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TMI Blog2001 (1) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... of central excise duty on khandsari molasses that the procurer of such molasses has been deemed to be a manufacturer, and that the deeming fiction is only for the purpose of such levy of duty on such khandsari molasses. This deeming fiction could not be extended to make the procurer as eligible for small scale exemption, which was governed by separate set of notifications and was subject to the various conditions as contained in those notifications. It was his submission that the small scale exemption notification has to be read strictly, and the benefit was only restricted to the manufacturer having a factory in which excisable goods were manufactured. The benefit could not be extended to the procurers of the Khandsari molasses, who were deemed to be manufacturer by virtue of deeming fiction, but were not manufacturer for the purposes of Section 2(f) of the Central Excise Act, 1944. He relied upon the following decisions :- (1) Collector of Central Excise, Mumbai-I v. Engineers Enterprises Pvt. Ltd. - 1999 (105) E.L.T. 376 (Tribunal), wherein it had been held that an exemption notification is required to be strictly interpreted reading the plain meaning of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r referred to as 'Rules'). Rule 7A was inserted in the Rules by the Central Excise (Amendment) Rules, 1997 vide Notification No. 6/97-C.E. (N.T.) dated 1-3-97. This Rule provided for recovery of duty on molasses produced by a Khandsari Sugar Factory. Rule 7A is extracted below :- "7A. Recovery of duty on molasses produced by a khandsari sugar factory. - Every person who procures molasses produced in a khandsari sugar factory, whether directly from such factory or otherwise, for use in the manufacture of any commodity, whether or not excisable, shall pay the duty or duties leviable on such molasses, as if such molasses has been manufactured by the procurer, at such time and to such persons as may be designated under these rules, whether the payment of such duty or duties be secured by bond or otherwise." 4. The 'procurer' was defined in Rule 2 as "any person, who receives molasses manufactured in a khandsari sugar factory whether directly from such factory or otherwise, for use in the manufacture of any commodity whether or not excisable, and is liable for payment of duty assessed on such molasses." Although the levy was on the khandsari molasses but it was collected by virtu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified by the Government in the official gazette. This section can be invoked for a commodity on which the retail price is required to be indicated as a statutory obligation. (2) Cost audit. - Another new Section 14AA has been introduced to enable the Commissioners to order for cost audit in case of misuse of Modvat credit or where the Modvat credit is far in excess of normal limits. This new section shall also come into force on the enactment of the Finance Bill, 1997. (3) Khandsari molasses. - One striking feature of this year's change is to provide for collection of excise duty at the consumption point in the case of khandsari molasses. Relevant rules of the Central Excise Rules, 1944 have been amended to provide for the manner of collection and the time of collection of duty in respect of khandsari molasses. The intention is to collect the excise duty on such khandsari molasses which finds use in the manufacture of alcohol. Khandsari molasses going for other uses are not intended to be charged to excise duty. Further, the khandsari producers are not required to pay any excise duty. The liability to pay duty has been put on the distilleries. The excise duty is to be paid by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) The aggregate value of clearances of all excisable goods for home consumption (including clearances for export to Bhutan or Nepal) by a manufacturer from one or more factories, or from a factory by one or more manufacturers, has not exceeded rupees three hundred lakhs in the preceding financial year : Provided that for the purpose of determining the aggregate value of clearances, the following clearances shall not be taken into account :- (a) any clearances, which are exempt from the whole of the excise duty leviable thereon (other than an exemption based on quantity or value of clearances) under any other notification or on which no excise duty is payable for any other reason; (b) any clearances bearing the brand name or trade name of another person, which are ineligible for the grant of this exemption in terms of paragraph 3 below; (c) any clearances of the specified goods which are used as inputs for further manufacture of any specified goods within the factory of production of the specified goods. Such clearances of specified goods used as inputs shall be deemed to be exempt from the whole of the duty of excise leviable thereon; (d) any clearances of strips of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . But in so construing the fiction, it is not to be extended beyond the purpose for which it is created or beyond the language of the Section by which it is created." The extension of the legal fiction to the procurer of khandsari molasses beyond the recovery of duty on such molasses and to provide the procurer, the benefit which was available only to the small scale manufacturers of the dutiable excisable goods, would be going beyond the purpose for which the said legal fiction was created. The legislative intent is clear and unambiguous, and to extend the legal fiction as in the manner as done by the Commissioner of Central Excise would go to defeat that legislative intention. The ld. Advocate had referred to the Supreme Court's decision in the case of Doypack Systems Pvt. Ltd. v. Union of India - 1988 (36) E.L.T. 201 (S.C.). In para 64 of the Report, the Hon'ble Supreme Court had observed that the deeming provision is intended to enlarge the meaning of a particular word or to include matters, which otherwise may or may not fall within the main provision. There is no dispute that the deeming provision may enlarge the meaning of a particular word, but the question is as to what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty on khandsari molasses when used in the manufacture of non-excisable alcohol. 9. Even otherwise, we find that the procurer of khandsari molasses does not fit in the scheme of small scale exemption. In the Notification No. 1/93-C.E., dated 28-2-93 (as amended), the benefit of exemption was in favour of a manufacturer whose clearance for home consumption from one or more factories did not exceed the specified limits. In para 2 of the said notification, it was provided that the aggregate value of clearances of the specified goods for home consumption in a financial year (a) by a manufacturer from one or more factories, or (b) from a factory by one or more manufacturers, was not to exceed the exemption limits given respectively in the sub-clauses of part 1 of that Notification. 'Factory' is defined in Section 2(e) of the Act as under :- 2(e) "factory" means any premises, including the precincts thereof, wherein or in any part of which excisable goods other than salt are manufactured, or wherein or in any part of which any manufacturing process connected with the production of these goods is being carried on or is ordinarily carried on; 'Manufacturer' is defined in Section 2( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notices. After the decision dated 30-1-99 of the Hon'ble High Court in respect of party's WP, this office fixed a personal hearing for 4-3-99. The party vide its letter dated 4-3-99 requested postponement of hearing for two weeks on the grounds of their having moved on LPA in the Hon'ble High Court against the Order dated 30-1-99 which was likely to be heard soon. No contention as to the time-bar nature of these demands was raised in this first correspondence of the party on the subject. It was only during next date of hearing i.e. 16-3-1999, the party contended that the Notices were hit by time limitation and therefore merit vacation. I have perused the acknowledgements of the party in respect of these Demand Notices. The SCNs dated 10-8-98, 23-9-98, 26-11-98 & 31-12-98 contain the dates of issue in bold and conspicuous numericals which couldn't escape the notice of even semi-literate man while acknowledging the receipt. Accordingly the party's contention of the notices being hit by time limitation appears to be an afterthought though mis-conceived and without any evidence to substantiate it. It wouldn't normally take more than two months for the party to agitate one as grave a ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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