedible variety alone should be deemed to be covered by this notification as exemption notification are required to be interpreted strictly. in the present case since product namely vanaspati ghee was of edible grade it was not covered by this notification as it stood during the relevant period. moreover the demand was not time barred as it was issued within six months of the date of receipt of rt 12. the ld. counsel on the other hand drew attention to the order-in-appeal and the arguments of the respondents as pleaded before the a.c. and the collector. the ld. counsel further submitted that the benefit of concessional rate of duty is available to them inasmuch as the description of goods under col. 3 against sl. no. 2 of the table annexed to notification no. 12/89-c.e. in fact excludes only hardened technical oil of inedible grade; that this excluded variety is already covered by sl. no. 1 of the notification and chargeable to nil rate of duty; that this position has been amply clarified by the amending notification no. 13/90, dated 20th march, 1990, wherein the description against sl. no. 2 is 'goods other than those specified at sl. no. 1'; that sl. no. 1 of notification no. 13/90 refers to hardened technical oil (inedible grade); that entry no. 2 of the notification no. 12/89 has been interpreted by the a.c. in his impugned order in a distorted fashion. he further stated that the ld. collector has rightly observed that description of the goods under col. no. 3 at sl. no. 2 of the schedule to the notification reads as 'goods other than hardened technical oil (inedible grade)'. this excluded category is covered by sl. no. 1 of the notification. moreover, the word, 'inedible grade', given in the parenthesis in fact qualifies hardened technical oil and not goods. from the scheme of this notification, it is further, noticed that the hardened technical oil of inedible grade are chargeable to nil rate of duty, whereas similar oils (edible grade) are chargeable to duty at the rate of rs. 1,900/- per mt. it is, thus, quite evident that what is excluded under sl. no. 2 of the notification is only the hardened technical oil (inedible grade) and not goods of edible grade.10. it was also his submission that the position was subsequently clarified by the government by amending this notification by way of notification no. 13/90, dated 20-3-1990 in which the words goods other than those specified at sl. no. 1 have been incorporated at sl. no. 2.the ld. collector is therefore right in holding that this is a clarificatory notification which has a retrospective effect.11. he however agrees that show cause notice having been issued within six months of rt 12 was not time barred.12. i have considered the above submission. i observe that the heading 15.04 as it stood during the relevant period reads as follows :- vegetable fats and oils and their fractions, partly or wholly hydrogenated, inter-esterified, re-esterified or elaidinised, whether or not refined but not further prepared.13. the notification no. 12/89 as it stood up to 19-3-1990 has already been reproduced at para 4 above.14. the relevant extract of notification no. 13/90, dated 20-3-1990 reads as follows :- g.s.r.(e). - in exercise of the powers conferred by sub-section (1) of section 5a of the central excises and salt act, 1944 (1 of 1944), the central government being satisfied that it is necessary in the public interest so to do, hereby directs that each of the notifications of the govt. of india in the ministry of finance (deptt. of revenue) specified in column (2) of the table hereto annexed, shall be amended or further amended, as the case may be, in the manner specified in the corresponding entry in column (3) of the said table:8. no. 12/89-c.e., in the said notification, in the table, against s. dated 1-3-1989 no. 2, for the entry in col. (3), the entry "goods other than those specified at s. no. 1" shall be 15. during the course of arguments the question of interpretation of entry at sl. no. 2 of notification no. 12/89 engaged our attention. as seen above while the department was reading it as applicable to all goods of inedible grade classifiable under 15.04 the collector and the respondents have interpreted it to mean goods classifiable under 15.04 other than hardened technical oil. prima facie both interpretation appear plausible therefore the respondent's argument and the collector's verdict that the subsequent notification no. 13/89 (sic) by which the aforesaid entry was amended to read 'goods other than those falling under entry at sl. no. 1' was clarificatory could not be lightly brushed aside. at the same time we felt that if the intention was to qualify all goods, irrespective of edible or inedible variety, except hardened technical oil, it would have been sufficient to mention goods other than hardened technical oil because normally technical oils are of inedible grade.16. an interesting question also arose in this context whether for the purpose of interpreting this clause the principle of construction of words in bonam partm or the principle of interpretation relating to cases where generic words follow more specific would be more appropriate i.e. whether ejusdem generis rule would apply. in this respect it is seen that in the maxwell's interpretation of statutes it is mentioned, inter alia, that the general word which follows particular and specific words of the same nature as itself take its meaning from them and is presumed to be restricted to the same genus as those words. for "according to a well established rule in the construction of statutes, general terms following particular ones apply only to such persons or things as are ejusdem generis with those comprehended in the language of the legislature". in other words, the general expression is to be read as comprehending only things of the same kind as that designated by the preceding particular expressions, unless there is something to show that a wider sense was intended, as where there is a provision specifically excepting certain classes clearly not within the suggested genus.17. therefore, the words inedible grade is to be read as referring to the goods of the same kind as hardened technical oil i.e. to the goods of inedible grade.18. there is yet another reason why we have preferred the above interpretation. in the earlier days the principle which held the field was that where there were two probable views the one favouring the assessee was required to be adopted. but of late in a series of judgments the hon'ble supreme court has taken the view that a strict interpretation of notification was warranted and in the case of liberty oil mills - 1997 (75) e.l.t. 13 (s.c.) it has been held that "in the case of an ambiguity or doubt regarding an exemption provision in a fiscal statute, ambiguity or doubt would be resolved in favour of the revenue and not in favour of the assessee and in this respect a reference has been made to the case of novopan india ltd.- 1994 (73) e.l.t. 769 (s.c.). in the present case the language of the entry no. 2 does create an ambiguity and doubt and there are two plausible interpretations. therefore it was necessary to resolve the issue by adopting the interpretation mentioned above in the light of aforesaid judgments.19. this view is further buttressed by the fact that there is nothing in the notification no. 13/90, dated 20-3-1990 which would go to suggest that the intention was to give it a retrospective effect or indicative of its clarificatory nature. the words indicated at entry no. 2 in the notification have substituted previous phraseology but the fact remains that the notification no. 13/90 is an amendment notification and an amendment comes into effect prospectively in the normal course unless there is some indication to the effect that it was only clarificatory or the intention was to give it a retrospective effect. the respondents have not referred to any material in this regard by way of any board's circular or trade notice or any material in the nature of a contemporaneous exposition in support of their contention. therefore, it is required to be held that in 12/89 the intention was to cover only the goods of inedible grade under sl. no.20. insofar as the time bar is concerned the important point to note is that the department's assurance that the assessee was following the procedure prescribed under chapter vila, is important. hence there was no question of time bar. even otherwise admittedly the notice has been issued within six months of the issue of the rt 12. therefore the demand is not time barred.21. in view of the above position the appellant's product being vegetable product of edible variety was not entitled to the benefit of notification no. 12/89 as it stood during the relevant period.22. the appeal of the department is therefore accepted as already announced in the open court.

