TMI Blog2013 (9) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... imported for initial setting up of Refinery, which had to be extended the benefit of the Notification but the goods required for running and maintenance of the refinery would also get covered - The purpose for which the exemption was granted must be considered in its entirety - The purpose of grant for exemption cannot be lost sight of - The Central Government must be held to be aware if not for the equipment itself but about the nature which would be required for setting up a Crude Oil Refinery - an exemption Notification should be construed directly but it was also well settled that interpretation of an exemption Notification would depend upon the nature and extent thereof - The terminologies used in the Notification would have an important role to play. Where the exemption Notification ex facie applies, there was no reason as to why the purport thereof would be limited by giving a strict construction thereto – Decided in favor of assesse. Dissenting opinion – Member (Technical) was of the opposing view and delivered the separate judgement – but the Third Member was of the opinion as to the Member (Judicial) – Thus majority Decision was into the favor of assesse. - C/1516/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods specified in the list. 2. The appellant s contention is that inasmuch as the said two Serial numbers extends exemption to items required for running, repairing and maintenance of the Refinery, the restrictive meaning given by the authorities below to the said two entries by holding that items imported during the period of setting up of the Refinery would only get attracted, lacks merit. They have strongly contested that the Phrase Setting-up has to be distinguished from the word Commission . While the word Commissioning is used for the stage that the Refinery started production, setting-up is an ongoing process which is evident from the language of the Entry No. 45 of list 17, which covers running, repairing or maintenance etc. If the findings of the appellate authority that if the goods mentioned in the Entry No. 44 45 of list 17 are imported during the completion of the Refinery, though will get exemption, if the same are imported after completion or after setting-up of the Refinery will not get exemption, is accepted, the same would be contrary to the express wordings used in the said two entries. Ld. Advocate has submitted that the benefit of Entry No. 45 cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit to the goods required for running, repair and maintenance. The said two entries are also part of the Notification. The harmonious construction would lead us to opine that any goods required for running, repair and maintenance would get covered by the said Notification. The findings of the Commissioner (Appeals) that if the goods mentioned in said two entries are imported during the completion of the Refinery, they will get exempted and if imported after completion of the Refinery, the same would not be exempted, is not appropriate inasmuch as, there is nothing in the said Notification restricting the same to importation made during the completion of the Refinery only. This would also lead to absurd results inasmuch as if an assessee imports all the items required for life time running, repair and maintenance of Refinery during the course of completion of the Refinery, he would get benefit and if said items imported subsequently on need basis requirement, the same would not get the benefit. Such an interpretation cannot be accepted. 5. We also note that the terms running, repair and maintenance refer to a continuous course of events which cannot be restricted only till the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturing Company Limited decision, has not been used in the present Notification and cannot be added and read in the Notification by the Revenue. On the contrary, expression running, repair and maintenance has been used in Entries 44 45, which indicate that the goods imported not only for initial setting up of the Refinery but also required to be used though out its life for running, repair and maintenance, would get covered by the Notification. 7. We also take note of the Hon ble Supreme Court decision in the case of Commissioner of Customs (Preventive), Gujarat v. Reliance Petroleum Limited [2008 (227) E.L.T. 3 (S.C.)], wherein while adjudging the admissibility of another Notification in respect of cranes used for the refineries, the Hon ble Supreme Court observed that - The purpose for which the exemption was granted must be considered in its entirety. The purpose of grant for exemption cannot be lost sight of. The Central Government must be held to be aware, if not for the equipment itself, but about the nature thereof, which would be required for setting up a Crude Oil Refinery. The Hon ble Court further observed as under :- We are not oblivious of the proposition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t have read required for setting up Crude Petroleum Refinery. I also find that the Commissioner (Appeals) in his impugned order has, in fact, examined this issue very thoroughly and had given a very well reasoned order. In fact, if I have to write an order, the logic and the contents would be almost same as the one adopted by the Commissioner. Therefore, instead of putting the same in my own language, I reproduce his order hereunder : 12. If we look at the body of the Notification and the entry 228, the following conditions have to be satisfied for claiming the benefit of entry 228 of this Notification. (i) The goods must fall under Column 3 of the Notification read with the relevant list appended. (ii) It should be required for setting up of crude petroleum refinery. 