TMI Blog2006 (12) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... icant proposes to manufacture, the following constitute the main raw materials: a) Fennel Seeds (Saunf Variyali etc.) b) Sugar Coated Fennel Seeds c) Coriander Seeds (Dhana Dali) d) Scented Shredded Betel Nuts (Sugandhi Supari) e) Cardamom (Elachi) f) Sugar Crystals g) lime h) Dry Dates i) Food Grade Flavours j) Saffron or Essences of Saffron k) Menthol The applicant has also obtained the requisite permission from the Directorate of Industries and Commerce for the purpose of manufacturing the said product. On these facts, the applicant has set forth the following two questions to seek advance ruling of the Authority: "1. Whether the Proposed Product i.e. Indian Mouth Freshener to be manufactured will be classified as "Pan Masala" under CETSH 2106 .9020? 2. In case the answer of the first question is in affirmative then whether all the duties discharged under Rule 8 of the Central Excise Rules, 2002 such as Basic Excise Duty Special Excise Duty [SED], National Calamity Contingent Duty [NCCD], Additional Duty of Excise on Pan Masala [AED (Pan Masala)] and Education Cess on the aggregate of duties discharged through Account Current [PLA] after Mandatory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Additional Duty of Excise (Goods of Special Importance) Act, 1957 and Additional Duty of Excise (Textile Textile Articles) Act, 1978. The said notification is to be read as an independent notification and no words can be added to or subtracted from it. Mr. Vikram Nankani, Learned Counsel appearing for the applicant invited our attention to the comments of the Commissioner to contend that in so far as question No. 1 is concerned, since the classification has been agreed to by the Commissioner, he has nothing to add it will be apposite to read Chapter Entry 2106.90 20 of first Schedule to the Tariff Act which is in the following terms Surbhi Industries Tariff Item Description of goods Unit Rate of Duty 2106 — Food preparations not elsewhere specified or included — — — — — 2106 90 20 — Pan Masala Kg. 37.5% 2106 90 30 Betel nut product known as "Supari" Kg. 16% ----- --- ---------- ------ --------- ------- --- ------ - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ukmani Pakkwell Traders it is well-settled that the exemption notification has to be construed strictly. 4. To appreciate the contentions of the Learned Counsel for the parties it would be apt to read here Notification No. 56/2002-CE dated 14.11.02:- "In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and sub-section (3) of section 3 of the Additional Duties of Excise (Textiles Textile Articles) Act, 1978 (40 of 1978), the Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts the goods specified in the First Schedule the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than the goods specified in Annexure-I…………………………………………………………………………………………………………. from so much of the duty of excise or additional duty of excise, as the case may be, leviable thereon under any of the said Acts as is equivalent to the amount of duty paid by the manufacturer of goods, other than the amount of duty paid by utilization of CENVAT Cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the expression 'paper and pulp' Court answered the questions in favour of the assessee and against the Revenue Against the judgement of the High Court the Revenue appealed to the Supreme Court. The Hon'ble Supreme Court dismissed the appeal and observed. 'The expression has been used comprehensively. It is necessary to remember that the when a provision is made in the context of law providing for concessional rates of tax of for the purpose of encouraging industry trial activity a liberal construction should be put upon the language of the statute". In Bajaj Tempo case (Supra 3), the assessee claimed benefit of partial exemption from tax under Section 15C of Income Tax Act, 1961 on the ground that the company was a new undertaking. The finding of the Tax Tribunal was that the assessee was a new company and that it could not be said to have been formed by the reconstruction of promoter company. The dispute centred round the question whether the company was formed by transfer of building or material used in the previous business. The said Section 15C contained a restrictive provision in clause (i) of sub-section (2) thereof, which provided that the section would apply to any in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. However, even if one goes by the strict interpretation of the notification (s) we are in agreement with the view expressed by the High Court that the first part of the notification (s), as distinct from the second part, does not refer to the "land". If the argument of the department is accepted that the first part of the notification would apply only if Tata Cummins Ltd. is the owner of the land and building in which its factory is located then we are not only giving a narrow interpretation to the notification Which would defeat the object underlying the incentive, policy but also it would be against the very text of the said notification (s) which omits the word 'land' from the first part of the notification." It would also be useful to refer to the following decisions of the Hon'ble Supreme Court:- Union of India and others vs. Modi Rubber Limited Ors. case. That