Judgment:
1. The above appeal has been filed by the Revenue against the order of Collector of Central Excise (Appeals).

2. The brief facts of the case are that the respondents herein are engaged in the manufacture of vanaspati ghee falling under Sub-heading 1504.00 of the CETA, 1985 and availing the benefit of concessional rate of duty of Rs. 1900/- PMT in terms of Notification 12/89-C.E., dated 1-3-1989 for goods specified against Sl. No. 2 of the Table annexed to the Notification. Since the Department was of the view that the concessional rate of duty under the above mentioned Notification was applicable to certain products of inedible grade, while the product manufactured by the respondents was admittedly of edible grade, a show cause notice demanding differential duty of Rs. 43,83,671.40 on goods cleared during the period September, 1989 to February, 1990 was issued and the Assistant Collector confirmed the duty demand. The lower appellate authority, however, set aside the order of the Assistant Collector holding that the respondents were entitled to the benefit of the Notification at Sl. No. 2 thereof on the ground that Sl. No. 2 covered the goods other than hardened technical oil (inedible grade) holding that the expression "inedible grade" would apply only to hardened technical oil and since the product in dispute was other than hardened technical oil, even though of edible grade, it was entitled to the benefit of Sl. No. 2 of the Notification.

3. We have heard Shri A.K. Madan, learned SDR and Shri Udai Joshi, learned Advocate.

4. The table annexed to Notification 12/89 during the relevant period reads as under:--------------------------------------------------------------------------Sl. No.Sub-heading No. Goods Rate--------------------------------------------------------------------------1.

1504.00 Hardened technical oil (inedible Nil grade)2.

1504.00 Goods other than hardened Rs. 1900/- technical oil (inedible grade)b per tonne 5. We agree with the learned DR that the words "inedible grade" governs all goods of inedible grade other than hardened technical oil and does not apply only to hardened technical oil (inedible grade) i.e. in other words, we hold that only goods of inedible grade other than hardened technical oil are covered by Sl. No. 2 of the Notification, while Sl.

