TMI Blog2017 (11) TMI 1037X X X X Extracts X X X X X X X X Extracts X X X X ..... ption of inputs and final products, the date from which option has been exercised and aggregate value of clearances. It is also seen that legislative intent in issuing the said notification is to grant concessional rate of duty to the SSI unit. The appellant had admittedly satisfied all substantial conditions of the notification so as to earn the benefit. Denial of benefit on the ground that the option was not filed separately, if the same is otherwise available to the assessee, would defeat the legislative intent. It is well settled that an interpretation which defeats the purpose, for which a particular notification stands issued by Government, is not required to be adopted - Admittedly, in the present case, the purpose of small scale notification is to grant benefit to the SSI and to encourage the small scale industries. Such purpose cannot be defeated on the ground that option was not made separately on a piece of paper but the same was conveyed to the Revenue in the form of ER-3 returns. The benefit of notification in question is based upon the fulfilment of other conditions, like assessee being a small scale manufacture, the quantum of clearances effected in a particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission that the appellant has been filing ER-3 returns regularly and it has been shown that they are availing the benefit of notification by paying duty on concessional rates. In that circumstances, it is clear that the appellant has shown their intention for availing the benefit of exemption notification. He relied upon the decision of this Tribunal in the case of CCE, Lucknow vs. Kanodia Polychem (P) Limited 2016 (341) ELT 429 (Tri. All.). He further submits that, for the subsequent period, the benefit of notification has been allowed to the appellant relying on their ER-3 returns. He also relied on the decision of the Hon ble Apex Court in the case of CC (Prv.), Amritsar vs. Malwa Industries Limited 2009 (235) ELT 214 (S.C.) to say that exemption notification should be read literally and the same is to be construed liberally if it is found that notification is applicable to the assessee. 4. On the other hand, ld. AR submits that the appellant is not entitled to the benefit of notification in question as they have not fulfilled the condition of the said notification. He relied on the decision in the case of CCE, Chandigarh vs. Saboo Cylinders (P) Limited 2005 (180) ELT 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construed strictly. Since the notification came into effect from 11-4-1994, the benefit of the notification cannot be extended to the appellants retrospectively w.e.f. 1-3-1994. In Eagle Flask Industries Ltd. v. Commissioner of Central Excise, Pune [2004 (171) E.L.T. 296 = (2004) 7 SCC 377], this Court held : 6. We find that Notification No. 11/88 deals with exemption from operation of Rule 174 to exempted goods. The notification has been issued in exercise of powers conferred by Rule 174-A of the Rules. Inter alia, it is stated therein that, where the goods are chargeable to nil rate of duty or exempted from the whole of duty of excise leviable thereon, the goods are exempted from the operation of Rule 174 of the Rules. The goods are specified in the Schedule to the Central Excise Tariff Act, 1985 (in short the Tariff Act ). The proviso makes it clear that where goods are chargeable to nil rate of duty or where the exemption from the whole of the duty of excise leviable is granted on any of the six categories enumerated, the manufacturer is required to make a declaration and give an undertaking, as specified in the form annexed while claiming exemption for the first ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods and have paid full rate of duty on clearance of branded goods, we hold that the appellant have not violated the provisions of Notification No. 9/2003-C.E., dated 1-3-2003. Accordingly, we hold that the appellant is entitled to exemption benefit under the provisions of Notification No. 9/2003-C.E., dated 1-3-2003. Accordingly, we dismiss the appeal. The respondent assessee will be entitled to consequential benefit, if any. 6. As the Hon ble Apex Court in the case of Malwa Industries Limited (supra) held that exemption notification should be read liberally and it should be construed having regard to the purpose and object it seeks to achieve for issuance of such notification has also be considered. Admittedly, in this case, while filing ER-3 returns, the appellant has shown that they are paying duty at concessional rates by availing benefit of notification in question. In that circumstances, merely non-filing of declarations will not be fatal for the appellant to deny exemption of notification. In that circumstances, we hold that appellant is entitled to the benefit of exemption notification. Consequently, demand of duty is not sustainable and the appeal is allowed with con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said case, the court has clearly held that the aforesaid approach of the Tribunal was wrong and illegal. In this context, para 34 of the judgment is pertinent and is reproduced below- 34. We find it difficult to sustain the reasoning of the Tribunal that the procedure laid down in Chapter X, is meant only to establish the receipt of goods by the recipient unit and their utilization. The Tribunal completely overlooked the object and purpose of the procedure laid down in Chapter X. The goods manufactured at the supplier end were excisable goods and if a party wants remission of duty, he has to follow certain pre-requisities, the object of which is to see that the goods be not diverted or utilized for some other purpose, on the guise of the exemption notification. Detailed procedures have been laid down in Chapter X so as to curb the diversion and misutilization of goods which are otherwise excisable. The plea of substantial compliance and intended use is, therefore, rejected for the reasons already stated. 11. Following the above principle laid down by the Hon ble Apex Court, it is important to examine the intent and purpose of option and the information to be provided. