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TMI Blog2014 (10) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... o undertaking the processes like texturising/draw twisting etc on POY in another factory of the appellants where benefit of Notification No.30/2009-CE is availed i.e. the activities of manufacturing POY and its subsequent processing are done in different factories of the appellants. It is the case of Revenue in these proceedings that the appellants are not entitled to the benefit of exemption under Sr.No.6 of Notification No.30/2004-CE as all these appellants are having the facilities of manufacturing POY in factory/factories situated elsewhere. Shri M. Chandrasekharan (Sr.Advocate), Shri Willingdon Christian (Advocate) and Shri S. Sunil (Advocate) appeared on behalf of the appeals related to GSML; Shri V. Sridharan (Sr.Advocate), Shri Anand Nainawati (Advocate) and Shri Mahesh Raichandani (Advocate) appeared on behalf of the stay/misc. applications and appeals related to BIPL; and Shri Prakash Shah (Advocate) and Shri D.H. Mehta (Advocate) appeared on behalf of the stay applications/appeals related to WSPL. 2. Shri M. Chandrasekharan (Sr.Advocate) appearing on behalf of his clients argued that GSML have got 3 factories situated at Jolwa and Vareli. That factories of GSML situated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by GSML. It was his case that when the intention of legislature is to mean any other factory/factories of the manufacturer, then specific words are so used to give specific expression as given in notifications like Notification No.24/95-CE and Notification No.8/2003-CE, where the expressions 'no proprietary interest in any factory' or 'from one or more factories of the manufacturer' have been used. That in the case of Notification No.30/2004-CE such words are not used, therefore, the words his factory in Notification No.30/2004-CE have to be only read as the 'same factory' where the exempted processes are being undertaken. It was also argued by ld.Advocate that it has been wrongly interpreted by the adjudicating authority that the concept of 'Singular' includes 'Plural' of the General Clauses Act 1987 will be applicable to the words 'his factory' used in Notification No.30/2004-CE. It was also argued by the Ld.Advocate that the word 'manufacturer' has not been defined under Section 2(f) of Central Excise Act 1944 but has to be construed in the context of the word 'manufacture' in common parlance as defined under Section 2(f) of the Central Excise Act 1944. That the word 'factor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those units/factories do not have the facility or machinery for manufacture of POY. It was argued by ld.Sr.Advocate that the language of Sr.No.6 of Notification No.30/2004-CE is identical to the wordings used in Sr.No.114 of Notification No.6/2000-CE dt.01.03.2000, which was being availed by his clients earlier and no objection was raised by the Revenue. It was also his case that the words 'his factory' used in Sr.No.6 of Notification No.30/2004-CE has to be considered as the same factory where exempted processes are being undertaken. That as per Para 4.8.1 of Circular No.334/3/2004-TRU, dt.08.07.2004 also, it has been clarified by CBEC that when the duty is paid on fibres and filament yarns then such duty paid yarn when further subjected to any process in a unit, which does not have the facility of making basic filament yarn (including texturised yarn), will also have an option to avail exemption. That the word unit used in the circular could only refer to the same factory where exempted processes are being undertaken. He relies upon the case law of Allahabad High Court in the case of Shahnaz Ayurvedics Vs CCE Noida [2004 (173) ELT 337 (All.)] to argue his point that circulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (117) ELT 47 (Tri-Del.)] and argued that exemption under Notification No.30/2004-CE is for a factory and the act of manufacturer and not to the manufacturer as a 'legal entity', therefore, exemption under Notification No.30/2004 has been correctly availed. 3.1 As an alternative submission, learned Sr.Advocate argued that if the benefit of Sr.No.6 of Notification No.30/2004-CE is held to be not admissible then his client should be granted benefit of CENVAT Credit of duty paid on the inputs like POY and input services used in the manufacture of PTY etc. That in view of the following case laws CENVAT Credit has been held to be admissible in respect of even clandestinely removed goods:- i) T.T.K. Pharma Ltd Vs CCE Chennai [2005 (189) ELT 239 (Tri-Che.)] ii) Arvind Agarwal Vs CCE Delhi [2005 (179) ELT 7570 (Tri-Del)] iii) DSM Anti-Infective India (P) Ltd Vs CCE Chandigarh [2004 (165) ELT 69 (Tri-Del)] iv) Sitham Fluid Seals Pvt.Ltd. Vs CCE Coimbatore [2003 (159) ELT 206 (Tri-Che.)] v) Merinoply & Chemicals Ltd Vs CCE Shillong [2001 (135) ELT 470 (Tri-Kolkata)] vi) Dalmia Industries Ltd Vs Collr.C.E. New Delhi [1996 (84) ELT 60 ((Tri-Del)] vii) V.P. Packaging Vs CCE Calcutta-I [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on behalf of the Revenue in all these stay/misc. applications and appeals. It was argued on behalf of the Revenue during hearing and through written submissions that the benefit of Notification No.30/2004-CE is not dependent upon the fact whether a manufacturer is having separate registrations for each factory or not. That the words 'his factory' used in Sr.No.6 of Notification No.30/2004-CE dt.09.07.2004 should mean any of the factories of the a manufacturer as a 'legal entity'. It was strongly argued by Special Counsel that exemption is not only to a manufacturer but also with respect to availability of facility for manufacture of POY in any of the factories of a manufacturer. Learned Special Counsel strongly defended the reliance of the adjudicating authority upon Section 13 of General Clauses Act 1987 with respect to the expression 'his factory' used in Notification No.30/2004-CE as 'Singular' includes 'Plural'. He also relied upon Para 3 of Budgetary changes made in Budget 2000-2001 wherein a rate of duty of Rs. 2.5 per kg was prescribed for texurised polyester yarn manufactured by independent texturiser under Notification No.6/2000-CE, as amended. It was his case that this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellants where the benefit of Notification No.30/2004-CE, dt.09.07.2004 is being availed? (ii) Whether extended period is invokable in these proceedings in view of facts & circumstances available on record? (iii) Whether penalties are required to be imposed upon the appellants in these proceedings? 