| SooperKanoon Citation | sooperkanoon.com/5020 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi |
| Decided On | Jun-20-1989 |
| Reported in | (1989)(24)LC460Tri(Delhi) |
| Appellant | Collector of C. Ex. |
| Respondent | G.K. Auto Industries |
2. This contention was not accepted by the Assistant Collector on the ground that the total value of clearances of all excisable goods manufactured by the respondents during the period falling under Central Excise Tariff Item 34-A and Tariff Item 68 had exceeded Rs. 30 lakhs and they were not entitled for exemption. Accordingly, the respondents were asked to pay duty of Rs. 78,075.98p.
3. When the matter went up in appeal, the Collector of Central Excise (Appeals) Bombay held that the appellants were eligible for exemption under the relevant notification, since of the total quantity of goods cleared, goods worth Rs. 17,21,151.07 were in fact exported. The learned Collector (Appeals) observed that it is quite clear from Notification No. 176/77-C.E., that only the value of clearances for home consumption were to be taken into account. He, therefore, set aside the impugned order of the Assistant Collector and allowed the appeal. It is against this order of the Collector (Appeals ) that the department is now before us.
4. We have heard Shri V.M. Doiphode, SDR for the department and Shri Ashok Tankala, Advocate for the respondents.
5. The question is simply one of finding out as to what is provided in the relevant notification. We, therefore, consider it necessary to re-produce the same : "In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exemptegoods falling under Item No. 68 of the First Schedule to the Central Excises & Salt Act, 1944 (1 of 1944) and cleared for home consumption on or after the first day of April in any financial year, by or on behalf of a manufacturer from one or more factories from the whole of the duty of excise leviable thereon, if an officer not below the rank of an Assistant Collector of Central Excise is satisfied that the sum total of the value of the capital investment made from time to time on plant and machinery installed in the industrial unit in which the goods, under clearance, are manufactured, is not more than rupees ten lakhs : Provided that this exemption shall not be applicable to a manufacturer if the total value of all excisable goods cleared by him or on his behalf in the preceding financial year had exceeded rupees thirty lakhs: Provided further that the exemption contained in this notification shall apply to the first clearances for home consumption by, or on behalf of, the manufacturer referred to in this notification, from one or more factories upto a value not exceeding rupees thirty lakhs during a financial year subsequent to 1977-78, and upto a value not exceeding rupees twenty-four lakhs during the period commencing on the 18th day of June, 1977 and ending on 31st day of March, 1978.
Explanation I. - For the purposes of determining the value of any capital investment, only the face value of such investment at the time when such investment was made shall be taken into account.
Explanation II. - For the purposes of determining the value of clearances under this notification, the value of goods, cleared for captive consumption within the factory in which the goods are manufactured shall not be taken into account." The learned Collector has stated that for purposes of this notification, only the goods cleared for home consumption are to be taken into account. This is what is being reiterated before us by the learned Advocate also. However, this view is clearly untenable.
6. To understand the provisions of the notification, it is necessary to examine the main provision as well as the subsequent proviso separately. It is because the learned Collector (Appeals) has not done this and that he has fallen into an error. The main provison of the notification exempts goods falling under Central Excise Tariff Item 68, which are cleared for home consumption from the whole of duty of excise leviable thereon, if the Central Excise authorities were satisfied that the sum total of the capital investment made from time to time on plant and machinery installed in the industrial unit in which the goods under clearance were manufactured, was not more than Rs. 10 lakhs. There is no difficulty so far as this part is concerned. The problem arises with reference to the proviso which now follows. It clearly provides that the exemption shall not be applicable to a manufacturer if the total value of all excisable goods cleared by him or on his behalf hi the preceding financial year had exceeded Rs. 30 lakhs. This proviso has been interpreted by the learned Collector (Appeals) to be limited to the value of all excisable goods cleared for home consumption or in other words, he has held that for this computation, goods which are exported have to be excluded. We are afraid there is nothing at all in the relevant proviso to support this interpretation. In fact, and, to the contrary, the proviso specifically emphasises that the total value of all excisable goods cleared by the assessee in the preceding financial year are to be taken into account. There is exclusion neither with reference to home consumption or exports.
7. The learned SDR has rightly drawn our attention to Explanation II to the notification which specifically provides that for the purposes of determining the value of clearances under this notification, the value of goods cleared for captive consumption, within the factory in which the goods are manufactured shall not be taken into account. So, here is a clear provision for a specific exclusion. Should it have been the intention, an exclusion could have been made in respect of goods exported. No such exclusion, however, exists in the notification. In interpretation of notification, where there is an ambiguity, we have to keep in view the purpose and the intention behind the notification in order that inconsistent or absurd conclusions don't result. We know very well, however, that many of these concessions are intended to be limited only to small scale manufacturers, the definition of which varies for purposes of different notifications. It is conceivable that in this case, the intention was to categorise the manufacturer with reference to the total value, not only of excisable goods cleared for home consumption but all such goods including those which were exported, as that might have been considered for the limited purpose of the notification as an appropriate indication of the size of the unit.
