TMI Blog1991 (9) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... 86 which exempts goods falling under sub-heading 2702.00. 3. A show cause notice dated 27-2-1987 was issued by Superintendent of Central Excise, Virudhachalam under Section 11A of the Central Excises and Salt Act, 1944 read with Rule 9(1) of Central Excise Rules, 1944 demanding a duty of Rs. 19,30,227.65 P. on Raw Briquette Chips and lignite dust alleged to have been cleared by the appellants from 1-9-1986 to 31-1-1987 without payment of duty. It is further alleged that the appellants are holder of L-4 licence No. 4 of 75 in their Briquetting and Carbonisation plant manufacturing Raw Briquette chips (RB Chips) and lignite dust. It is stated that raw briquette chips which are obtained in the B C Plant after the process of crushing and drying raw lignite but before the process of carbonisation, retain the characteristics of lignite and hence are classifiable under sub-heading 2702.00 of CET Act, 1985. It is further stated that Notification No. 179/85 as amended by Notification No. 78/86, exempts goods falling under sub-heading 2702.00 if only they are manufactured in a mine whereas R.B. chips and lignite dust are manufactured in the Briquetting and Carbonisation plant which is li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He has held that Briquetting and Carbonisation operations cannot be called operations ancillary to dressing or sale of lignite either in mineral form or in agglomerated form. Therefore, he held that the B C plant is not a premises covered by the definition of mine under Notification No. 179/85 as amended and hence chips and dust of lignite manufactured in B C plant are not covered by the duty exemption and on that ground, confirmed the order-in-original. Appeal No. 3803/89-C 7. In this appeal, a show cause notice was issued on 2-8-1988 by the Collector of Customs and Central Excise, Tiruchirapalli, Tamil Nadu to the appellants by which a demand of Rs. 19,03,622.40 P. for clearances of excisable goods during the period 1-4-1986 to 31-8-1986 was raised under Rule 9(2) of Central Excise Rules, 1944 read with proviso to Section 11A(1) of Central Excises and Salt Act, 1944. They were also asked why a penalty should not be imposed on them under Rule 173Q of Central Excise Rules, 1944. The allegation in the show cause notice is the same as in the earlier appeal. As regards the goods cleared under sub-heading 2702.00 of CET not being eligible for exemption under Notification No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 1-8-1985 without payment of duty due thereon during the period 1-4-1986 to 31-8-1986. Hence it was alleged that they had rendered themselves for action for contravening the provisions of Rule 9(i), 52-A, 53,173-B, 173-C, 173-Gand 174-A punishable under Rule 9(2) read with the proviso to Section 11A(1) of the Central Excises and Salt Act, 1944 for mis-statement, irregular availment of the benefits of the Notification No. 179/85, dated 1-8-1985 and the consequential non-payment of duty on the clearances of the said goods. 8. The appellants have contended that the activity fell within the definition of Mine as per Section 2(j) of Mines Act, 1952 and that they were exempted from paying the duty as per-the notification in question. They further contended that the Notification SO-3699, dated 22-11-1965 was issued for the purpose of labour welfare and safety and not for the purpose of operations themselves carried on in the Mines and, therefore, would not vitiate, alter or remove the meaning and character of the Briquetting and Carbonising plant from being a mine . They have further contended that exemption Notification No. SO-3699, dated 22-11-1965 issued under Section 83 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... micals are required from the gases and tar during the high temperature formation process. (b) It is given in the technical literature that the contaminated test which is obtained from the spillage from conveyors and other material handling equipments and from processes during the briquetting process and which are not suitable for recycling are also sold in the market as fuel. They have also given in the technical write up that some broken and crumbled small chips of briquettes which are not fit for re-processing are also sold in the market. (c) The cut raw briquettes after processing, yield lignite coke which is chemically called licko which are marketed. (d) During the process, they obtained organic chemicals like 1. Carbolic Acid 2. Orthocrsol 3. Metaparcresol 4. Xylenol 5. Multivalent phenol 6. Dephenolised 7. Tar 8. Tar sludge. (e) the product lignite coke obtained from carbolic acid is called Liko plus 15-M size coke fines and 15 MM in the product handling plant and discharged to consumers. 10. The learned Collector, after hearing the parties, rejected the appellants claim and has confirmed the duty demanded in the show cause notice. However, he has accepted the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 85, dated 1-8-1985. The said notification exempted goods which fall under sub-heading 2702.00 which had been manufactured in a mine. The explanation to the notification states that expression mine has the meaning assigned to it in clause (j) of Section 2 of the Mines Act, 1952. It is his contention that the B C plant is a mine and the goods are manufactured in the mine and hence, exempted from payment of duty. He further contended that notification did not contemplate that the Mines Act should be operative but had only taken the meaning of expression mine to be assigned as in clause (j) of Section 2 of the Mines Act. The explanation to the notification, therefore, did not imply that the exemption would be granted only if the Mines Act was in operation and not otherwise. The explanation to the notification was only trying to restrict the meaning of expression mine to be as given in the Mines Act and not to go beyond it. It is his contention that the Central Govt. by its Notification SO-3699, dated 22-11-1965 issued under Section 83 of the Mines Act, had exempted the appellants from the operation of the Mines Act which did not mean that the appellants ceased to be a mine. