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M/s Techfab India Industries Limited Versus Commissioner of Central Excise-Daman

Denial of benefit of export in case of Deemed export - Notification No. 44/2001-CE (NT) dated 26.06.2001 - Revenue contended that the opening paragraph of the notification provides that the said notification would apply only on the physical export of the goods, out of India and not deemed export - Held that:- Under the Central Excise Scheme, Rule 18 and Rule 19 of Rules are dealing with export of the goods. Rule 18 provides any goods are exported, the Central Government granted rebate of duty pa .....

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ithout payment of duty for use in the manufacture of export goods. - Language of the proviso is clear and there is no ambiguity. The manufacturer of Advance Licence holder supplies the material to another manufacturer, who in turn supplied the resultant products to the ICB would be covered within scope of the notification. In our considered view, it is not justified to ignore the plain meaning of the proviso and interpret in such a manner, as it would render inconsistency with and meaningles .....

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of the said Notification No. 44/2001-CE (NT) by Notification No. 23/2009-CE (NT) dated 22.09.2009, it has extended the removal of intermediate goods without payment of duty, for manufacture and export in terms of Para 8.3 (C) of policy, otherwise, the proviso inserted therein by amending notification would be nugatory and meaningless. - Notification No. 44/2001-CE (NT), in this case, is issued in exercise of prior Rule 19 of the Rules. Rule 19 of the Central Excise Rules permitted to export .....

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otified to follow the procedure of Rules 2001 for removal of intermediate goods for manufacture and except of goods by holder of DEEC and Advance License. Proviso to the said notification have wider amplitude, to extend the goods cleared by on Advance Licence holder to another Advance Licence holder for use in the manufacture of export of goods to ICB, by following the procedure laid down therein. - demand of duty alongwith interest and penalty cannot be sustained. Accordingly, the impugned orde .....

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e-Fabricated Vertical Drains, Wastage of Fibers, Wastage of Filter fabrics and Wastage of PP classifiable under Chapter 56,63,55 and 39 of the Schedule to the Central Excise Tariff Act, 1985. The appellants were issued Advance License, for Deemed Export License No. 0310668669/2/03/00 dated 02.12.2011 and 0310694583/2/03 dated 14.05.2012 by DGFT, Mumbai for manufacture and supply of the finished goods to Project Authority of Assam Integrated Flood and Riverbank Erosion Risk Management Programme ( .....

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thout payment of duty, in terms of the said notification No. 44/2001-CE (NT) (supra) after observing the procedure under Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules 2001 (in short Rules 2001). 2. A Show Cause Notice dated 12.12.2012 was issued to the appellant proposing demand of duty alongwith interest and to impose penalty for the period 2011-2012 and 2012-2013. It has been proposed to deny the benefit of exemption Notification No. 44 .....

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n Notification No. 44/2001-CE (NT) readwith Para 8.3 of the Foreign Trade Policy. It is contended that they have procured the intermediate goods, from Advance Authorization Holder and supplied the final products to AIFRERMIP, which is Deemed Export and covered under Para 8.3 (C) of the Policy. He submits that proviso to Notification no. 44/2001-CE (NT) (supra) would be read harmoniously with the opening paragraph of the Notification. He drew the attention of the Bench, case laws on interpretatio .....

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orization holder to another Advance Authorization holder and it can not be extended to the deemed export. He further submits that they have violated the conditions of the Rules, 2001 in so far as the said Rules would apply in respect of the goods exempted by notification issued under Section 5 A of the Central Excise Act, 1944. In the present case, the intermediate goods are not exempted by notification issued under Section 5 A of the Act, 1944. He further submits that the condition in the openi .....

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SC-CUS 5. After hearing both the sides and on perusal of the records, we find that the appellant was issued Advance Authorization holder License to manufacture Non Woven Needle Punch Fabrics, Non Woven Geo Bags etc. and supply the goods in the project of Assam Integrated Flood and Riverbank Erosion Risk Management Programme under international competitive bidding. It is a deemed export and the goods would be cleared without payment of duty under Notification No. 108/95-CE Dated 28.08.1995. By th .....

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cise Officer for availing benefit of exemption notification issued by the Chief Executive Officer, AIFRERMIP Government of Assam. For the proper appreciation of the case, a specimen copy of certificate dated 11.08.2011 is reproduced below:- To Whom It May Concern. Certificate Under Notification No. 108/95, dated 28.08.1995. This is certify that the work of Supply of Non-woven Geo-Textile Bags and Special Sewing Threads for the Assam integrated Flood and Riverbank Erosion Risk Management Investme .....

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ment of India and by the Government of Assam. Certificate further that M/s Techfab (India) Industries Ltd. Are required to supply the following materials: SL No. Description of Goods Quantity Manufacturer Origin 1 2 3 4 5 1 Non-woven Geo-Textile Bags 1454400 Nos. M/s Techfa (India) industries Ltd. Mumbai having their office at 712 Embassy Centre, Nariman Point, Mumbai 4000021, India and factory at Plot No. 147/2 & 3, 147/1 & 4, Near Polyole Fibers Ltd. Opp. Debhel Talab, Village Dabhel, .....