case dealt with exemption notifications issued under the Excise Act. The question before the Hon'ble Supreme Court was what should be the true import of the expression 'duty of excise' employed in notifications issued by the Government of India under sub-rule (1) of Rule 8 of Central Excise Rules 1944 (Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beral construction to extend the term the scope o the exemption notification. Such exemption notification be strictly construed and the assessee should bring himself squarely within the ambit of the notification. No extended meaning can be given to the exempted item to enlarge the scope of exemption granted by the notification." In Commissioner of Central Excise, Trichy vs. Rukmani Pakkwell Traders' the respondent was a trader in scented supari which was marketed under the brand AAR with a photograph of Mr. A.R. Ramaswamy, the founder of AAR group of Companies. The respondent claimed benefit of Notification No. 1/93-CE dated 28.2.93 which granted exemption, amongst others, to scented supari. Clause 4 of the notification provided that exemption contained therein would not apply to specified goods bearing brand name or trade name (registered or not) of another person. On the view that the goods were not exempted under the said notification, a show cause notice was issued to the respondent. After considering the reply of the respondent, the Assistant Collector confirmed the demand which was upheld on appeal by the respondent. On further appeal to CEGAT, the claim of the respondent w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the said goods under any of the aforementioned three said Act; (iv) the quantum of duty exempted is equivalent to the amount of duty paid by the manufacturer of goods other than the amount of duty paid by way of utilization of CENVAT Credit under the Cenvat Credit Rules, 2002 (now 2004). Admittedly BED and SED are levied under the First Schedule and the Second Schedule respectively of the Tariff Act. It has already been pointed out that the duties in dispute are levied under Finance Act, 2001, Finance Act, 2005 Finance (No.2) Act, 2004 respectively. A perusal of sub-section (1) of section 136 of Finance Act, 2001. which is the charging section shows that NCCD is levied and collected for the purpose of the Union by surcharge, a duty of excise and sub-section (2) thereof says that it is in addition to any' other duties of excise chargeable on such goods under the Act or any other law for the time being in force; so also a combined reading of sub-section (1) of section 91 and sub-sections (1) and (2) of section 93 of the Finance(No.2) Act, 2004 shows that Education Cess, levied and collected on excisable goods shall be in addition to any other duties of excise chargeable on s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In M/s Bisra Stone Lime's case (Supra 9), one of the contentions raised before the Hon'ble Supreme Court was whether Orissa Electricity Board has power to levy a surcharge under the provisions of the Act. It was held that the word surcharge was not defined in the Act, but etymologically, inter alia, surcharge stood for an additional or extra charge for payment. In our opinion none of the cases would help the applicant so as to treat NCCD, AED EC within die meaning of BED leviable under the CE It is surprising that on 27.11.2006, long after conclusion of the hearing of the case, the constituted attorney of the applicant has chosen to send a xerox copy of final order of the learned technical member of CESTATin support of refund of the duties in dispute. Apart from the fact that the said order is not binding on us, for the aforementioned reasons we are also not persuaded by the reasoning and the result in that case. Adverting to the next contention of the Learned Counsel it is true that section 2A of the CE Act does provide that reference to the expressions "duty", "duties", "duty of excise" and "duties of excise" shall be construed to include a reference to CENVAT and-Rule 3 of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time being in force. The rate of EC is 2% of aggregate of (i) Basic Excise Duty; (ii) National Calamity Contingent Duty (NCCD); and (iii) Additional Duty of Excise. There is a fundamental distinction between abolition of duty and exemption of duty. What in principle basic excise duty (BED) is leviable under the Tariff Act but certain goods are exempted under CE Act on fulfilments of conditions specified in the exemption notification, BED will form the component for purposes determining the rate of EC. But where BED is abolished it cannot be taken a component for calculating EC. Therefore, so long as BED is in force it will form a component of aggregate of duties for determining 2% EC which is leviable under the Finance (No.2) Act, 2004. In this view of the matte a cannot give effect to the contention of the learned counsel. In the light of the above discussion we rule on:- Question 1 that the proposed product i.e Indian Mouth Freshener is classifiable as 'Pan Masala' under CETSH 2106. 9020 Question 2 in so far as Special Excise Duty (SED) is concerned, it has been deleted from the question the Commissioner has Conceded the claim of the applicant for exemption in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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