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TMI Blog2018 (12) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... d and no duty was paid consequently, the adjudicating authority confirmed the demand and imposed penalty, therefore, the appellant is before us. 2. Sh. Devan Parikh, Ld. Sr. Counsel appearing on behalf of the appellant, at the outset, submits that identical issue under the same set of facts has been considered by the Larger Bench of this Tribunal in the case of Arvind Products Ltd. vs CCE & ST Ahmedabad 2014 (310) ELT 515 (Tri. L.B.) wherein it was held that the only condition to be fulfilled is the assesse should not take cenvat credit that will be sufficient for allowing the exemption Notification No. 14/2002-CE. On the query from the Bench, Ld. Advocate clarifies that as per the condition No. 3 of exemption entry serial No. 12 even if the input i.e. unprocessed fabric in the present case is received under exemption even then the exemption to the final product is available for the reason that the condition prescribed that on the input the appropriate duty of excise leviable under the first schedule to the Central Excise Tariff Act and the additional duties of Central Excise (Goods of Special Importance) Act read with any notification for the time being in force, or the additiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no credit of the duty paid on inputs or capital goods has been taken under rule 3 or rule 11 of the Cenvat Credit Rules, 2002. Explanation-II - For the purposes of the conditions specified below, textile yarns or fabrics shall be deemed to have been duty paid even without production of documents evidencing payment of duty thereon." 8.2 A view was taken by CESTAT before the judgment of Auro Textiles v. CCE, Chandigarh (supra) that exemption under Notification No. 14/2002-C.E., was admissible but a diagonally opposite view has been taken by CESTAT judgment in the case of Auro Textiles and subsequent case laws. In Para 16 of CESTAT's order in the case of Auro Textiles, it was observed that Courts and Tribunals are not expected either to enlarge or to restrict the scope of an exemption benefit assured under such notification and that while interpreting a provision of a taxing statute the question which should be asked as to what does the provision of law states on its plain reading. Therefore, after giving elaborate and detailed findings, it was held in the case of Auro Textiles case (supra) that benefit of Notification No. 14/2002-C.E., cannot be given if duty is not paid on the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presumed that all grey cotton fabrics received by a textile processor is not duty paid because Sr. No. 10 of the same notification exists. It is also relevant to note that exemption under Sr. No. 10 of this exemption notification is not unconditional but is subject to certain conditions. Thus, the grey fabrics available 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 Para 8.3 above, there is apparent conflict between Condition-3 and Explanation-II of the Notification No.14/2002-C.E., and has to be given a harmonious construction. For understanding the intention of the legislature behind this exemption we are of the considered opinion that one has to go to the Explanatory Notes and the speeches of the Finance Minister, if any, given at the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it, 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 cascading effect of taxation. It will not be in the interest of Small operators to follow only the Cenvat credit mode. 8.6 In the case of UOI v. State of Tripura [AIR 2012 Supreme Court 3240],, Apex Court has held that any interpretation which leads to injustices and absurdity must be avoided and in such situations court may look into the purpose for which the statute has been brought and would try to give a meaning which would adhere to the purpose of that statute. Relevant Para 4 of this judgment 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 expoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... At times, the intention of the legislature is found to be clear but the unskillfulness of the draftsman in introducing certain 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 that an expression used in a statute should be given its ordinary meaning unless that meaning leads to anomalous or absurd situation. If the interpretation meant by the Revenue is accepted then every alternate stage of processing will be required to be taxed by virtue of Section 2(f) (ii) of the Central Excise Act, 1944 read with Chapter note 4 of Chapter 52 or Chapter 54 or Chapter 55 of the Central Excise Tariff Act, 1985. 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 con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r knitting or crocheting of fabrics within the same factory, the condition specified in column (5) against each of the said respective S. Nos. is intended to have been satisfied if the said processed fabrics are manufactured from textile fibres or yarns, as the case may be, on which the appropriate duty of excise leviable under the First or the Second Schedule to the said Central Excise Tariff Act read with any notification for the time being in force or the additional duty of customs leviable under section 3 of the Customs Tariff Act, 1975, as the case may be, has been paid; (3) this Explanation shall have effect as if it had always been the part of this notification." From Explanation-VII (3), it has been made clear that this explanation will have effect as it was always existing as a part of Notification No. 14/2002-C.E. Therefore, legislature has the expertise and language to convey where an amendment will be corrective and retrospective. As no such Clause like, the one which exists in Notification No. 3/2003-C.E., dated 6-1-2003, is available while amending Condition-3 of Notification No. 14/2002-C.E. therefore, the same can not be considered curative and retrospective in op ..... X X X X Extracts X X X X X X X X Extracts X X X X
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