13. The controversy is on the use of the words setting up . According to the adjudicating authority, the setting up is complete if the refinery starts production or commissioned, a term used by the adjudicating authority but as-per appellant, the setting up is an on-going process. The exemption can be taken up at any stage of the running of the refinery. The advocate also relied on the language of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nary objection raised on behalf of the appellant. 16. In the case of ITC v. CCE reported in 2004 (171) E.L.T. 433 (S.C.), the Hon ble Court re-affirmed the legal position that ordinary and natural meaning has to be seen in interpreting the provisions of Notification. 23. Presumably the phrase badly drafted was used to mean that the language of the Entry was ambiguous. In case of such ambiguity close reasoning will be employed - but without stretching the language to arrive at the only reasonable construction. These decisions exemplify the general rule of statutory construction that words have to be construed strictly according to their ordinary and natural meaning, particularly when the statute is a fiscal one irrespective of the object with which the provision was introduced. Of course if there is ambiguity in the statutory language, reference may be made to the legislative intent to resolve the ambiguity. But if the statutory language is unambiguous then that must be given effect to. The legislature is deemed to intend and mean what it says. The need for interpretation arises only when the words used in the statute are, on their own terms ambivalent and do not manifest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification should be construed strictly and in case of doubt, the benefit should be given to the Department. They further supported this view in the case of Liberty Oil Mills [1995 (75) E.L.T. 13 (S.C.)]. Having regard to the above findings, we uphold the impugned order and reject the appeal. 19. It was rightly pointed out by the Advocate that if a particular commodity ultimately satisfies the requirement of the Notification, the exemption has to be extended to such commodity even if the said commodity is used for manufacturing the intermediate product which is in turn used for making the final product as has been held by the Supreme Court in the case of CC, Kolkata v. Rupa Co. Ltd. reported in 2004 (170) E.L.T. 129 (S.C.). All these decisions make it very clear that the exemption is an exception to the Rule and the wording of the Notification has to be strictly construed. However, if the conditions are satisfied then full effect of the entry has to be given. 20. For examining the scope of the word setting up the advocate has also relied on Order Nos. 224 to 226/2005. [reported in 2005 (187) E.L.T. 466]. In that case, the issue was the entitlement of Notification No. 11/9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has strongly relied upon the lines The Revenue introduces the word initial before the words setting up and interprets the goods required for the first refinery only are entitled for the exemption. In other words, the Revenue tries to read something which is not there in the notification. This is not permissible. 22. I am not able to appreciate as to how these lines advance the cause of the appellant. The issue for consideration is the scope of the word setting up . The last line of the quoted excerpt gives some indication about the scope. It indicates that setting up will bring into existence a refinery. Once, the refinery comes into existence, the process of setting up of that refinery is complete. It may be possible, as has been held by the Tribunal, that another refinery may be set up or the capacity of the existing refinery may be increased by setting up additional machines but that also will get the benefit of the Notification as the imported machines will be used for setting up, i.e. completion of a refinery. The only meaning which can be assigned to setting up is the completion of an industry. At no stretch of imagination the meaning of the words setting up of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the wordings of the Notification cannot be allowed. The argument of the appellant that the words setting up have been used to allow the benefit only to actual user is also not sustainable as person A may import goods while under this heading for person B who will be setting up the refinery. 25. In view of the above, I hold that the words setting up has to be given some meaning and the meaning assigned to it by Hon ble High Court of Calcutta in Asiatic Oxygen Ltd. (supra) is completion. Once the refinery has reached the stage of completion, the setting up is over. The benefit of exemption Notification 21/2002-Cus., dated 1-3-2002 will not be available to goods imported for maintenance of equipments after setting up of the refinery. The mobile cranes imported by the appellant are not eligible for exemption. 