TMI Blog2014 (1) TMI 1519X X X X Extracts X X X X X X X X Extracts X X X X ..... and 124/1988, the value of the exempted finished goods will have to be excluded in arriving at the aggregate value for the purposes of the notification. Rationale behind the insertion is that when the specified goods are chargeable to nil rate of duty or exempted under any notification, as the case may be, the specified goods used as inputs are not treated as exempt under clause (c) of Paragraph 3, in which event, they should form part of the aggregate value of clearance. Thus the question of further relief being granted by excluding the inputs from the aggregate value was sought to be set right, so that the notification prescribing the slabs would be more meaningful, but till such time such insertion was made and in the absence of any specific provision restricting the scope on the specified goods with reference to their chargeability to nil rate of duty or exempt from the whole of duty under any other notification, paragraph 3, as it existed during the relevant point of time, cannot, in any manner, be read down - notification No.69 of 1997 dated 03.12.1997 inserting clause (f) in Explanation to paragraph 5 is only prospective in nature and consequently would not be of any rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uating the provisions of Explanations II and III to Notification No.175/86 CE dated 01.03.1986 to the Explanation to clause (c) of para 3 of Notification No.16/97 CE dated 01.04.1997 and Explanation (G) to Notification 38/97 dated 27.06.1997, since the former deals with the inclusion or exclusion of the value of the inputs used in the manufacture of final product in computing the aggregate value of clearances and whereas the latter Notifications deal with computing the aggregate value of clearances and demand of duty on inputs ?" 2. Since legal issues raised are common in all the above appeals, the facts in C.M.A.No.174 of 2008 alone are dealt with in the disposal of all the above Civil Miscellaneous Appeals. The second respondent/assessees herein are manufacturers of plastic bags/plastic cups (hereinafter referred to as the Final Products), excisable as goods classified under Chapter sub heading 39.23/39.24 of Central Excise Tariff Act, 1985. For the manufacture of plastic bags, the assessee manufactured and consumed Lay Flat Tubes (hereinafter referred to as the intermediate products) falling under sub heading 3917.00 of Central Excise Tariff Act, 1985. 3. Notification No.67/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specific Notification concerned with Small Scale Units which superseded Notification No.7/97-C.E., and introduced new scheme on duty concession from 01.04.1997. A reading of the Notification shows that it considered the exemption and granting concessional rate on the advalorem duty payable with reference to the clearance of aggregate value with reference to goods of the description specified in Annexure appended to the notification as is in excess of the amount calculated at the rate specified in the notification against such clearances. Thus for the assessees having (i) first clearances upto an aggregate value not exceeding Rupees Thirty Lakhs made on or after 1st day of April in a financial year, the rate is nil. However, in respect of (ii)clearances of aggregate value not exceeding Rupees twenty lakhs immediately following the clearances specified above viz., (i) the rate is given as three per cent advalorem and (iii) those clearances of aggregate value not exceeding Rupees fifty lakhs immediately following the clearances specified above viz., (ii) subjected to concessional rate of five per cent advalorem depending only. The Notification stipulated that those manufacturers, who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rances mentioned against each of the serial numbers in the said Table and not separately for each manufactuer." The Explanation in Clause 5, appended thereon defines certain terms, which reads as under:- " Explanation.- For the purposes of this notification,- (a) "brand name" or "trade name" shall mean a brand name or trade name, whether registered or not, that is to say a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purposes of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of the identity of that person; (b) where the specified goods manufactured by a manufacturer bear a brand name or trade name, whether registered or not, of another manufacturer or trader, such specified goods shall not, merely by reason of that fact, be deemed to have been manufactured by such other manufacturer or trader; (c) "value" means the value as determined in accordance with the provisions of section 4 of the Central Excise Act, 1944 (1 of 1944), or the tariff value fixed und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d periodically. The Revenue contended that the polythene bags (finished goods) and the intermediate goods viz., lay flat tubings were classifiable under Chapter 39 of Central Excise Tariff Act, 1985 and covered under the schedule to the Notification No.67/95 dated 16.03.1995. The final product viz., polythene bags were exempted from duty by virtue of Notification No.4/97 CE dated 01.03.1997. Considering the import of Notification No.67/95 dated 16.03.1995 particularly the schedule, by reason of the final products being exempted under Notification No.4/97 CE dated 01.03.1997, the Revenue held the view that the assessee would not be eligible for exemption on the intermediate products manufactured. 8. The Department contended that by reason of the above said factual aspect, the proceedings dropped against the assessee was not correct. The assessee, however, contented that provisions of Notification No.16/1997 applicable to Small Scale Units granted exemption to specific goods used as inputs in the manufacture of specified goods within the factory of production. The Commissioner of Central Excise (Appeals) observed that Paragraph 3(c) of the Notification would not be applicable to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have found itself in an eminent position as proviso to paragraph 3 of the Notification and to call "insertion" as "Explanation" was a misnomer. The CESTAT rejected the contention of the Revenue and held that the amendment brought under notification No.69/97 dated 03.12.1997 was not clarificatory and had only prospective effect. It viewed that in the absence of any material in the amending Notification (No.69/97) to indicate that clause (f) was introduced with retrospective effect, one cannot give retrospective effect, to hold that the provisions defeated the assessee's claim. The CESTAT held that the demand of duty based on wrong reading