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M/s Arora Knit Fabrics Pvt. Ltd. Versus CCE, Ludhiana

2016 (8) TMI 117 - CESTAT CHANDIGARH

Whether market purchase goods can be treated as duty paid goods - manufacture of knitted or crocheted fabrics of cotton - procurement of textile fabrics i.e. raw material/inputs - Notification No. 14/2002-CE dated 1.3.2002 - Held that:- . This will be an anomalous or absurd situation or else textile processors will be forced to avail Cenvat credit route alone to avoid cascading effect of taxation. In this context Explanatory Note of Budget Bulletin 2002 become relevant when it conveys that benef .....

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efit of exemption allowed to the assessee. - E/1343/2005-EX(DB) - Final Order No. 60115/2016 - Dated:- 20-5-2016 - Mr. Ashok Jindal, Member (Judicial) and Mr. Raju, Member (Technical) Ms. Krati Somani, Advocate - for the appellant Shri Sanjay Jain, AR - for the respondent ORDER The appellants M/s Arora Knit Fabrics Pvt. Ltd. were issued a demand show cause notice for wrongly availed concessional rate of duty under Notification No. 14/2002-CE dated 1.3.2002. The said notification, in terms of S. .....

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Reliance was placed on the decision of Apex Court in the case of Dhiren Chemical Industries-2002 (139) ELT 3 (SC) wherein it has been held that the exempted goods attracting nil rate of duty cannot be treated as goods on which payment of duty at the appropriate rate has been made. The demand of duty was confirmed by the Commissioner. Being aggrieved with the said order, the appellants are in appeal before this Tribunal. 2. Learned Counsel for the appellants relied on the decision of larger bench .....

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the impugned order. 4. We have gone through the rival submissions. We find that the larger bench of the Tribunal in the case of Arvind Products Ltd. (supra) was interpreting the very issue that are under dispute. In the instant case, the Tribunal in the said case has observed as under : - 8.3 However, we are of the considered view that natural expressions used in a statute should be understood in a simple and plain meaning of the expressions as commonly understood. However, a harmonious con .....

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the same notification. The words like appropriate duty of excise leviable, read with any notification for the time being in force duty has been paid and no credit of duty paid on inputs or capital goods has been taken have been used in condition -3 pertaining to Sr. No. 12 of Notification No. 14/2002-C.E. All these expressions have been interpreted by various orders of CESTAT and Courts, including the Apex Court. On top of all this Explanation-II of Notification No. 14/2002-C.E. creates a fictio .....

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nd the intention of the framers of Notification No. 14/2002-C.E. If a view is taken that all the goods lying in the market are non duty paid by virtue of Sr. No. 10 of Notification No. 14/2002-C.E. then Explanation-II to this notification becomes redundant. Secondly, by presuming that all categories of grey fabrics supplied to the appellants have not discharged any duty that interpretation will be like creating another fiction that all grey fabrics lying in the market are deemed not duty paid , .....

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ble in the market may not be 100% grey fabrics on which no duty has been paid. That is why a fiction is created under Explanation-II that for the purpose of condition of this notification textile yarn or fabrics shall be deemed to have duty paid even without production of duty paying documents. There is no expression like, except good which are clearly recognizable as non duty paid in Explanation-II of Notification No. 14/2002-C.E. to have any doubt. 8.4 In view of the observations made in .....

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s of Budget Bulletin 2002 with respect to Notification No. 14/2002-C.E., dated 1-3-2002, under the heading II Textile Fabric clarified as follow :- II. Textile Fabric Notification No. 14/2002-C.E., and 15/2002-C.E., both dated 1-3-2002 prescribes effective rates of duty of nil of 12% adv. in the case of textile fabrics subject to the condition that the goods should have been made from textile yarns of fabrics on which the appropriate excise duty or CVD has been paid. It may, however, be noted th .....

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n any documentary proof for payment of duty. However, if the manufacturer wants to avail Cenvat credit of duty paid on inputs or capital goods on actual basis, he will be required to produce duty paying documents as prescribed under the Cenvat Credit Rules. 8.5 It is evident from the above Explanatory Notes that framers of Notification No. 14/2002-C.E., wanted to extend the benefit of this exemption to the manufacturers subject to the only condition that no Cenvat credit is taken/not taking .....

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to the assessee. It has been rightly argued by the Senior Advocate in the present proceedings that if the views of the Revenue are accepted than it will lead to chaos and absurdity because making a manufacturer to pay duty again after breaking Cenvat chain by not taking credit, will burden small processing manufacturers to pay duty again on the processed fabrics when no credit on inputs is taken. Indirectly all the textile processors will be forced to adopt Cenvat credit route only to avoid cas .....

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dgment is reproduced below :- 4. Before we embark upon an enquiry as to what would be the correct interpretation of Section 28-A, we thin it appropriate to bear in mind certain basic principles of interpretation of statute. The rule stated by Tindal C.J. in Sussex Peerage case, (1844) 11 CI and F 85, still hold the field. The aforesaid Rule is to the effect : If the words of the statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in t .....

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son and Company Limited, 1955 (2) All ER 345, Lord Reid pointed out as to what is the meaning of ambiguous and held that a provision is not ambiguous merely because it contains a word which in different context is capable of different meanings and it would be hard to find anywhere a sentence of any length which does not contain such a word. A provision is, in my judgment, ambiguous only if it contains a word or phrase which in that particular context is capable of having more than one meaning. I .....

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ite surplusage, if they can have appropriate application in circumstances conceivably within the contemplation of the statute. In Quebec Railway Light Heat and Power Company v. Vandray, AIR 1920 PC 181, It has been observed that the Legislature is deemed not to waste its words or to say anything in vain and a construction which attributes redundancy to the legislature will not be accepted except for compelling reasons. Similarly, it is not permissible to add words to a statute which are not ther .....

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ain words in the statute results in apparent ineffectiveness of the language and in such a situation, it may be permissible for the court to reject the surplus words, so as to make the statute effective………….. 8.7 In the case of GOI v. Indian Tobacco Association [2005 (187) E.L.T. 162 (S.C.)] also Hon ble Apex Court held that an exemption notification must be construed with regard to the object and purport it seeks to achieve. It was also laid in this judgment tha .....

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