TMI Blog2020 (2) TMI 1114X X X X Extracts X X X X X X X X Extracts X X X X ..... t available to the assessees and has accordingly confirmed the demand. The only question formulated by the Members on the Difference of Opinion is whether the appellants are eligible for the exemption Notification No. 04/2006-C.E, dated 01,03.2006 as held by Member (Judicial) or they are not eligible for the exemption as held by Member (Technical). In Union of India Vs. Elphinstone Spinning Weaving Co. Ltd., [ 2001 (1) TMI 966 - SUPREME COURT ], the Hon'ble Apex Court formulated what it termed the cardinal principle of construction in the following words: a statute is a command of the Legislature. The interpreter must, therefore, in interpreting and construing the statute, identify the intention of the Legislature; that in identifying the intention of the Legislature by the process of constructing, the Court will have to adopt both literal and purposive approaches. This would mean that the true or legal meaning of an enactment is derived by construing the meanings of the words used in the enactment in the light of any discernible purpose or object which comprehends the mischief of its remedy to which the enactment is directed. In State of Uttar Pradesh Vs. Vijay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellants are not eligible for the benefit of exemption notification No.4 ibid and accordingly, I concur with the conclusions drawn by the Member (Technical) - Registry is directed to place the matter before the Division Bench for recording majority/Final Orders accordingly. Majority order recorded - Appeals dismissed. - Excise Appeal No. 40658 of 2013, 40661-40664/2013, 40692/2013, 40698/2013,40699/2013, 40788-40790/2013, 40820-40835/2013, 40850-40852/2013, 41084/2013, 41107/2013, 41138/2013, 41175/2013 - Interim Order No. 40089-40122/2019, Final Order No. 41321-41354/2019 - Dated:- 19-11-2019 - HON'BLE MS. SULEKHA BEEVI CLS., MEMBER (JUDICIAL) HON'BLE P. VENKATA SUBBA RAO, MEMBER(TECHNICAL) For the Appellant : Shri S. Renganathan, Advocate, Shri S. Venkatachalamr Advocate and Shri M. Kannan, Advocate For the Respondent : Shri S. Govindarajan, AC (AR) and Shri L. Nandakumar, AC (AR) ORDER PER: MS. SULEKHA BEEVI C.S- The issue involved in all these appeals being the same, they are heard together and are disposed by this common order. 2. Brief facts are that the appellants are engaged in packing of duty paid machine dipped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for that purpose). They generally consist of a stem of wood, cardboard textile yarn impregnated with stearin wax, paraffin wax etc. (wax matches or vestas) and of a head made of various inflammable chemical products . 3.3 As per Chapter Note 3 of Chapter 36, each matchstick ignited by striking should be deemed to be a match. So the matchsticks purchased are finished and excisable goods and has suffered appropriate duty at the hands of the manufacturer. The allegation of the department is that the processes undertaken by the appellant in packing the matches in boxes painted with red phosphorous, though done without aid of power is not eligible for exemption as per Notification No. 4/2006-CE because the raw materials, dipped match splints were manufactured by using aid of power. Admittedly, no power was used in the factory of the appellant. Only if power is used in the factory of the appellant in any one of the six processes mentioned in the notification, the appellant have to pay duty on the goods cleared by them. Since no power is used in the packing of matchsticks -in the appellant's factory, the benefit of the notification cannot be denied. 3.4 In this regard, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to sizes. So also paper was made over to other units for being shredded into small strips for the purpose of manufacture of fireworks. After steel wires were cut to sizes and the paper was processed? the same were being returned to the factories of the assessee. In the present case, the appellants were purchasing duty paid match splints from various sources and packing it and removing the same as matches. The raw materials used by them were not sent outside for further processing with the aid of power. The Tribunal in the case of Omega Packaging P. Ltd. (supra) had occasion to consider a similar issue and has distinguished the facts in Standard Fireworks Industries (supra). 3.9 The Id. Counsel Shri S* Venkatachalam also argued that the process of packing the matchsticks in the boxes does not amount to manufacture. After referring to Note 3 of Chapter 36, he submitted that in the Chapter Note there is no mention to the effect that packing of matchsticks in the match boxes amount to manufacture. No new product has emerged in the factory of the appellant and no manufacturing activity is carried out in the unit so as to attract levy of excise duty. Only if power is used in any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of matches is carried out in a single factory. It is not applicable when the duty paid matchsticks are packed because the finished matches already have come into being at the factory of another manufacturer and suffered duty. The appellants therefore prayed that the confirmation of duty demand, interest and penalty amounts may be set aside. 