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TMI Blog2009 (9) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... al Excise Act, 1944 along with demand for interest under Section 11AB of the said Act, and has also imposed penalty to the tune of Rs. 13,57,13,562/- in exercise of powers under Rule 25 of the Central Excise Rules, 2002 and Section 11AC of the said act. 4. In the Appeal No. 974/08, arising out of the show cause notice dated 20th July, 2007, the demand of duty to the tune of Rs. 11,19,41,549/- along with education cess to the tune of Rs. 25,19,723/- has been confirmed under Section 11A along with demand of interest in terms of Section 11AB of the said Act and has also imposed penalty of Rs. 11,44,61,272/- under Rule 25 of the said Rules and Section 11AC of the said Act. 5. The appellants are engaged in manufacture of tractors classifiable under Chapter Heading No. 87.01 of the Central Excise Tariff Act, 1985. They also manufacture engines which are required to be part of the tractors and which are classifiable under Heading 8408 of the said Act. The tractors are exempted from the payment of excise duty in terms of Notification No. 23/2004-C.E., dated 9-7-2004 and No. 6/2006-C.E., dated 1-3-2006 w.e.f. 9-7-2004. In the course of inspection of the premises of the appellants, the Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Notification is plain and clear and does not leave any room for doubt about the scope of the expressions used with reference to Serial No. 296 of that Notification, it would not be possible to interpret the same with reference to Section notes of any particular Chapter in the Tariff Act. He also submitted that, the Tribunal in its earlier judgments has already held that, the benefit under Exemption Notification extends to the parts used in manufacture and used captively for manufacture of the goods classifiable under Heading 8701 and in that regard drew our attention to the decision in the matter of Mahindra & Mahindra Ltd. v. CCE, Nagpur, reported in 2007 (210) E.L.T. 579 (Tri.-Mumbai) and VST Tillers Tractors Ltd. v. CCE (Adj.) Bangalore, reported in 2009 (239) E.L.T. 295 (Tri.-Bang.). 8. Learned Advocate also submitted that in terms of the said Notification, the appellants would be entitled to avail the credit in relation to the duty paid on the parts used as the inputs for manufacture of the machines which are captively used for manufacture of final product namely, the tractors. He also submitted that, the claim in relation to the demand prior to August, 2005 is squarely bar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pression in the main or principal statute. Once the goods classifiable under sub-heading 8408 cannot be construed as the parts or parts and accessories in view of Section Note 2(e) of Section XVII of the Tariff Act, any subordinate legislation issued in relation to the exemption from the obligation to pay the duty, the expressions used therein cannot be construed contrary to what is stated about the same expressions in the main statute. He further submitted that, the Departmental clarifications are to be understood in consonance with the statutory provisions and that, in any case, the circular issued by the Board cannot be binding upon the Tribunal. Reliance was sought to be placed in the decision of the Apex Court in the case of CCE, Bolpur v. Ratan Melting & Wire Industries reported in 2008 (231) E.L.T. 22 (S.C.) = 2008 (12) S.T.R. 416 (S.C.) and Faridabad Iron & Steel Traders Association v. Union of India reported in 2004 (178) E.L.T. 1099 (Del.) 11. It is not in dispute that the claim of exemption from payment of duty by the appellants is in relation to the engines classifiable under sub-Heading 8408 which are captively used for manufacture of tractors by the appellants. 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 3500 PMT whereas circles made from brass attracted nil rate of duty and it was not in dispute that the circles manufactured by the assessee were from brass. In those circumstances, the exemption Notification No. 3/2001-C.E., dated 1-3-2001 was sought to be interpreted, in a situation where the exemption was sought to be denied by the Department on the ground that the trimmed and untrimmed articles of brass cannot fall under Serial No. 200 but were falling under serial No. 201. After considering the description of the goods under Serial No. 200 and 2001, the Apex Court allowed the claim for exemption by the assessee. 14. In Maestro Motors Limited case, the Apex Court while dealing with the question as to whether CKD packs imported into the country could be considered as the motor cars and not components while considering the claim of the assessee regarding exemption under Notification No. 29/83-Cus., and 29A/83, it was held that it is settled law that to avail the benefit of a Notification, party must comply with all the conditions of the Notification. Further, a Notification has to be interpreted in terms of its language. If in the Notification exemption is granted with refere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts" within the meaning of the said expression under the Notification which is issued under the same statute in relation to which the said section note exists on the statute book. It is pertinent to note that the Tariff Act along with said Section note has been in force since 1986. The framers of law in their wisdom knowing well the said provision of law issued the Notification specifying parts classifiable under any Chapter used within the factory of production for manufacture of goods of Heading 8701 to be exempted from payment of duty. The Exemption Notification in this manner has been in force since 2002 in relation to the product in question. In other words the exemption Notification while using the expression "parts" for the purpose of granting exemption makes no difference between the parts classifiable under one Chapter sub-heading or other and it applies to the parts classifiable under any of the Chapter sub-heading under the Tariff Act. Only condition which has been attached thereto is that such parts must be used within the factory of production for manufacture of goods classifiable under 8701. Once it is not in dispute that the goods are captively used for manufacture o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restriction is that such parts should be used within the factory of production for manufacture of the goods classifiable under Heading 8701. The language of the Notification is clear and simple and in our considered opinion would not permit to impart any restriction which is not provided for in the Notification. Being so, merely because the Section note prescribes certain clarifications about the nature of the goods for the purpose of classification - while dealing with the goods classifiable 8401 to 8479, the same could be applied to understand the scope of the exemption Notification in relation to the entry against Sl. No. 296 under earlier Notification and entry against Item No. 92 in the later Notification. In this regard, the decisions of the Apex Court in S. Teja Singh or Ispat Industries Ltd. case are of no help to the Department. It was a case under Income Tax Act, 1922. In S. Teja Singh case, the Tribunal had referred to the High Court, the question as to whether penalty can be imposed under Section 28 of the Income Tax Act, 1922 on failure to comply with the provisions of Section 18A(3) of the said Act and the High Court had agreed with the Tribunal that it was competent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been held by the Apex Court when the exemption Notification is clear and simple in its language which leaves no room to doubt about inclusion of any product thereunder, it is difficult to accept the contention on behalf of the respondent that such section notes would restrict the ambit of scope of exemption Notification irrespective of the fact that the exemption Notification has been issued knowingly well the scope of the Chapter and Section notes under the Tariff Act by the framers of law and the draftsman of the Notification. Added to this, it is even the understanding of the Board that the expression "parts" referred to in the Notification in question would apply to all the parts used within the factory of production for manufacture of goods of Heading 8701. It is pertinent to note that the Board in its clarification has clearly stated that- "3. Notification No. 6/2002-C.E., dated 1-3-2002 (Sr. No. 296) and the Notification No. 6/2006-C.E., dated 1-3-2006 (Sr. No. 92) exempt parts, falling under any Chapter, used within the factory of production for manufacture of goods of Heading 8701. In view of this specific provision, goods falling under any Chapter, so long as they are p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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