TMI Blog2001 (10) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... td. 3-11-98. Memorandum of Cross Objection No. E/CO-39/2001-Mum. has been filed by the assessee in Appeal No. E/195/2001-Mum. filed by the Department. 2. By Orders-in-Original dated 12-11-98 and 10-1-2000 the Commissioner of Central Excise, Mumbai VI has held that the assessee who is a manufacturer of synthetic detergents and who is registered as Co-operative Women Society and also registered under Khadi Village Industries Act 1956, is not entitled to exemption claimed under Notification No. 88/88-C.E. as well as Notification No. 13/92-C.E. The appellant is manufacturing, among other things, Laundry Soaps, technically known as Synthetic Detergent under brand name SASA falling under Chapter sub-heading No. 3402.19. The said soap is manufactured by them in form of cake, powder and liquids. They had been filing Classification Lists. C.L. No. 2/91-92 was filed with effect from 25-7-91 claiming the exemption under Notification No. 80/91-C.E., which amended Notification No. 88/88-C.E. The case of the assessee is that they were manufacturing Laundry Soap, being an organization registered under Khadi Village Industries Act, 1956 as a Women Co-operative Society and hence they need ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be claimed. The assessee s case is that they have correctly availed of the exemption under Notification No. 88/88, as amended from time to time, for the product in question viz. detergent cake and detergent powder and area Mira is a rural area and that the demand of Rs. 19,31,30,535.61 for the period from 1-10-1992 to 30-9-1997 cannot be made by the Department. The assessee also claimed in their reply that the larger period cannot be invoked in this case inasmuch as there was no fraud, collusion or willful misstatement or suppression of facts. 4. We have described only one show cause notice in respect of one Appeal, as we feel it sufficient for us to refer to the same, as the common issues are involved in all these matters argued before us. 5. The Adjudicating Authority by his Order dated 12-11-98 has held in Paragraphs 13 14 of the adjudication order that the census report of 1991, population of Mira Bhayander was provisionally placed at 1,75,372. The population of Mira was certified as 11,573. Therefore, the population of the place Mira being more than 10,000, this place cannot be treated as rural area in terms of Notification No. 88/88. Therefore, benefit of exemption un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rwada. Mahajanwadi, Ghodbundar and Varsova are the revenue village of Thane. This is available at Page 103 Part 1 of the Paper Book received before us on 20-4-2001 and also in the Appeal at Page 81 of the Paper Book. It is further contended by the ld. Counsel that after the above Trade Notice issued by the Cochin Collectorate, the department cannot argue to the contrary. He relies on several decisions of the Supreme Court, one of which is Ranadey Micronutrients [1996 (87) E.L.T. 19 (S.C.)]. He also states that Trade Notice issued by one Commissionerate is binding on all the other Commissionerates and he relies on the judgment of Hon ble Supreme Court in the case of Steel Authority of India v. CCE [2000 (115) E.L.T. 42 (S.C.)]. During the course of the arguments, the ld. Counsel rebutted the arguments of ld. Counsel for the department regarding the Constitutional Provision of Village in the following manner. He states that the decisions cited by the ld. Counsel for the Revenue are all irrelevant in the context of the Trade Notice. The Constitutional Provisions relied on by the ld. Counsel for the department are not relevant inasmuch as we are looking to the aspect of exemption Notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion No. 7/98, w.e.f. 2-6-98 and, hence, demand for the period from 2-6-1998 to Feb., 2000 is not sustainable on this count alone. It is further argued by the ld. Counsel that in any event, in terms of Notifications 19/84 and 12/94 and 8/96 and 5/97, the soap which is manufactured by them cannot be saddled with duty, as the same were exempted under those notifications. The only condition under those Notifications is that it should be an Organization approved by Khadi Village Industries Commission, which is admitted to be so in this case, and it is not disputed in the show cause notice. It is further emphasised that with effect from 14-5-97, the Tariff Heading 3401.13 itself provides for the same. 8. As against this ld. Counsel for the Revenue argued and as indicated notes hereof as under : As far as the arguments of the Appellants that the A.C. had already approved the Classification List No. 2/91-92, dated 25-7-1991 claiming exemption, by his letter dated 16-8-1991 and hence, there is no scope of invoking the extended period, cannot stand on its legs because the appellants themselves have misdeclared the facts and claimed the exemption and Asstt. Commissioner, relying upon th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his provision is made in the interest of the economy of the country. The provisions of sub-section (2)(b) of S. 12 prohibit the person exporting from taking any steps which would affect the