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TMI Blog1991 (3) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... n the yarn produced by the assessee in its spinning and weaving mill and which was utilised for the purpose of weaving the fabrics manufactured by it. In paragraph 6 of the judgment, the Honourable High Court observed that if there was one single process, of manufacture then the mere fact that at some stage during that process an excisable commodity emerged, would not make it liable to excise duty, unless it was removed for the purpose of consumption or sale. It was also observed that in that context, consumption refers to the utilisation of the commodity for a different purpose and not the mere conversion of the same commodity into another product. In paragraph 6 of the judgment the discussions of the Honourable High Court were as follows : "6. We are of opinion that the contention of the learned counsel for the petitioners is well founded and directly covered by a number of earlier decisions of this court. As mentioned earlier, the contention of the petitioners is based on the decision in the case of The Delhi Cloth & General Mills Co. Ltd. [1978 (2) E.L.T. J 121] which has been earlier referred to. This case has been followed and the relevant principles discussed and illustrate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition in the other writ petition and LPA referred to earlier. In the light of these decisions we are of opinion that in the present case the assessee's contention is well founded. The assessee is running a composite textile mill in which it is licensed to manufacture and produce man-made fabrics. There is only one process for which the assessee has been licensed and the entire factory is the place of manufacture the removal from which will attract excise duty. But there is no such removal within the meaning of the rule at all. The yarn produced by the petitioner company is passed on to the warp beams wherefrom are made to attribute several processes before the final fabric emerges. This, in our opinion, is a case where there is a single end-product, and the various processes are all towards the emergence of that end-product. No doubt if the yarn that is wound upon the cones is removed by the assessee for the purpose of sale or for the purpose of consumption otherwise the goods so removed would attract duty and that is not denied by the petitioner itself. But so long as the cone are not removed from the pipeline and they continue to wound on the cones, transferred to the warp beams ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -81 1-1--81 - 30-4-80 14. E/2284/84-D -do- 7-8-1-81 1-12-80 - 30-5-81 Amount Period time-barred AC's Order No. & Date (6) (7) (8) Rs.P. 1,25,542.41 Nil V(18 III)/18-1/87/6149 dt. 1-7-82 13,367.66 Nil V(18 III)/18-4/87/6147 dt. 1-7-82 72,12,496.32 April 74 to 4-2-81 V(18 E)/18-4/87/6133 dt. 1-7-82 35,13,419.00 1-1-78 to 8-12-80 V(18 III)18-2/87/6145 dt. 1-7-82 2,56,973.76 Nil V(18 E)/18-4/81/447 dt. 27-1-82 1,22,756.88 16-10-80 to 23-10-80 -do- 3,54,019.92 Nil -do- 2,20,204.60 Nil -do- 1,06,265.00 Nil -do- 2,83,540.80 1-1-78 to 5-7-80 V(18 E) 18-4/81/295 dt. 15-5-81 38,97,746.42 1-1-1-78 to 5-7-80 V(18 A) 18-2/81/371 dt. 16-5-81 1,32,406.74 1-1-78 to 5-7-80 V(18-A)18-1/81/273 dt. 16-5-81 7,52,584.80 1-1-78 to 5-7-80 V(18) 1/81/647 dt. 23-5-81 37,255.56 - V(18 E)18-15/81/417 dt. 23-1-82 1,18,307.70 16-10-80 to 23-10-80 -do- 93,719.35 - -do- 1,97,238.84 - -do- 24,30,988.89 1-12-80 to 6-2-81 -do- 4. The refund claims were rejected by the Assistant Collector of Central Excise for the following reasons: (a) The appellants' units were composite mills. All the operations involved, right from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no doubt that the Central Excise Tariff (First Schedule) has specific tariff entries for the various yarns which are commercially identifiable commodities. In the circumstances, I hold that the duty was correctly paid on the yarns even if used captively for the manufacture of fabrics. Doubts, if any, have further been removed by the amendments of Rules 9 and 49, ibid, with retrospective effect vide Notification No. GSR-74(E) dated 20-2-1982 read with Section 51 of the Finance Act, 1982. These amendments make it clear beyond doubt that duty is leviable on the goods consumed or utilised within the factory of production itself. Further the validity of the amendments with retrospective effect has been upheld by the Delhi High Court in the case of M/s. J.K. Cotton Spinning & Weaving Mills - 1983 (12) E.L.T. 239 (Del.). While upholding the validity, Court has concluded that duty is leviable even on an intermediate product or 'in process product' though the same is utilised in the Composite Mill for the manufacture of an end-product! The Court further observed that indeed, in one way of looking at it, there will always be physical removal, either bodily or mechanically, when goods go ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Co., Ltd. [1982 (10) E.L.T. 887] for the period prior to 20-2-1982. Section 3(3) of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 makes provision that Central Excises and Salt Act, 1944 and Rules made thereunder will apply in relation to the Levy and Collections of duties of excise leviable under that Act Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 but not under the Finance Act, 1982 which has become part of the Central Excises and Salt Act, 1944. (ii) In any event and without prejudice to the aforesaid it is submitted that while Section 51(2) of the Finance Act, 1982 validates the collection of duties under the Central Excise Act before the 20th day of February, 1982 it does not validate the collection of duties like that leviable under Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 levy of SED is the relevant Finance Act. Similarly levy of AED is under Additional Duty of Excise (Textiles and Textile Articles) Act, 1978. Such levy is different from Excise Duty levied under Central Excise Act [see Modi Rubber Ltd. v. Union of India 1986 (25) E.L.T. 849]. Unless the Act made provision for retrospective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic, Special and Additional Duties of Excise. It was stated by the learned Advocate Shri Sridharan that the totals of these break-up tallied with the amounts claimed by the appellants in various refund applications. This shows that the appellants claimed refund not only of Basic Excise Duty, but also of Special and Additional Duties of Excise. This argument was not disputed by the learned Departmental Representative Smt. Zutshi. She also did not dispute the figures and the break up given in the statements. On 14-9-1990, Shri Sridharan and also Smt. Zutshi did not advance any further fresh arguments, but they adopted the arguments advanced by them before the Bench on 30-1-1990. In view of this, orders were reserved on all these appeals. 