No. 1 covers inedible grade of hardened technical oil. The exemption Notification on a plain reading, leads us to take this view and if the respondents' contention is to be accepted then Sl. No. 2 of the Notification would have read as "goods (other than hardened technical oil inedible grade)". In this view of the matter, we. hold that the vanaspati ghee of edible grade which was later made eligible to concessional rate of duty by issue of Notification 13/90-C.E., dated 20-3-1990, was not covered by Sl. No. 2 of the Notification 12/89, dated 1-3-1989 and that, therefore, duty was rightly leviable on this product for the period in dispute.

6. As regards time bar, though a plea was initially raised by the learned Counsel for the respondents that the demand was partly time barred as the show cause notice Was issued on 4-4-1990 for the period from September, 1989 to February, 1990, he subsequently gave up the claim when it was pointed out to him that since RT 12 returns for the month of September, 1989 were filed on 5th October, 1989, the entire demand was within the normal period of limitation.

7. In the light of the above discussion, we hold that the vanaspati ghee of edible grade manufactured by the respondents herein is not entitled to the benefit of concessional rate of duty of Rs. 1900/- PMT in terms of Sl. No. 2 of the table annexed to Notification 12/89, set aside the impugned order and allow the appeal of the Revenue.

I observe that the impugned Order-in-Appeal Nos. 102-103/91 covers two order-in-original in respect of the same issue and the same product covering the periods September, 1989 to February, 1990 and 1-3-1990 to 19-3-1990 respectively. The appeal memorandum has been filed w.r.t. the order of the Collector as a whole but this particular appeal deals only with the first order-in-original dated 28-8-1990 relating to the period September, 1989 to February, 1990.

9. Ld. DR has in this respect reiterated the department's view as contained in the appeal memorandum emphasising that the Notification No. 12/89, dated 1-3-1989 covered only goods of inedible grade falling under Heading 1504.00 and Serial No. 2 of the table annexed to the notification covered such goods other than hardened technical oil which was already covered by Sl. No. 1. It was his submission that when goods are mentioned separately and specifically in the table then notwithstanding that they form part of the general nomenclature such goods of inedible variety alone should be deemed to be covered by this notification as exemption notification are required to be interpreted strictly. In the present case since product namely vanaspati ghee was of edible grade it was not covered by this notification as it stood during the relevant period. Moreover the demand was not time barred as it was issued within six months of the date of receipt of RT 12. The ld. Counsel on the other hand drew attention to the order-in-appeal and the arguments of the respondents as pleaded before the A.C. and the Collector. The ld. Counsel further submitted that the benefit of concessional rate of duty is available to them inasmuch as the description of goods under Col. 3 against Sl. No. 2 of the table annexed to Notification No. 12/89-C.E. in fact excludes only hardened technical oil of inedible grade; that this excluded variety is already covered by Sl. No. 1 of the notification and chargeable to nil rate of duty; that this position has been amply clarified by the amending Notification No. 13/90, dated 20th March, 1990, wherein the description against Sl. No. 2 is 'goods other than those specified at Sl. No. 1'; that Sl. No. 1 of Notification No. 13/90 refers to hardened technical oil (inedible grade); that Entry No. 2 of the Notification No. 12/89 has been interpreted by the A.C. in his impugned order in a distorted fashion. He further stated that the ld. Collector has rightly observed that description of the goods under Col. No. 3 at Sl. No. 2 of the Schedule to the notification reads as 'goods other than hardened technical oil (inedible grade)'. This excluded category is covered by Sl. No. 1 of the notification. Moreover, the word, 'inedible grade', given in the parenthesis in fact qualifies hardened technical oil and not goods. From the scheme of this notification, it is further, noticed that the hardened technical oil of inedible grade are chargeable to nil rate of duty, whereas similar oils (edible grade) are chargeable to duty at the rate of Rs. 1,900/- per MT. It is, thus, quite evident that what is excluded under Sl. No. 2 of the notification is only the hardened technical oil (inedible grade) and not goods of edible grade.

10. It was also his submission that the position was subsequently clarified by the Government by amending this notification by way of Notification No. 13/90, dated 20-3-1990 in which the words goods other than those specified at Sl. No. 1 have been incorporated at Sl. No. 2.

The ld. Collector is therefore right in holding that this is a clarificatory notification which has a retrospective effect.

11. He however agrees that show cause notice having been issued within six months of RT 12 was not time barred.

12. I have considered the above submission. I observe that the Heading 15.04 as it stood during the relevant period reads as follows :- Vegetable fats and oils and their fractions, partly or wholly hydrogenated, inter-esterified, re-esterified or elaidinised, whether or not refined but not further prepared.