securing the payment of the full value of the exported goods. Clause (b) gives power to the Reserve Bank to verify and examine whether the declaration made does in fact represent the full amount or the full value of the goods exported. This provision clearly indicates that what is intended to be declared is the true and full value of the goods exported and not any declaration irrespective of the correctness of the value. This is made equally clear by the provisions of S. 22 of the Act of 1947 which require that every declaration made under the Act must be a true declaration and not a declaration which is known to the maker to be untrue or which he has reason to be believe to the false which he has reason to believe to be false or untrue in any material particular. These provisions would suggest that the declaration must be true. Having regard to the purpose of the enactment of the Act of 1947 and to the relevant sections thereof the word declaration can have but one meaning and that is a true ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with the provisions of this part. With the plain reading of above, it is noticed that word shall is used which says that there shall be Panchayats at the village and therefore if there is no panchayat it cannot be village under the Constitution of India. As there is Municipal Council under Art. 243Q for Mira-Bhayander Municipal area hansom Mira cannot be termed as village by any stretch of imagination, irrespective of certificates given by Tahasildar and other local officers. 10. No statutory provision can override constitutional provision. Case law : AIR 1995 Supreme Court 2348 (Para 15, Page 23) Vinay Chandra Mistra v. Union of India. In view of these observations of the latter Constitution bench on the point, the observations made by the majority in Prem Chand Garg s case (AIR 1963 SC 996) (supra) are no longer a good law. This is also pointed out by this Court in the case of Mohammed Anis v. Union of India. (1994) Supp. 1 SCC 145, by referring to the decisions of Delhi Judicial Services v. State of Gujarat (1991 AIR SCW 2419) (supra) and Union Carbide Corporation v. Union of India (AIR 1992 SC 248) supra by observing that statutory provisions cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion suturing material and would not be outside the expression surgical appliances. As the relevant point of time these two were separately dealt, with needle simplicitor falling within the expression 90.18 and suturing material simplicitor falling within clause a of Note 3 of Chapter 30 and consequently under Item 3005.90. But when the suturing material and the needle form an integrated single item used for surgical purposes it would not be proper to adopt a narrow construction to place it under the heading of suturing material removing it from the broader terminology of surgical appliance under Item 90.18. It was possibly for this reason that by the subsequent notifications the position was made clear and the ambiguity was removed. We are, therefore, of the opinion that the items produced by the appellant company would fall within Entry 90.18 as the terminology surgical appliances has a broader compass than the terminology suturing appliances of Chapter 30 of the Excise Tariff. As far as the decision in Jain Engineering (supra) is concerned, the facts show that the Notification provided that the article specified in the table annexed to the Notification and falling under Headi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asimhamurthy again relied on certain observations in CCE v. Parle Exports (P) Ltd. [1988 (38) E.L.T. 741 (S.C.) = 1989 (1) SCC 345], in support of strict construction of a provision concerning exemptions. There is support of judicial opinion to the view that exemptions from taxation have a tendency to increase the burden on the other unexempted class of tax payers and should be construed against the subject in case of ambiguity. It is an equally well known principle that a person who claims an exemption has to establish his case. Indeed, in the very case of Parle Exports (P) Ltd. relied upon by Shri Narasimhamurthy, it was observed : While interpreting an exemption clause, liberal interpretation should be imparted to the language thereof, provided no violence is done to the language employed. It must, however, be borne in mind that absurd results of construction should be avoided . The choice between a strict and a liberal construction arises only in case of doubt in regard to the intention of the legislature manifest on the statutory language. Indeed, the need to resort to any interpretative process arises only where the meaning is not manifest on the plain words of the statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould give a liberal construction to words of exception confining the operation to the duty . It is only, however, in the event of there being a real difficulty in ascertaining the meaning of a particular enactment that the question of strictness or of liberality of construction need arise . 17. To the same effect is the view expressed by Sir Raymond Evershed in Routledge v. Mckau Ors. [(1954 (1) A.E.R. 855)]. The learned Master of Rolls observed : on the authorities, that exemption, as I understand, should be liberally interpreted. 