TMI Blog2009 (9) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... on, CBEC understanding of issue was same as reflected in C.B.E. & Circular No. 839/16/2006-CX, dated 16.11.2006. Exemption allowed for engines since only condition of their being captively consumed in factory of production satisfied. - E/2364/2007 & E/974/2008 - 854-855/2009-EX(PB), - Dated:- 22-9-2009 - Justice R.M.S. Khandeparkar, President and Shri M. Veeraiyan, Member (T) S/Shri Nikhil Agarwal, Dheeraj Srivastava, Advocates, for the Appellant. Shri B.K. Singh, JCDR, for the Respondent. [Order per : Justice R.M.S. Khandeparkar, President (Oral)]. - Since common questions of law and facts arise in both these appeals, they were heard together and are being disposed of by this common order. 2. Heard at length the learned Advocate for the appellants and learned Joint CDR for the Department. Perused the record placed before us. 3. The appeals arise from the order dated 31-5-2007 passed by the Commissioner, Central Excise, Noida. By the impugned order, in the appeal No. 2364/07, arising out of the show cause notice dated 4th September, 2006, the duty amounting to Rs. 13,30,52,512/- and education cess amounting to Rs. 26,61,050/- has been confirmed in exerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 9-7-2004 read with Notification No. 6/2006-C.E., dated 1-3-2006 in respect of engines classifiable under Chapter Heading 84.08 captively used in the manufacture of tractors 7. Learned Advocate appearing for the appellants drawing our attention to the said Exemption Notifications and particularly to Serial No. 296 of the Notification No. 6/2002-C.E., dated 1-3-2002, submitted that, the same clearly refers to parts used within the factory of production for manufacture of the goods of the Heading 8701 classifiable under any Chapter of the Central Excise Tariff Act and is not restricted to the parts of any specific Chapter as such, nor it excludes parts from any specific Chapter from the said Act. He further submitted that, when the term is used in generic sense, under the guise of interpretation the Notification cannot be read to exclude some of the products which could be used in production of the final product specified under the Notification. Reliance is placed in the decision in the matter of CC, Bangalore v. Maestro Motors Limited, reported in 2004 (174) E.L.T. 289 (S.C.) and CCE, Jaipur v. Mewar Bartan Nirman Udyog, reported in 2008 (231) E.L.T. 27 (S.C.). He further su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereof could not be construed as " the parts or the parts and accessories" within the meaning of the said expression under the said statute and obviously therefore, merely because the Notification refers to the parts, the said expression cannot be construed to include the goods classifiable under Heading 8401 to 8479 as being the parts within the meaning of the said expression under the said Notification. In other words, according to the respondents the goods classifiable under Heading 8401 to 8479 even though they may be in the nature of the parts of a bigger machine or engine, for the purpose of understanding the scope of the word "parts" in the Notification in question, those goods cannot be included therein and, therefore, would not be entitled for exemption under the said Notification. Reliance is sought to be placed in the case of CIT, Delhi v. S. Teja Singh reported in 1959 AIR 352 and Ispat Industries Ltd., v. CC, Mumbai reported in 2006 (202) E.L.T. 561 (S.C.), while contending that, the subordinate legislation cannot override the provisions in the domain of principal legislation nor the expression used in the subordinate legislation can be understood or construed contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of manufacture of tractors were excluded from obligation to pay the duty in terms of Entry No. 296 of the Notification No. 23/2004. Similar entry continued under Notification No. 6/2006 under entry No. 92. 13. The Apex Court in Mewar Bartan Nirman Udyog case while dealing with the case wherein the assessee was entitled to avail benefit under Notification No. 3/2001-C.E., dated 1-3-2001 had observed that "it is well settled position in law that exemption Notification has to be read strictly. A Notification of exemption has to be interpreted in terms of its language. Where the language is plain and clear, effect must be given to it. While interpreting the exemption Notification, one cannot go by rules of interpretation applicable to cases of classification under the Tariff. Tariff items in certain cases are required to be interpreted in cases of classification disputes in terms of HSN, which is the basis of the Tariff". Further, noted that the Court was not concerned with the interpretation of tariff but was required to interpret the exemption Notification from the point of view of avoiding dichotomy which was sought to be introduced by the exemption Notification. At the releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the Notification. Thus components in completely knocked down packs would get the exemption under this Notification, even though for purposes of classification they may be considered to be cars". 15. Considering the law laid-down by the Apex Court in relation to the Rules of Interpretation pertaining to the exemption Notification issued under taxing statute, it cannot be disputed that the entry against Item No. 296 in the earlier Notification as well as against 92 in the later Notification clearly speaks of parts classifiable under any Chapter used within the factory of production for manufacture of the goods under Heading 8701. Obviously, therefore, on the face of the exemption Notification, all parts which are captively used for the manufacture of goods of the Heading 8701 irrespective of their classification would be entitled to avail the exemption benefit under the said Notification. The contention on behalf of the Department, however, is that taking into consideration the Section note No. 2 of Section 17 of the Tariff Act, the same excludes the product classifiable under Heading 8408 from being described as "parts" or "parts and accessories" and therefore such goods whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... First Schedule of the excise tariff which enumerates the general rules for interpretation of the schedule under Clause (1) itself provides that "that divides of the sections, Chapters and sub-Chapters which provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the Headings and any relative section or Chapter notes and provided such Headings or notes do not otherwise require according to the other provisions and enumerated in the said schedule. Equally it is true that in case of exemption Notification the same has to be strictly construed and when the language thereof is plain and clear it would not warrant any interpretation and certainly not when such interpretation would rather than giving effect to the language of the Notification would lead to anomalous results. As already noted above, the exemption Notification gives complete exemption from the obligation of payment of duty to the final product classifiable under Heading 8701. It also gives exemption from payment of duty to the parts classifiable under any Chapter used in production of the goods classifiable under 8701. While granting such exemption, it also speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make the rule ultra vires the Act. If we peruse the Section 4(2)(e) to Section XVII had read thus - "the expression "parts" and "parts and accessories" do not apply to the following articles, whether or not they are identifiable as for the goods of this Section : (a) …… (b) …… (c) ....... (d) ......... (e) Machines or apparatus of Headings 8401 to 8479, or parts thereof; articles of Heading 8481 or 8482 or, provided they constitute integral parts of engines or motors, articles of Heading 8483;" Even if we peruse the Chapter 84 of sub-heading thereunder particularly sub-Heading 8409 and 8431 they essentially refer to parts of certain products. If we consider provisions in schedule one bearing in mind the purpose behind the Section and Chapter notes, the same essentially refer to the classification of products. Obviously, such notes would assume relevancy while dealing with the issue of classification as also when such issue become relevant even for the purpose of dealing with the matter under an exemption Notification. However, as has been held by the Apex Court when the exemption Notification is clear and simple in its language which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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