11. Once a refinery is set up, exemption under Sr. No. 228 would not be available. The scheme of assessment under Customs law is first to classify the goods and thereafter see whether there are any exemptions available. In this case, after classification, what is to be seen is whether the exemption is available under the notification. Once the refinery has been set up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lementation of legislative intention. 12. Learned advocate also relied upon the decision of the Hon ble Supreme Court in Reliance Petroleum Ltd. case in support of his contention that the purpose for which the exemption was granted must be considered in its entirety. The observations of Hon ble Supreme Court does not imply that if the exemption notification itself is not applicable, even then one has to go to the intention of the legislature and see whether the benefits can be extended. Further, the Hon ble Supreme Court in that case was considering whether the crane and the trailer imported could be considered for assessment as one unit and could be considered as mobile crane and the issue as to whether such a crane could be imported under this notification after the refinery was set up, was not before the Hon ble Court. Therefore, the judgment is not applicable on facts to the present case. 13. I am also not able to accept the argument that the term for setting up is analogous to the term for use which occurs in various exemption notifications. Setting up means completion and once the refinery is completed, setting up is over and it cannot be extended indefinitely. 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted in 2010 (255) E.L.T. 353 (Guj.) = 2010 (20) S.T.R. 564 (Guj.). With these observations, Hon ble President directed that the matter be returned and placed before the concerned Bench. 17. As directed by the Hon ble President, the difference of opinion is revised as under : DIFFERENCE OF OPINION (i) Whether straight meaning is required to be given to Sl. No. 228 of Notification No. 21/2002-Cus. thereby restricting the concessional rate to the goods specified in the list 17 required for setting up of crude petroleum refinery only as held by Member (Technical) or the benefit of the notification has to be extended to the goods required for running, repair and maintenance of the refinery as held by learned Member (Judicial). (ii) Whether the entries Nos. 44 45 of list 17 would become meaningless and otiose if a straight meaning is given to the Sl. No. 228 of the notification as held by learned Member (Judicial) or whether it would be the correct interpretation of the notification and the entries at Sl. No. 44 45 are meant for repairing and maintenance of the items in different entries under Sl. No. 17 as held by Member (Technical). (iii) Whether the terms running ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant had imported mobile crawler cranes which were used for the maintenance operations of Fluidized Catalytic Cracking Unit (hereinafter referred to as FCC) in the refinery. It is his submission that in list No. 17 there are items specified from S. Nos. 1 to 45. 20. It is his submission that S. Nos. 1 to 43 enlist the items which are required for the refinery being set up and items indicated at S. Nos. 44 45 include EOT cranes and goods which are required for running, repairing or maintenance of the goods specified in the list (from S. Nos. 1 to 43 of list No. 17). It is his submission that by the very nature of the goods mentioned at S. Nos. 44 45, they are required for running, repairing or maintenance of various goods in the refinery and would be required during and after completion of the setting up of the refinery. It is his submission that the (expression required for setting up cannot be confined only up to the stage of completion of setting up of the refinery. He would submit that even after the refinery is set up and commenced production, further goods are undoubtedly required for running, repairing or maintenance of the refinery and for this specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the expression required for setting up could not be confined to initial setting up of the plant only but would also cover pipes required for replacement of worn out/damaged pipes. It is his submission that this Board s circular also found acceptance by the Bench in the case of Lanco Industries Ltd. v. CCE - 2010 (253) E.L.T. 70. It is his submission that the goods imported i.e. mobile crawler cranes are covered by S. Nos. 44 45 of the list No. 17 of the Notification No. 21/2002-Cus. It is his submission that in the appellant s own case, Hon ble Supreme Court, as reported at 2008 (227) E.L.T. 3 (S.C.), while interpreting an identical predecessor notification that some of the entries in the list are over lapping and the object of grant of notification must be considered in a broad based manner and the benefit of the notification have to be construed widely and the purpose of the notification must be allowed to be achieved. It is his prayer that the Ld. Member s (Judicial) s view may be considered as correct. 