18. We are, however, of the opinion that, on principle, the decision of this Court in Mangalore Chemicals - and in Union of India v. Wood Papers referred to therein - represents the correct view of law. The principle that in case of ambiguity, a taxing statute should be construed in favour of the assessee - assuming that the said principle is good and sound - does not apply to the construction of an exception or an exempting provision; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustan Ltd. v. Collector of Central Excise, Hyderabad (Paras 2, 3 have been reproduced as under) : 2. The appellant manufactures that it calls Halls Ice Mint Tablets . It classified these tablets as Ayurvedic medicines under Heading 3003.10 of the Central Excise Tariff. It was issued a notice to show cause why these tablets should not be classified under Tariff Heading 3003.19 as patent or proprietary medicines . The Assistant Collector, after hearing the appellant, hold that the tablets were patent or proprietary medicines classifiable under Heading 3003.19. In appeal by the appellant, the Collector of Central Excise (Appeals) held that the tablets were Ayurvedic medicines classifiable under Heading 3003.30. The Excise Authorities went in appeal to the Tribunal and, for the first time, took the stand that the tablets were correctly classifiable under Heading 17.04 as confectionery . The appellant, of course, stuck to its stand that the tablets were Ayurvedic medicine classifiable under Heading 3003.19. The Tribunal noted that the Assistant Collector had classified the tablets under Heading 3003.19 (sic 3003.10), that is, as patent or proprietary medicines. This was clear ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted to resile in this Court from the basis on which they argued their case before the Tribunal. 16. The Appellants have all along and including in their classification list filed by them, have claimed that they are manufacturing synthetic detergents and claimed exemption under Notification 88/88-Central Excise and have been consistent of the same till filing of appeal in CEGAT. Changing of classification at oral argument stage cannot be permitted. Not using power 17. The point raised by the Appellants that they are not using power in manufacturing of detergent :- Though no new plea is permissible yet this exemption is applicable to soaps and not synthetic detergents. Modvat 18. Modvat cannot be decided at the Appellate stage as the Modvat benefit can only be granted subject to fulfillment of requirement laid under the rules and relevant order. Limitation 19. If at all the Hon ble CEGAT comes to conclusion that Mira is falls within Municipal area and is not village in that case also the Show Cause Notice is barred by limitation as department being in the same area had knowledge of the same. The Respondents contention regarding this point of limitation. This arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification 80/91 rural areas read as - rural area means the area comprised in any village, and includes the area comprised in any town, the population of which does not exceed twenty thousand or such other figure as the Central Government may specify from time to time. Shri Chatterji, ld. Counsel invited our attention to the case of Diwan Chand v. Nizam Din and Others [1924 Lahore 662(1) where the Lahore High Court defined the village as - The expression village connotes ordinarily an area occupied by a body of men mainly dependent upon agriculture or occupations subservient thereto. In that case, it was not a point which is arising in the instant case. That was a case under Punjab Preemption Act. The Court held that rural areas becomes urban depending upon growing commercial pursuits. So the ratio of the said judgment may not be applicable to the facts of this case. 23. In the instant case, we are mainly concerned with the definition of the term rural area as defined under various Exemption Notifications. We have to interpret the words as contained in the body of the Notifications, viz. proviso and explanation. In the proviso, there is a reference to Khadi Vill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment, we do not seem it necessary refer to this Act. 24. The next point for our consideration is in respect of village, panchayat, etc. which was vehemently argued by the ld. Counsel for the department. The ld. Counsel for the Revenue referred to Part IX of the Constitution dealing with Panchayats. He refers to the terms village as defined in Article 243(g) of the Constitution. The said clause provides as village means a village specified by the Governor by public notification to be a village for the purpose of this Part and includes a group of villages so specified. He submitted before us in a very strenuous way that a Constitution being a superior legal document will have priority over all other legal instruments. Therefore, what is contained in constitution should be followed. In our view, the words contained in any Act, if it is not defined in that Act, then we have to resort to dictionaries/treatises for meaning. Part IX of the Constitution deals with political and administrative set