13. The Notification No. 12/89 as it stood up to 19-3-1990 has already been reproduced at Para 4 above.

14. The relevant extract of Notification No. 13/90, dated 20-3-1990 reads as follows :- G.S.R.(E). - In exercise of the powers conferred by Sub-section (1) of section 5A of the Central Excises and Salt Act, 1944 (1 of 1944), the Central Government being satisfied that it is necessary in the public interest so to do, hereby directs that each of the notifications of the Govt. of India in the Ministry of Finance (Deptt. of Revenue) specified in column (2) of the Table hereto annexed, shall be amended or further amended, as the case may be, in the manner specified in the corresponding entry in column (3) of the said Table:8. No. 12/89-C.E., In the said notification, in the Table, against S. dated 1-3-1989 No. 2, for the entry in col. (3), the entry "Goods other than those specified at S. No. 1" shall be 15. During the course of arguments the question of interpretation of entry at Sl. No. 2 of Notification No. 12/89 engaged our attention. As seen above while the department was reading it as applicable to all goods of inedible grade classifiable under 15.04 the Collector and the respondents have interpreted it to mean goods classifiable under 15.04 other than hardened technical oil. Prima facie both interpretation appear plausible therefore the respondent's argument and the Collector's verdict that the subsequent Notification No. 13/89 (sic) by which the aforesaid entry was amended to read 'goods other than those falling under entry at Sl. No. 1' was clarificatory could not be lightly brushed aside. At the same time we felt that if the intention was to qualify all goods, irrespective of edible or inedible variety, except hardened technical oil, it would have been sufficient to mention goods other than hardened technical oil because normally technical oils are of inedible grade.

16. An interesting question also arose in this context whether for the purpose of interpreting this clause the principle of construction of words in BONAM PARTM or the principle of interpretation relating to cases where generic words follow more specific would be more appropriate i.e. whether Ejusdem Generis rule would apply. In this respect it is seen that in the Maxwell's Interpretation of Statutes it is mentioned, inter alia, that the general word which follows particular and specific words of the same nature as itself take its meaning from them and is presumed to be restricted to the same genus as those words. For "according to a well established rule in the construction of statutes, general terms following particular ones apply only to such persons or things as are ejusdem generis with those comprehended in the language of the Legislature". In other words, the general expression is to be read as comprehending only things of the same kind as that designated by the preceding particular expressions, unless there is something to show that a wider sense was intended, as where there is a provision specifically excepting certain classes clearly not within the suggested genus.

17. Therefore, the words inedible grade is to be read as referring to the goods of the same kind as hardened technical oil i.e. to the goods of inedible grade.

18. There is yet another reason why we have preferred the above interpretation. In the earlier days the principle which held the field was that where there were two probable views the one favouring the assessee was required to be adopted. But of late in a series of judgments the Hon'ble Supreme Court has taken the view that a strict interpretation of notification was warranted and in the case of Liberty Oil Mills - 1997 (75) E.L.T. 13 (S.C.) it has been held that "in the case of an ambiguity or doubt regarding an exemption provision in a fiscal statute, ambiguity or doubt would be resolved in favour of the revenue and not in favour of the assessee and in this respect a reference has been made to the case of Novopan India Ltd.- 1994 (73) E.L.T. 769 (S.C.). In the present case the language of the Entry No. 2 does create an ambiguity and doubt and there are two plausible interpretations. Therefore it was necessary to resolve the issue by adopting the interpretation mentioned above in the light of aforesaid judgments.

19. This view is further buttressed by the fact that there is nothing in the Notification No. 13/90, dated 20-3-1990 which would go to suggest that the intention was to give it a retrospective effect or indicative of its clarificatory nature. The words indicated at Entry No. 2 in the notification have substituted previous phraseology but the fact remains that the Notification No. 13/90 is an amendment notification and an amendment comes into effect prospectively in the normal course unless there is some indication to the effect that it was only clarificatory or the intention was to give it a retrospective effect. The respondents have not referred to any material in this regard by way of any Board's circular or trade notice or any material in the nature of a contemporaneous exposition in support of their contention. Therefore, it is required to be held that in 12/89 the intention was to cover only the goods of inedible grade under Sl. No.20. Insofar as the time bar is concerned the important point to note is that the department's assurance that the assessee was following the procedure prescribed under Chapter VILA, is important. Hence there was no question of time bar. Even otherwise admittedly the notice has been issued within six months of the issue of the RT 12. Therefore the demand is not time barred.

21. In view of the above position the appellant's product being vegetable product of edible variety was not entitled to the benefit of Notification No. 12/89 as it stood during the relevant period.

22. The appeal of the department is therefore accepted as already announced in the open court.