21. Ld. Shri K. Mondal appearing for Revenue would submit that there is no dispute as to the fact that appellant had imported mobile crawler cranes after the refinery was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification to find out of the intention. He would rely upon the following decisions. (i) Sarabhai M. Chemicals v. CCE, Vadodara - 2005 (179) E.L.T. 3 (S.C.) (ii) ITC Ltd. v. CCE, New Delhi - 2004 (171) E.L.T. 433 (S.C.) (iii) UOI v. Ganesh Metal Processors Industries - 2003 (151) E.L.T. 21 (S.C.) (iv) CC, Kandia v. Rupa Co. Ltd. - 2004 (170) E.L.T. 129 (S.C.) (v) Novopan India Ltd. v. CCE C, Hyderabad - 1994 (73) E.L.T. 769 (S.C.) (vi) CCE, Allahabad v. Ginni Filaments Ltd. - 2005 (181) E.L.T. 145 (S.C.) (vii) Cincinnati Milacron Ltd. v. CC, Ahmedabad - 2003 (153) E.L.T. 181 (T) (viii) Siddeshwari Cotton Mills (P) Ltd. v. UOI Anr. - 1989 (39) E.L.T. 498 (S.C.) 22. I have considered the rival submissions made at length and perused the records. 23. Undisputed facts in this case are that there is an import of mobile crawler cranes in September 2005 for carrying out maintenance operations of FCC in the refinery set up by the appellant. It is also undisputed that the said cranes were required for maintenance activities in the said FCC. FCC is also covered under the items from S. Nos. 1 to 43 of list No. 17 appended t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refinery, the entry at Sr. Nos. 45 of the List No. 17 would become meaningless and otiose, as held by ld. Member (Judicial). The argument put forth by Revenue that the Items at Sr. Nos. 45 will not become redundant as it will cover such capital goods those are required when the Initial setting up of refinery, seems to be illogical and does not carry the case of Revenue any further, as the items at Sr. No. 45 are required for running of a refinery and import thereof while refinery is being set up does not arise. Again, it is a common knowledge that maintenance and repairs of equipments can take place only and only after such equipments have been commissioned and become operational, which can happen only after setting up of the refinery. The rare occasion of equipment being run prior to initial setting up commissioning of the refinery and the need to replace such equipment through Import of spares cannot possibly be the object behind adding Sr. Nos. 44 and 45 to the list of equipments liable for import. In my view, the object of the notification was to exempt specified capital goods required by a refinery and as long as the capital goods fall within the specified categories, the be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar purpose. A contextual meaning to the entries, keeping in view of the nature of exemption sought to be granted by reason of the said notification, must be assigned. The crane was to be shifted from place to place covering a huge area. Its services were required at a large number of places. It has been found that the description of the crane, technically given as Heavy Duty Crane was, in fact, a mobile crane. Only with a view to provide mobility thereto, a self-propelled modular transport system had been provided. 21. The comparison made by the learned Solicitor General that mobility of a person would depend upon his personal fitness and not when he is placed on a wheelchair, in our opinion, is not apposite. The purpose of grant of exemption is different. The object for grant of notification shall be considered in a broad based manner. The wordings used therein have to be given its natural meaning. The purpose must be allowed to be achieved. The words all types of materials should be construed widely. The principle of contextual interpretations laid down in the above judgment is equally applicable to the present case, where the main object of the notification uses the expr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f benefit of the Notification No. 21/2002-Cus., would appear to be a narrow view. 26. I find that the Tribunal in the case of Lanco Industries Ltd. - 2010 (253) E.L.T. 70 (wherein I was one of the Member) has held that the pipes which are required for the replacement of worn out/damaged pipes would also gets the benefit of Notification No. 6/2002-C.E., dated 1-3-2002. Revenue in that case was denying the benefit of exemption of excise duty to the ductile iron pipes which were required for replacement of worn out pipes, on the ground that such pipes are not required for setting up of water treatment plants. The Bench took the view in Paragraph 14, after considering the Board s Circular No. 354/34/2008-TRU, dated 14-3-2008, that the pipes which are supplied for replacement of worn out or damaged pipes, are also eligible for benefit of exemption under the said notification. The C.B.E. C. Circular takes note of the fact that under the notification referred to above, the expression used is setting up as distinct from the expression initial setting up , which is used in many other notifications issued under Section 25 of the Customs Act. On this basis, the Board has clarified ..... X X X X Extracts X X X X X X X X Extracts X X X X
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