of the provision, hence, could not be sustained, particularly, after the period April 97 to November 97, on the value of clearances effected during that period. Having regard to the above, the Tribunal viewed that the amendment brought to para 3(c) of Notification 16/97-CE dated 01.04.1997 by Notification 69/97-CE dated 03.12.1997 was only prospective in operation. In the light of the above said findings, the demand was set aside and the CESTAT allowed the assessee's appeal and restored it to the files of the Adjudicating Authority to pass fres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous Appeals viz., during the period April 1997 to March 1998 and December 1997 to March 1998 and the questions of law arising in these Civil Miscellaneous Appeals, it is suffice to refer to the facts in one case. 14. We had already seen in the preceding paragraph the effect of Notification No.69/97 dated 03.12.1997, which is applicable to all assessees irrespective of it being a Small Scale Unit or not. 15. The assessee in C.M.A.No.174 of 2008 is engaged in the manufacture of plastic bags classifiable under Chapter sub heading 39.2324 of Central Excise Tariff Act, 1985 and inputs viz., Lay Flat Tubes or the intermediate products falling under Chapter Heading 39.17 of the Central Excise Tariff Act, 1985. It is not denied by the assessee that the final product is exempted under Notification No.175/86 CE dated 01.03.1986. Going by the facts herein, the assessee did not claim any benefit under Notification No.67/1995 dated 16.03.1995. However, when Notification No.16/1997 dated 01.04.1997 was issued covering Small Scale Units, the claim was made by the assessee for beneficial treatment. As is evident from the reading of the Notification 16/97 dated 01.04.1997 under S.No.1, the exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) ..." 16. The case of the Revenue is that under clause 3(c), there is a specific exclusion of the value of clearances in respect of specified goods used as inputs in the manufacture of any specified goods within the factory; such inputs are deemed to be exempt from whole of the duty and excise leviable thereon. According to the Revenue, the Government thought it fit to put an end to any controversy with regard to such clearances of specified goods used as inputs and deemed to be fully exempt from the whole of the duty of excise leviable thereon, for the purpose of determining the aggregate value of clearances in respect of the specified goods which are chargeable to nil rate of duty or are already exempt from the whole of the duty of excise leviable thereon; thus Notification No.16/1997 dated 01.04.1997 was amended under Notification No.69/97-C.E.,dated 03.12.1997. Learned Standing counsel appearing for the Revenue submitted that instead of bringing it as part of paragraph 3, the amendment was made by insertion as clause (f) as part of Explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en in the annexure are treated as exempt from the whole of the duty and hence, not taken into account in determining the aggregate value of clearance. It is only by an amendment through insertion of clause (f), we find that the specified goods used in as inputs shall not be deemed to be exempt under clause (c) of paragraph 3, when the specified goods manufactured are chargeable to nil rate of duty or already exempt from the whole of duty leviable thereon under any notification. Even herein, by such insertion, under notification No.69 of 1997 dated 03.12.1997, we do not find that the notification was given retrospective effect, quite apart from the fact it figures in under the Explanation and not one to be noted for the purpose of determining the aggregate value of clearance. The difference between Paragraph 3(c) and the newly inserted clause (f) in the Explanation is thus clear that while the former is concerned about specified goods manufactured as enumerated under the Annexure and hence the inputs are deemed as exempt for the purpose of excluding the same from the aggregate value of goods; in so far as Clause (f) is concerned, it specifically adverted its attention to cases of sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to as inputs) are used for further manufacture of specified goods within the factory of production of inputs, the clearances of such inputs for such use shall not be taken into account for the purposes of calculating the aggregate value of clearances under this notification." 22. In construing the effect of Explanations II and III, the Apex Court observed as under: "6. A plain reading of the notification shows that the Government of India, in exercise of the powers conferred under sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 (for short, 'the Rules'), has exempted excisable goods of the description specified in the annexure thereto and falling under the Schedule to the Central Excise Tariff Act, 1985 (hereinafter referred to as 'the specified goods'). 7. It is not in dispute that the inputs as well as the finished goods manufactured by the assessee answer the description of the 'specified goods'. The short question remains to be resolved is, for the purposes of claiming exemption under the notification, how should the aggregate value be arrived at? It is in that context that a reference to Explanation II would be relevant. It says that for the purposes of compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification prescribing the slabs would be more meaningful, but till such time such insertion was made and in the absence of any specific provision restricting the scope on the specified goods with reference to their chargeability to nil rate of duty or exempt from the whole of duty under any other notification, paragraph 3, as it existed during the relevant point of time, cannot, in any manner, be read down. 24. Thus, going by the notification terms that paragraph 3 alone deals with the manner of on determining the aggregate value of clearance, the Explanation added clause (f) in paragraph 5, strictly speaking, has the effect of a proviso to 3(c). 25. In the light of the view that we have taken, we do not accept the plea of the Revenue that the inserted clause (f) in paragraph 5 has to be given retrospective effect. Consequently, we hold that notification No.69 of 1997 dated 03.12.1997 inserting clause (f) in Explanation to paragraph 5 is only prospective in nature and consequently would not be of any relevance to the case on hand. 26. We reject the plea of the Revenue that the amendment brought to the Explanation is always clarificatory in nature, hence, retrospective. For ..... X X X X Extracts X X X X X X X X Extracts X X X X
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