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith current account was only an error and the assessee had not violated the more substantial condition viz. no Cenvat credit should be taken in regard to the goods. This is clearly a faulty approach on the part of the Tribunal. It is stated at the cost of repetition that the assessee was required to fulfil the condition in stricto senso viz. to pay the duty either in cash or through account current if it wanted to avail the benefit of exemption notification and not through adjustment of Cenvat credit which is not the mode prescribed in the aforesaid conditions. Once we find that the conditions have not been fulfilled the obvious consequence would be that the assessee was not entitled to the benefit of this notification. 7. Therefore, in view of the principle of law laid down in the aforesaid case and in Hari Chand Shri Gopal s case (supra) by the Hon ble Supreme Court, in our opinion, non-fulfilment of the said mandatory condition would disentitle the appellant in availing the benefit of the SSI exemption Notification No. 9/2003-C.E., dated 1-3-2003. However, we find that the appellants had recorded all facts in their statutory records and the demand has been issued for the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the decision in the case of Hari Chand Shri Gopal and others (supra) and Surat Mettalics Pvt. Limited (supra). ( Points of difference pronounced in the court on 25.07.2017 ) Per Archana Wadhwa: 15. The following difference of opinion stands referred to me as Third Member: Whether the Member (Judicial) is correct in relying on the decisions in the case of Malwa Industries (supra) and KanodiaPolychem (P) Limited (supra) to hold that appellant is entitled for the benefit of SSI exemption Notiication No.9/2003-CE or the Member (Technical) is correct in holding that the appellant is not entitled to avail the benefit of Notification No.9/2003-CE dated 01.03.2003 relying on the decision in the case of Hari Chand Gopal and others (supra and Surat MetallicsPvt. Ltd. (supra). 16. After hearing both sides, I find that the reason for dispute and the factual position stands recorded by the Member (Judicial) and the same are not being repeated so as to avoid repetition. Short issue required to be decided is as to whether the benefit of small scale Notification No.9/03-CE dated 01.03.2003 would be available to the appellant in the absence of the declaration filed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... option is a procedural requirement and non observance of the same would not result in denial of the substantive benefit to the assessee, if otherwise available. 18. The declaration requires an assessee to give various informations about them to their jurisdictional Central Excise authority. Such information is regarding name and address of the manufacturer, location of the factory, description of inputs and final products, the date from which option has been exercised and aggregate value of clearances. The question which arises is that if the information, which according to the Revenue is required to be provided in the separate declaration, is otherwise available to the Revenue, whether non-filing of declaration would result in denial of the benefits to the assessee. 19. The entire idea of the above notification is that the jurisdictional Central Excise officer is put to notice as regards the presence of manufacturer by mentioning the requisite information in the declaration. Such information was, in any case, available to the Revenue as the appellant was regularly filing ER-3 returns showing the fact of availing the benefit of the notification. When the ER-3 returns clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufactured and cleared by an assessee stands reached in the factory of the recipient and stands further used by the recipient in the manufacturer of their product. It was in such scenario, the Hon ble Supreme Court observed that procedure prescribed under Chapter X is required to be followed strictly so as to ensure the intended use of the goods. The ratio of the above decision cannot be adopted and applied in the present case, where the assessee has not filed declaration intending to avail benefit of SSI notification especially when such intention and option stands intimated to the Revenue in the form of ER-3 returns. For the same reason, the decision of the Tribunal in the case of Surat MetallicsPvt. Ltd.-2016 (343) ELT 1099 (Tri.-Ahmd) cannot be followed inasmuch as the same has simpliciter relied upon the said decision of the Hon ble Supreme Court in the case of Hari Chand Shri Gopal. 22. On the other hand, I find that the appellant have admittedly fulfilled the eligibility criteria of the notification in which case, the declaration of law by the Hon ble Supreme Court in the case of Malwa Industries Ltd. would apply. Hon ble Supreme Court also observed that there should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ural conditions. Some conditions are substantive, mandatory and based on considerations of policy and some other merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes, which they were intended to serve. As observed by the Supreme Court in the case of Union of India Vs. M/s. Wood Papers Ltd.-[1991 JT (1) 151 at 155,] that when the question is as to whether a subject falls in the notification or in the exemption clause then it being in nature of exception is to be construed strictly and against the subject but once ambiguity or double about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction In the absence of any other dispute about the fact that but for non filing of declaration/option, the assesseeotherwise falls within exemption notification, a liberal interpretation is required to be given and non following the procedural condition of filing separate declaration cannot be held as making the appellant disentitle to the benefit of the notification. 25. In view of foregoing discu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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