8. In the circumstances, we set aside the impugned order and allow these appeals of the department.
9. I have carefully gone through the order proposed by learned Brother Shri K. Prakash Anand but I regret respectfully that I am unable to pursuade myself with the conclusion reached therein.
10. Notification 176/77, which is the subject of interpretation, has already been set out in para 5 by the learned Brother. It is to be noted that the main portion of the said notification grants an exemption to goods falling under Tariff Item 68 of the Central Excise Tariff cleared for home consumption on or after the first day of April in any financial year. The 1st proviso to this notification which is the focus of the interpretation in the instant case, states that the exemption notification shall not be applicable to a manufacturer if the total value of all excisable goods cleared by him or on his behalf in the preceding financial year has exceeded Rs. 30 lakhs.
The question that arises for consideration is whether the word 'cleared' emphasised above in the first proviso would refer to 'cleared for home consumption' alone or would refer to cleared for all other purposes apart from home consumption i.e. cleared for export as well as for home consumption.
11. The Appellant-Collector puts forward the contention, which is reiterated by the learned SDR during the course of hearing, that the word 'cleared' in the 1st proviso, would mean cleared for all purposes i.e. for home consumption as well as for export because the word 'cleared' has not been qualified by the word 'for home consumption' as in the main portion of the exemption notification.
12. The learned Advocate, Shri Ashok Tankala, appearing for the respondent, on the other hand, contends that the word 'cleared' mentioned in the 1st proviso would take its colour from the word 'cleared' in the main portion of the notification inasmuch as the proviso cannot go beyond the scope and ambit of the main enactment, that is the general rule of construction adopted in construction of provisos unless the statutory language in the proviso is plain and clear enough to give a different interpretation.
13. I am inclined to agree with the learned Advocate for the respondents. The settled rule of construction of proviso is what has been stated by the learned advocate. In Principles of Statutory Interpretation by Justice G.P. Singh (4th edition) it has been stated at page 123 as follows :- "The language of a proviso even if general is normally to be construed in relation to the subject-matter covered by the section to which the proviso is appended. In other words normally a proviso does not travel beyond the provision to which it is a proviso. 'It is a cardinal rule of interpretation,' observed BHAGWATI, J., 'that a proviso to a particular provision of a statute only embraces the field which is covered by the main provision to which it has been enacted as a proviso and to no other'." Applying the aforesaid principle, the learned Author gives an example from an Income Tax Act in the following words :- "On the same principle, Proviso 1 to Section 24(1) of the Indian Income-tax Act, 1922 was construed as limited in its application to set-off profits and losses arising under different heads, a subject dealt with by Section 24(1) and was held inapplicable to set-off profits and losses arising under the same head, a subject dealt with under Sections 7 to 12-B." On the same reasoning it is apparent that the main portion of the exemption notification which grants exemption to goods falling under Tariff Item 68 is with reference to clearances for home consumption. In other words, the subject-matter of exemption is goods falling under Tariff Item 68 cleared for home consumption. The 1st proviso makes the exemption notification inapplicable if the value of clearances of all excisable goods in the preceding financial year exceeded Rs. 30 lakhs.
The goods falling under Tariff Item 68, the subject-matter of exemption in the main part of the notification have been replaced by the clearances of all excisable goods, that is the only change expressly made by the 1st proviso. In so far as the clearances in the 1st proviso are concerned these are fop be with reference to the clearances for home consumption referred to in the main part of the notification.
Therefore, in so far as the value of clearances in terms of the proviso are to be computed it has to be with reference to the clearances for home consumption referred to in the main part of the notification.
14. Apart form the aforesaid reason, there is yet another reason which compels me to take the view which I have taken above. Clearances for export, in so far as the goods namely, 'motor vehicle parts' in the instant case are concerned, are exempted even otherwise from payment of duty either under Rule 13 when such goods can be exported without payment of duty under bond or full rebate of duty paid on such goods could be claimed under Rule 12 of the Central Excise Rules, 1944. If the interpretation advanced by the department is accepted it would be clearly against the object of export promotion. Such a restricted view, therefore, is not warranted to impose a larger liability on a person who undertakes export of goods and export of which is otherwise exempted from payment of duty.
15. In view of the aforesaid discussion, the appeal filed by the Collector is dismissed.