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excise duty may be allowed against above referred goods/materials to M/s Techfab (India) Industries Ltd., Mumbai as per Government of India (Ministry of Finance, Department of Revenue) Notification No. 108/95-CE, dated 28.08.1995 as amended and other relevant notification. This certificate shall remain valid for a period 8 (eight) months time with effect from 10th August, 2011. 6. Both the sides submit that in the present case, there is no dispute on eligibility of the benefit of exemption notif .....

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.09.2009 is reproduced below:- In exercise of the powers conferred by sub rule (3) read with sub-rule (2) of rule 19 of the Central Excise (No. 2) Rules, 2001, the Central Board of Excise and Customs hereby notifies the conditions, safeguards and procedures for removal of excisable goods (hereinafter referred to as the intermediates goods) [from the place of manufacture of warehouse] without payment of duty for the purpose of use in the manufacture or processing of all articles (hereinafter refe .....

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the case may be, has been permitted by the licensing authority or the Committee to manufacture for supply of such goods to the ultimate exporter; (ii) the provisions of the Central Excise (Removal of Goods at Confessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 shall be followed, mutatis mutandis; (iii) the quantity of intermediate goods are removed without payment of duty shall not exceed the duty exemption entitlement indicated in the said Certificate; (iv) the intermedia .....

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er production in the factory of he ultimate exporter or may be disposed of in such manner as may e specified by the Commissioner of Central Excise having jurisdiction over the factory of the ultimate exporter in terms of the provisions of Export and Import Policy notified under the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992); (v) the ultimate exporter makes necessary arrangements for facilitating drawl of samples and subjecting them to such tests as may be directed by the C .....

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er yarn, polyester fabrics, stainless steel sheets, stainless steel strips, magnetic tapes, precious metals, metals clad with precious metals and articles thereof, be made only through (a) any of the sea ports at Kandla, Mumbai, Nhava Sheva, Cochin, Chennai, Visakhapatnam and Kolkata; or (b) any of the airports at Mubai, Kolkata, Delhi, Chennai and Bangalore, or (c) any of the internal container depots at Delhi and Bangalore; (viii) the goods shall be exported be exported following the procedure .....

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me, alongwith attested copies of the shipping bills, bills of lading and the Duty Exemption Entitlement Certificate with appropriate entries made by the officers of Customs : Provided that this procedure shall also be available for the supplies made by an Advance authorization holder to a manufacturer holding another Advance authorization, if such manufacturer, in turn, supplies the resultant products to an ultimate exporter in terms of para 8.3 (C) of the Foreign Trade Policy, and the procedure .....

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ent of duty. - (1) Any excisable goods may be exported without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, as may be approved by the Commissioner. (2) Any material may be removed without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, for use in the manufacture or processing of goods which are exported, as may be approved by the Commissioner. (3) The export under sub-rule (1) .....

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b Rule (2) of Rule 19 permitted to clear the any materials from a factory without payment of duty for use in the manufacture or processing of the export goods. Sub Rule (3) of Rule 19 empowered the Board to frame the conditions, safeguards and procedure to clear the excisable goods for export and any materials cleared without payment of duty for use in the manufacture of export goods. 8. By the said Notification No. 44/2001-CX, the Central Board of Excise and Customs, in exercise of power under .....

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25.09.2009. By virtue of amended Notification No. 23/2009-CE (NT) (supra) after sub-para (ix) and before Explanation, a proviso was inserted in Notification No. 44/2001-CE (NT). The said notification framed the procedure conditions and safeguards for removal of intermediate goods, without payment of duty under Rule 19 of Central Excise Rules, 2001 for manufacture and export by Advance License holder under DEEC Scheme. By amendment of Notification No. 44/2001-CE (NT) as on 25.09.2009, vide notif .....

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in which goods supplied do not leave country, and payment for such supplies is received either in Indian rupees or in free Foreign Exchange. Para 8.3 of policy states the benefit of deemed exports, as under:- 8.3 Deemed exports shall be eligible for any / all of following benefits in respect of manufacture and supply of goods qualifying as deemed exports subject to terms and conditions as in HBP v1 :- (a) Advance Authorisation / Advance Authorisation for annual requirement / DFIA. (b) Deemed Exp .....

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to a manufacturer of another Advance License holder, in turn, supplies the products to an ultimate exporter (in the present case ICB). In terms of proviso to Notification No. 44/2001-CE (NT) as amended on 25.09.2009 Advance Licence holder supplies the goods to another Advance Authorization (i.e. appellant herein) has to follow the procedure as laid down in the notification. In the present case, there is no dispute on the fact that the appellants, Advance License holder, procured the goods from .....

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ification. He submits that the proviso inserted in the said notification cannot go beyond the scope of the opening paragraph of the notification, and therefore, the appellant is not eligible the benefit of Notification No. 44/2001-CE (NT). 10. We are unable to accept the submission of the Learned Authorised Representative for the Revenue. It is well settled that proviso would be construed harmoniously with the opening paragraph of the notification, to which it stands. A proviso in the statute mu .....

