M/S. Mihijam Vanaspati Ltd. Vs. Commissioner of Central Excise, - Court Judgment

Excerpt:
1. the commissioner has confirmed the demand of duty of rs. 7,54,909.27 and has imposed a personal penalty of rs. 25,000.00 on the appellants by denying them the benefit of exemption notification no. 10/96-ce dated 23.7.96. vide the said notification, full exemption from central excise duty has been granted to all goods manufactured in a factory and consumed within the same factory in the manufacture of vanaspati. the appellants are using the metal containers manufactured in their own factory for the purpose of packing vegetable products. the revenue entertained a view that though the metal containers are being used by the appellants for the manufacture of vanaspati, they cannot be considered as having been consumed. inasmuch as the notification uses the words - "consumed within the.....

Judgment:
1. The Commissioner has confirmed the demand of duty of Rs. 7,54,909.27 and has imposed a personal penalty of Rs. 25,000.00 on the appellants by denying them the benefit of exemption Notification No. 10/96-CE dated 23.7.96. Vide the said Notification, full exemption from Central Excise Duty has been granted to all goods manufactured in a factory and consumed within the same factory in the manufacture of Vanaspati. The appellants are using the Metal Containers manufactured in their own factory for the purpose of packing vegetable products. The Revenue entertained a view that though the Metal Containers are being used by the appellants for the manufacture of Vanaspati, they cannot be considered as having been consumed. Inasmuch as the Notification uses the words - "consumed within the factory of their production in the manufacture of goods" - and inasmuch as the use of Containers for packing of vegetable products cannot be equated to ' consumption ', the benefit of the Notification should not be made available to the appellants.

2. We have heard Shri S.K.Bagaria, learned Advocate for the appellants and Shri V.K.Chaturvedi, learned S.D.R. for the Revenue.

3. The short point required to be decided in the present appeal is as to whether the use of Metal Containers for packing of Vanaspati satisfies the condition of Notification which is to the effect that the said goods are consumed within the factory of their production in the manufacture of goods. It has been strongly argued before us that under the Essential Commodities Act, 1955; Packaged Commodities Act; Packaged Commodities Rules and various other statutory provisions, packing of Vanaspati in containers is a statutory requirement. These facts are also admitted by the Commissioner (Appeals) that manufacture of Vanaspati is complete when packed in tin containers for making it marketable.Union of India vs. V.M.Salgaoncar and Brothers (P) Ltd. (Supreme Court) reported in 1998(99) ELT-3, has held in paragraph 8 as under:- "8. The word 'consumption' may involve in the narrow sense using the article to such an extent as to reach the stage of its non-existence. But the word, 'consumption' in fiscal law need not be confined to such a narrow meaning. It has a wider meaning in which any sort of utilisation of the commodity would as well amount to consumption of the article, albeit that article retaining its identity even after its use."Deputy Chief Controller of Imports and Exports vs. K.T.Kosalram (Supreme Court) reported in 1999(110) ELT-366, the Hon'ble Supreme Court while considering clause (c) in an Import Licence which used the expression, "the goods will be utilised only for consumption as raw materials.......", was pleased to reject the contention of the respondent that 'consumption' conveys the idea of destruction of the commodities consumed and observed as under:- "The word 'consumption' as used in clause (c) in the licence seems to us to convey the idea of using up the goods by fixing them in the factory alongwith other components" 6. From the foregoing decision, it can be safely concluded that the expression - 'consumption' - used in the Notification, is required to be interpreted as 'used' and the Tin Container used for packing of vegetable product, would be entitled to Notification No.10/96-CE dated 23.7.96.

7. It has also been submitted that the said Notification No.10/96 was issued consequent upon the grant of full exemption in respect of Vanaspati. Upto 22.7.96, Vanaspati was liable to duty and consequently, the said Tin Containers manufactured by the appellants and captively used for packing Vanaspati within its factory in the manufacture of Vanaspati, were fully exempt from Central Excise Duty under Notification No.67/95-CE.8. During the 1996 Budget, Vanaspati was granted full exemption from Central Excise Duty by Notification No.16/96-CE, with the result that the items captively consumed would not enjoy the benefit of Notification No.67/95, the final product becoming exempt from duty.

Accordingly, the Central Government, simultaneously, issued Notification No.10/96-CE dated 23.7.96 granting full exemption from Central Excise Duty to the goods consumed within the factory of their production in manufacture, inter-alia, of the goods falling under Heading 15.04 i.e. Vanaspati.

9. The above developments reflect upon the legislative intent, duly supported by the Budget Speech of the Finance Minister while presenting the 1996 Budget in the Parliament on 22.7.96, which is to the effect that the exemption in respect of Vanaspati was granted because it is an article of mass consumption. As such, to adopt the interpretation in such a way so as to deny the benefit of Notification No.10/96 to Metal Containers, would be to defeat the very purpose of the enactment of the said Notification, as reflected by the above legislative intent.

10. In view of the foregoing, we set set aside the confirmation of demand of duty and imposition of penalty upon the appellants, and allow the appeal with consequential reliefs to the appellants.