8. So far as admissibility of benefit of notification to the appellants, under Sr.No.6 of Notification No.30/2004-CE is concerned Shri V. Sridharan, ld.Sr.Advocate appearing on behalf of the appellant M/s Bhilosa Industries Pvt.Ltd., argued that the words 'his factory' used in the exemption Notification No.30/2004-CE have to be interpreted as the 'same factory' where exempted processes are being carried out and cannot be considered as any other factory of the manufacturer. It was his case that if the intention of the legislature was to consider all the factories of the manufacturer then the wordings used in the notification should have been 'his factory/factories' or 'a manufacturer who does not have the facility of manufacturing POY anywhere else' or 'has no proprietary interest in any other factory/factories' etc. He relied upon the Finance Bill dt.14.05.1979, read with No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory (including plant and equipment) for manufacture of filament yarns of chapter 54. Explanation. - For the purposes of this explanation, 'manufacture of yarns' means manufacture of filaments of organic polymers produced by, - (a) polymerization of organic monomers, such as, polyamides, polyesters, polyurethanes, or polyvinyl derivatives; or (b) by chemical transformation of natural organic polymers (cellulose, casein, proteins or algae), such as viscose rayon, cellulose acetate, cupro or alginates. 9.1 Under this amendment dt.01.03.2005, all filament yarns procured from outside when subjected to any process (including texturising) by a manufacturer were exempted if the manufacturer does not have facility 'in his factory' for manufacturing the filament yarn of Chapter 54. By this amendment even texurised yarn was also brought within the ambit of exemption under Sr.No.6 of Notification No.32/2004-CE. In the absence of any definition of words 'his factory', used in this notification, a clear picture is not emerging whether the words 'his factory' mean the same factory where exempted processes are undertaken or will also include all the factories owned by the manufacturer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his factory for the manufacture of filament yarns of Chapter 54. In this regard it is also observed that the words 'manufacture' and 'in his factory' have not been defined in Notification No.30/2004-CE. At the same time it is an undisputed fact that the activities of making filament yarn (POY) and its subsequent processing pertaining to existing demands are carried out in different factories. As the word 'manufacturer' has also not been defined specifically in exemption Notification No.30/2004-CE or Central Excise Tariff Act, 1985, therefore, the meaning of the same has to be understood from Section-2(f) of the Central Excise Act 1944: SECTION 2. Definitions. - In this Act, unless there is anything repugnant in the subject or context, - (a) .... (b) .... (c) ... (d) .... (e) .... (f) 'manufacture' includes any process, - (i) incidental or ancillary to the completion of a manufactured product; (ii) which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or (iii) which, in relation to the goods specified in the Third Schedule, involves packing or repack ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturing activity is being undertaken and the word 'manufacturer' will not mean a legal entity or all group companies taken together. If any contrary interpretation is made then demands under Section 11A of the Central Excise Act 1944 could be raised against any of the registered units of a group of companies undertaking manufacturing activities at different locations. 9.7 The above view taken is also fortified by the following facts available on record. Before exemption under Notification No.30/2004-CE texurised yarn (including draw twisted and draw wound yarn) of polyesters; manufactured by 'independent texturiser', who does not have the facilities 'in his factory' for producing POY; was exempted from duty in excess of Rs. 2.50 per kg under Notification No.6/2000CE, dt.1.3.2000 as amended (Sr.No.114). The words used in this notification were 'independent texturiser' and 'in his factory'. Both the words were singular and meant one person doing the act of texturising in his factory. Appellants were availing the benefit of this exemption and no objection was ever raised by Revenue that if appellants had more than one factories, having facilities of producing POY elsewhere, then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have also made an alternative argument that the demands issued for the period beyond one year will also be time barred as they were earlier availing the benefit of Notification No.6/2000-CE dt.1.3.2000, as amended and were paying duty @ Rs. 2.50 per kg on texurised yarn (including draw twisted and draw wound yarn) where same words 'in his factory' were used in Sr.No.114 of this notification. On verification of case records, we find it so as appellants were filing periodical ER-1 returns claiming exemption under Notification No.6/2000-CE. As the words used in both the Notification No.30/2004-CE and Notification No.6/2000-CE are 'in his factory', therefore, appellants could have entertained a bonafide belief that words 'in his factory' used in Notification No.30/2004-CE means the 'same factory' and thus cannot be fastened with the tag of 'with intent to evade duty' for invoking extended period. Appellants obtained separate registrations for the manufacturing activity in each factory and were paying duty on POY which will definitely involve captive consumption valuation, under Rule-8/9 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules 2000, while send ..... X X X X Extracts X X X X X X X X Extracts X X X X
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