7. The grounds sought to be raised by the Miscellaneous Application are legal grounds. We, therefore, allow the application. Consequently, the arguments of both sides which were mainly with reference to the legal points, have to be considered and decision taken on the issues raised. 8. The gist of the arguments of the learned Advocate for the appellants is that the amendments of Rules 9 and 49 of the Central Excise Rules, by Notification of 1982 wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1978 also refers "Additional Duties of Excise". Therefore, she has argued, the Central Excise Duty referred to in Rules 9 and 49 and Section 51 of the Finance Act, 1982 covers Basic Excise Duty, Special Excise Duty and the Additional Excise Duty. Referring to sub-section (3) of Section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, she has argued that this sub-section incorporates the Central Excises and Salt Act and Central Excise Rules, 1944 in this Additional Duties of Excise Act, 1978. In support of this argument, she referred to Page 16 of the Principles of Statutory Interpretation by Justice G.P. Singh, 4th Edition, which deals with incorporation of an earlier Act, into a later Act by reference. She has, therefore, contended that the retrospective amendment of Rules 9 and 49 of Central Excise Rules, by Section 51 of the Finance Act, should cover Special Excise Duty and the Additional Duty of Excise also. In support of her argument, she has relied on Tribunal's decision reported in (i) 1989 (23) ECR Page 385 - Paras 33,127,129 and 130 (ii) 1987 (28) E.L.T. 126 (Tribunal), 1987 (11) ECR 632 (Tribunal) (iii) 1987 (11) ECR 228 (Madras) and ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1A) Where a person keeping an account-current under the third proviso to sub-rule (1) makes an application to the Collector for withdrawing an amount from such account-current, the Collector may, for reasons to be recorded in writing, permit such person to withdraw the amount in accordance with such procedure as the Collector may specify in this behalf.] (2) If any excisable goods are, in contravention of sub-rule (i) deposited in or removed from any place specified therein, the producer or manufacturer thereof, shall pay the duty leviable on such goods upon written demand made (within the period specified in Section 11A of the Act, by the proper officer, whether such demand is delivered personally to him, or is left at his dwelling house, and shall also be liable to a penalty which may extend to two thousand rupees, and such goods shall be liable to confiscation.)" "49. DUTY CHARGEABLE ONLY ON REMOVAL OF THE GOODS FROM THE FACTORY PREMISES OR FROM AN APPROVED PLACE OF STORAGE. - (1) Payment of duty shall not be required in respect of excisable goods made in a factory until they are about to issue out of the place on premises specified under Rule 9 or are about to be removed from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; They shall come into force on the date of their publication in the Official Gazette. 2. In Rule 9 of the Central Excise Rules, 1944 (hereinafter referred to as the said rules), the following Explanation shall be inserted at the end, namely :- "Explanation. - For the purposes of this rule, excisable goods produced, cured or manufactured in any place and consumed or utilised - (i) as such or after subjection to any process or processes; or (ii) for the manufacture of any other commodity, whether in a continuous process or otherwise, in such place or any premises appurtenant thereto, specified by the Collector under sub-rule (1), shall be deemed to have been removed from such place or premises immediately before such consumption or utilisation." 3. In Rule 49 of the said rules, the following Explanation shall be inserted at the end namely : - "Explanation. - For the purposes of this rule, excisable goods made in a factory and consumed or utilised - (i) as such or after subjection to an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on any excisable goods under the Central Excise Act, shall be deemed to be, and shall be deemed to have always been, as validly levied, assessed or collected as if the amendments referred to in the sub-section (1) had been in force at all material times; (b) no suit or other proceeding shall be maintained or continued in any court for the refund of, and no enforcement shall be made by any court of any decree or order directing the refund of, any such duties of excise which have been collected and which would have been validly collected if the amendments referred to in sub-section (1) had been in force at all material times; (c) refund shall be made of all such duties of excise which have been collected but which would not have been so collected if the amendments referred to in sub-section (1) had been in force at all material times; (d) recovery shall be made of all such duties of excise which have not been collected or, as the case may be, which have been refunded but which would have been collected or, as the case may be, would not have been refunded, if the amendments referred to in sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , read with any notification for the time being in force issued by the