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r inconsistency with and meaningless of the notification. 11. It is noticed that the DGFT by letter dated 06.03.2013 informed the Assistant Commissioner of Central Excise, Customs & Service Tax, Daman as under:- Sub:- Verification of the raw materials procured under against Advance License No. 0310694583 dated 14.05.2012 & 0310668669 dated 02.12.2011 and follow up conditions of Notification 44/2001-CE (NT) dated 26.06.2001-reg. Sir, With reference to the above subject this is to inform y .....

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12. The Learned Advocate referred judicial decisions on interpretation of proviso to notification as under:- (a) In Commissioner of Customs (Preventive), Gujarat v. Reliance Petroleum Limited, (2008) 7 SCC 220 = 2008 (227) E.L.T. 3 (S.C.), this Court has held : 30. We are not oblivious of the proposition of law that an exemption notification should be construed directly but it is also well settled that interpretation of an exemption notification would depend upon the nature and extent thereof. .....

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grant of notification shall be considered in a broad based manner. The wordings used therein have to be given their natural meaning. The purpose must be allowed to be achieved. The words all types of materials should be construed widely. 31. Moreover, a liberal construction requires to be given to a beneficial notification. This Court in Commissioner of Customs (Preventive) Mumbai v. M. Ambalal and Company, (2011) 2 SCC 74 = 2010 (260) E.L.T. 487 (S.C.), (in which one of us was the party) has .....

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romotion of certain activities should be liberally interpreted. This composite rule is not stated in any particular judgment in so many words. In fact, majority of judgments emphasise that exemptions are to be strictly interpreted while some of them insist that exemptions in fiscal statutes are to be liberally interpreted giving an apparent impression that they are contradictory to each other. But this is only apparent. A close scrutiny will reveal that there is no real contradiction amongst the .....

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provision for concessional rate of tax should be liberally construed. So also in Bajaj Tempo Ltd. v. CIT it was held that provision granting incentive for promoting economic growth and development in taxing statutes should be liberally construed and restriction placed on it by way of exception should be construed in a reasonable and purposive manner so as to advance the objective of the provision. 33. In Commissioner of Central Excise, Shillong v. North-Eastern Tobacco Co. Ltd., (2003) 1 SCC 161 .....

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efore, we do not see any legal infirmity in the judgment and order so passed by the Tribunal. 35. Accordingly, while rejecting the appeal filed by the revenue, we confirm the findings and conclusions reached by the Tribunal. In the facts and circumstances of the case, the parties are directed to bear their own costs. (b) Kush Sehgal & Ors Vs. M.C Mitter & ORS [2000] INSC 148 on 28n March, 2000 (SC):- This we say because the normal function of a Proviso is to except something out of the e .....

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ich would make the exceptions unnecessary and redundant should be avoided (See: Justice G.P. Singh s Principles of Statutory Interpretation Seventh Edition 1999, P-163). This principle has been deduced from the decision of the privy Council in Govt. of the Province of Bombay vs Hormusji Manekji AIR 1947 PC 200 as also the decision of this Court in Durga Dutt Sharma vs Navaratna Pharmaceutical Laboratories AIR 1965 SC 980. (C) M/s Coastal Paper Ltd. Vs Commissioner of Central Excise, Visakhapatn .....

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ever, whether case can be decided with such simplistic overtones, is the question. We are of the view that the expression rags appearing in the Notification has to be construed having regard to the attendant circumstances, the context in which the same is used in the said Notification as well as the purpose for which this term has appeared in the Notification. At the same time, it is also necessary to go behind the objective for which Notification itself is issued thereby giving it a purposive i .....

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and to no other. The proper function of a proviso is to except and deal with a cause which would otherwise fall within the general language of the main enactment, and its effect is to confine to that case. Where the language of the main enactment is explicit and unambiguous, the proviso can have no repercussion on the interpretation of the main enactment, so as to exclude from it, by implication what clearly falls within its express terms. The scope of the proviso,, therefore, is to carve out a .....

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preme Court analyzed the scope of exemption notification and its proviso extensively, in different context. In the present case, by Notification No. 108/95-CE, the final product of the appellant is exempted from duty supplied to Assam Integrated Flood and Riverbank Erosion Risk Management Programme, which will be a deemed export as per Para 8.1 of Foreign Trade Policy. Revenue is demanding duty on the intermediate goods used in the manufacture of finished goods cleared as per Para 8.1 of policy, .....

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submits the procedure under Rule 2001 would be followed in the case, where the goods are exempted under Section 5 A of the Central Excise Act, 1944. Notification No. 44/2001-CE (NT), in this case, is issued in exercise of prior Rule 19 of the Rules. Rule 19 of the Central Excise Rules permitted to export the goods without payment of duty. Sub Rule (2) of Rule 19 further permitted to removal any material without payment of duty for use in the manufacture of goods, which are exported. Central Boar .....

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