up as contained in Article 243A, Article 243B which deals with constitutional aspect of panchayat, Article 243C deals with composition of panchayat, Article 243D deals with reservation of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from time to time. The manufacturing unit of the assessee is situated at Mira, falls in the Mira-Bhayander Municipal area. As per census report (Series 14 Maharashtra) of 1991 the population of Mira-Bhayander is provisionally placed at 1,75,372. The population of Mira as per the Certificate No. Napa/Sasa/24/586/97-98, dated 28-4-97 issued by Chief Executive Officer, Mira Bhayander Municipal Council is 11,753. By issue of Notification No. CON-1082/2933/CR/660/82/UD 11, dated 12-6-1985, which was published in the Maharashtra Govt. Gazette dtd. 12-6-1985, the area in which manufacturing units are located has been proclaimed by the Urban Development Department of Maharashtra as a municipal area. Hence, the place where the production unit is located cannot be said as rural area . 11. The assessee s contention is that Mira is a rural area and they have rightly claimed benefit of Notification No. 88/88, dt. 1-3-88. In support of their stand they relied upon the Trade Notice No. 2/96, dt. 3-1-96 by the Commissioner of Central Excise Customs, Cochin, which reads as follows :- 1. It is clarified that the exemption under Notification No. 88/88-C.E., dtd. 1-3-88 is available to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the Municipal Council has been enshrined under the said Act of 1965. The legal and administrative set up should follow what is contained in the said Act. That is all and not for any other thing. As is evident from the certificate given by the Chief Officer of Mira-Bhayander Municipal Council dated 28-4-97 (available at Page 111 of the Paper Book filed on 20-4-2001), the population is less than 10,000. Once that has been confirmed, the parameters provided under the exemption Notification 88/88 have been complied with viz. the population is less than 10,000. As stated earlier, we are not concerned with Mira Bhayander Municipal Council but here we are concerned only Mira village. The inclusion of Mira Village under Mira-Bhayander Municipal Council is for the purpose of getting various facilities under the Maharashtra Municipal Council, Nagar Palika Industrial Township Act and it does not itself erase the existence of village in such Municipal areas. From 25-7-91 to 21-2-2000, the term rural area has been assigned a meaning as an area comprised of village determined in Land Revenue record including any area covered under a Municipal Committee, Municipal Corporation. The depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by my learned brother. On the point of limitation my views are as follows : 29. The Demand in this case is raised and confirmed on the ground that benefit of Notification No. 88/88-C.E., dated 1-3-88 was not available to the assessees and that the assessees availed the benefit thereof by misrepresentation and suppression of facts. 30. The benefit of notification was available to assessees situated in Rural Areas . In this notification the phrase has been specifically explained. The phrase Rural Areas was interpreted as areas other than those areas which are included in any body established under any Municipal law in a State. This definition occurred in the notification from the period 1-3-88 to 25-7-91. This explanation was changed vide amending Notification No. 80/91, dated 25-7-91. The expression Rural Area thus during the period 25-7-91 to 21-2-2000 (when the basic notification was yet again amended) read as follows : Explanation - In this notification, - (a) rural area means the area comprised in a village, and includes the area comprised in any town, the population of which does not exceed ten thousand or such other figures as the Central Government may s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne belief that they were eligible for the benefit of the notification. It was also claimed that the assessees are an association comprising of women who are barely literate and are in any event, not capable of interpreting the law. 38. The entire issue involved in this case evolves around the interpretation of the term village . This phrase has been variously interpreted at different times in the very same notification and is capable of more different interpretation as was demonstrated by the two learned Counsels appearing before us. Even at the end of a keenly fought legal battle, both sides maintained that their interpretation was correct. 39. In view of the complexity of the interpretation, in view of the interpretation favourable to the assessees made in the cited trade notice and in view of the admitted lack of acumen with the body of the women i.e. the assessees unit, it cannot be held that the assessees knowing fully that the benefit of notification was not available to it, proceeded in a manner to claim the benefit thereof. Nor can the Revenue attempt to put their lack of knowledge into mala fides on part of the assessees. When the benefit of any notification is claime ..... X X X X Extracts X X X X X X X X Extracts X X X X
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