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ruling rendered by the Supreme Court in the case of A.V. Fernandez v. State of Kerala (AIR 1957 SC 657). In particular, he referred to para 41 of the report which is noted below - There is a broad distinction between the provisions contained in the statute in regard to the exemptions of tax or refund or rebate of tax on the one hand and in regard to the non-liability to tax or non-imposition of tax on the other. In the former case, but for the provisions as regards the exemptions or refund or rebate of tax, the sales or purchases would have to be included in the gross turnover of the dealer because they are prima facie liable to tax and the only thing which the dealer is entitled to in respect thereof is the deduction from the gross turnover in order to arrive at the net turnover on which the tax can be imposed. In the latter case, the sales or purchases are exempted from taxation altogether. The legislature cannot enact a law imposing or authorising the imposition of a tax thereupon and they are not liable to any such imposition of tax. If they are thus not liable to tax, no tax can be levied or imposed on them and they do not come within the purview of the Act at all. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion mine to be restricted to the definition given in Section 2(j) of the Mines Act, 1952. The Notification No. 179/85, dated 1-8-1985 as amended is reproduced below - Exemption to goods produced in Mines - In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts goods falling under sub-heading Nos. 2505.00, 2702.00, 2703.00, 2705.00, 2709.00, 2711.21, 2714.90 or 7101.39 as the case maybe, of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and manufactured in a mine, from the whole of the duty of excise leviable thereon under Section 3 of the Central Excises and Salt Act, 1944 (1 of 1944). Explanation. - In this notification, the expression mine has the meaning assigned to it in clause (j) of Section 2 of the Mines Act, 1952 (35 of 1952). Notification No. 179/85-C.E., dated 1-8-1985 as amended by Notification No. 78/86-C.E., dated 10-2-1986 and No. 439/86-C.E., dated 23-10-1986 and No. 127/88-C.E., dated 1-3-1988". 16. As can be seen from this notification, it exempts goods falling under sub-heading 2702.00 and the same is manufactured in a mine. The explanation to this not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C plant to be considered as a mine, is vested only with the Secy. to Govt. who is competent to decide conclusively by issue of a certificate on this point and the appellant not having produced the said certificate to that effect, the appellants contention that B C plant is a part of mine, cannot be considered by us. As it will not be open for us to give a finding that B C plant is part of the mining activity as per the definition of mine occurring in Section 2(j) of the Mines Act as the Mines Act itself lays down in Section 82 that it is the Secretary to the Central Govt. who shall decide this point conclusively and his decision being final. 19. Sh. Natarajan relied on the ruling of Mehta Brothers (supra) and contended that where a single Act of Parliament is introduced in another Act, it must be read in the sense which it bore in the original Act. This ruling will not be of any help to him as the Mines Act itself has clarified in Section 82, that it is the Secy. to the Central Govt. who will decide the issue pertaining to the point as to whether any excavation or working or premises in or adjacent to and belonging to a mine on which any process ancillary to the getting, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preparation for sale of coke is being carried on, by virtue of a notification issued under Section 83(1) of the Mines Act. 20. The learned Collector has observed that the Notification No. SO-3699, dated 22-11-1965 having excluded B C plant from the operation of the Mines Act would all the more, justify B C plant from not being considered as a mine. This finding of the learned Collector is also not without substance. As it is for the Central Govt. to decide whether this activity is a mining activity. The Central Govt. without issuing a certificate under Section 82 of the Mines Act, who by a specific notification under Section 83, declaring that B C plant to be exempted from the ambit of the Mines Act, it could only mean that the Central Govt. is not willing to consider B C plant as a mine. 21. The B C plant is registered under the Factories Act and the entire activity of the B C plant has been given in the technical write up, thus it would strengthen the proposition that the activity in B C plant is more of nature of production of goods in a factory and not in a mine. The excavation of minerals from the appellants mine are being directly marketed. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X
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