Central Government in relation to the duty so chargeable, there shall be levied and collected a special duty of excise equal to ten per cent of the amount so chargeable on such goods. (2) Sub-section (1) shall cease to have effect after the 31st day of March, 1983, except as respects things done or omitted to be done before such cesser; and Section 6 of the General Clauses Act, 1897 (10 of 1897), shall apply upon such cesser as if the said sub-section had then been repealed by a Central Act. (3) The special duties of excise referred to in sub-section (1) shall be in addition to any duties of excise chargeable on such goods under the Central Excises Act or any other law for the time being in force. (4) The provisions of the Central Excises Act and the rules made thereunder, including those relating to refunds and exemptions from duties, shall, as far as may be, apply in relation to the levy and collection of the special duties of excise leviable under this section in respect of any goods as they apply in relation to the levy and collection of the duties of excise on such goods under that Act or those rules, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 50(4) of the Finance Act in the case of Special Duties of Excise, as well as Section 3(3) of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, incorporated by reference the provisions of the Central Excises and Salt Act, 1944 and the rules made thereunder in those sections for the purpose of levy and collection of Special Excise Duty and Additional Excise Duty. The effect of incorporation of an earlier Act, into a later one by reference has been very lucidly discussed by Justice G.P. Singh, Chief Justice of Madhya Pradesh High Court, as he then was, in his book "Principles of Statutory Interpretation", 3rd edition at pages 219 - 221 of the said book. The relevant portions from those pages are incorporated below: When an earlier Act or certain of its provisions are incorporated by reference into a later Act, the provisions so incorporated become part and parcel of the later Act as if they had been "bodily transposed into it" [Ramsarup v. Munshi, AIR 1963 SC 553, p. 558]. The effect of incorporation is admirably stated by LORD ESHER, MR: "If a subsequent Act brings into itself by reference some of the clauses of a former Act, the legal effect of that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the later Act is subject to qualifications and exceptions. [See text and footnotes 28 to 36 at pp. 225 to 228]. 13. A similar point came up for consideration before the Honourable Supreme Court in the case of Ujagar Prints etc. etc. v. Union of India and Others, reported in 1988 (38) E.L.T. 535 (SC). In the said case, the Honourable Supreme Court examined the effect of Section 3(3) of the Additional Duties of Excise (Goods of Special Importance) Act, 1957. Sub-section (3) of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 reads as follows : "(3) The provisions of the Central Excises and Salt Act, 1944 (1 of 1944) and the Rules made thereunder, including those relating to refunds and exemptions from duty, shall, so far as may be, apply in relation to the levy and collection of the Additional Duties as they apply in relation to the levy and collection of the duty of Excise on the goods specified in sub-section (1)". This provision is similar to the provision of Section 3(3) of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 and Section 50(4) of the Finance Act, 1982 relating to Special Excise Duty. After examining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct but also all its other provisions, including those containing the definition. In the concluding sub-paragraph of Para 24 of the said judgment, the Honourable Supreme Court also observed as follows: "What appears, therefore, clear is that what applies to the main levy, applies to the Additional Duties as well." 14. In the light of the above, we hold that in view of Section 3(3) of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 and the relevant provision of the Finance Act, 1982, viz., Section 50(4) of the Finance Act, 1982, all the provisions of the Central Excises and Salt Act, 1944 and the rules made thereunder are applicable to the levy and collection of Additional Duties of Excise and the Special Duties of Excise. We have already discussed that by Section 51 of the Finance Act, 1982, the amendments to Rules 9 and 49 of the Central Excise Rules, as effected by Notification No. 20/82-C.E., dated 20-2-1982 by inserting explanation below these rules, has been given retrospective effect to these amendments. As a result, the explanation below these rules came into force from the inception of the Central Excise Rules, 1944. By virtue the retrospective a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by him" on that quantum of the goods cleared by him during the relevant financial year which exceeds the quantum of goods cleared by him during the base year. Clause (b) of sub-section (6) of Section 280ZD defines the expression "duty of Excise" for the purpose of the aforesaid provision and it meant the duty of excise leviable under the Central Excises and Salt Act, 1944. In the said case, the Supreme Court held that the Special Excise Duty which was levied under Section 80 of the Finance Act, 1965 cannot be regarded as having been levied under the Excise Act. In the judgment reported in 1986 (25) E.L.T. 849 (SC), Union of India and Others v. Modi Rubber Limited and Others, the Honourable Supreme Court, while interpreting the scope of Notification No. 123/74-C.E., held that the exemption did not cover Special Excise Duty, Additional Excise Duty or Auxiliary Duty for the purpose of exemption. This judgment was delivered by the Honourable Supreme Court on 18-8-1986. The judgment of Honourable Supreme Court, in the case of M/s. Ujagar Prints etc. etc. v. Union of India and Others was delivered on 4-11-1988. This judgment squarely covers the effect of incorporation of the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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