4. Ld. AR Shri S. Govindarajan supported the findings in the impugned order. He referred to Notification 4/2006 and submitted that in SL No. 72, it is stated that to avail the benefit of notification none of the following processes is to be carried out with the aid of power, The various processes are:- a. frame filling b. dipping of splints in the composition for match heads c. filling of boxes with matches d. posting of labels on match boxes, veneers or cardboards packaging 4.1 Thus any process which is done in relation to the manufacture of matches, if done with the aid of power, notification benefit will not be applicable. In the present case, the appellants have purchased duty paid match splints and used for packing them in boxes. Though the appellants have not used any power for packing and painting the boxes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in or -in relation to the manufacture of which none of the following processes is ordinarily carried on with the of power, namely - (i) frame filling (ii) dipping of splints in the composition for match heads (iii) filling of boxes with matches (iv) pasting of labels on match boxes, veneers or cardboards, (v) packaging Nil ---- 6.1 It is not disputed that the appellants are not using power within their factory for painting the boxes with red phosphorous, packing, bundling etc. To be more specific, the processes undertaken by the appellants are confined to the activity of making / painting the boxes, packing, labelling etc. They clear the entire boxes containing the dipped match splints without payment of duty by availing the exemption of the above notification. The case of the department is that since the dipped splints packed in the boxes is manufactured by using the aid of power, the exemption as per the notification is not available to them. The notification does not say that the entire processes mentioned therein from sub-clause (i) to (v) have to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in steel wires and paper in bulk and send it outside to with the use of power. These processes. were of the assessee therein itself. In the present entirely different. The appellants have purchased (dipped splints) which have suffered excise duty and the process of painting the boxes, packing etc. The sent any of their raw materials outside their factory to be processed using the aid of power. When. the raw materials (dipped splints) manufactured using the aid of power has suffered duty, the appellants cannot be denied the exemption alleging that the raw materials have been manufactured with the aid of power. The facts as narrated in Standard Fireworks Industries (supra) are not analogous or identical to the facts of the present appeals and therefore distinguishable. 6.3 The Tribunal in the case of Omega Packing P. Ltd. (supra) had occasion to consider a similar situation wherein the exemption under Notifications No. 71/83-CE, 153/86-CE and 102/88 were analysed. It was held that when metal containers were manufactured by the assessee without the use of power in his factory using bought out tops and bottoms, the benefit of notification is eligible. The discussion of the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctured by appellants and accordingly the impugned Order is set aside and appeal is allowed 6.4 While interpreting and applying a notification, the same has to be considered in respect of the assessee who has availed the benefit of notification. The said aspect has been clarified by the Board in Circular No. 1/93-CX-4 dated 2.121993. The same is reproduced as under:- Power Use of power - One part. of footwear manufactured with the aid of power - Notification No, 49/86-C.E. Circular No. 1/93-CX.4, dated 2-12-1993 Government of India Central Board of Excise Customs New Delhi Subject : Power - Use of powerh manufacture of components - Effect Footwear manufactured without the use of power. but out of parts manufactured with the aid of power eligible to exemption under Notification No. 49/86-C.E. The matter has been examined and it is found that the instructions of June, 1969 (F. No. 8/19/67-CX.2, dated 27-6 1969) mentioned at Para 4 of your letter were issued with reference to the then existing Notification No. 94/67- C.E., of May, 1967 and had to be read with reference to Tariff heading existing then. This Notification was for a factory w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts manufactured using power are marketable and excisable goods. There are a lot of intermediate products which are sold in the industry which are excisable goods. Such goods may not be sold directly to the ultimate consumer. These are used in further manufacture in the industry. For the appellant, the duty paid match splints are raw materials used for manufacture of matches. Admittedly, they did not use power in the manufacture of matches carried out by them. The department does not have a case that the appellants purchased raw materials and send it outside the factory to make dipped match splints using power. The duty paid splints are raw materials for them. 6.7 From the above discussions, we are of the view that the appellants having not used any power in the process carried out by them for manufacture of matches, the benefit of Notification 4/2006CE is eligible to them. 6.8 The Ed. Counsel Shri S. Venkatachalam has also put forward arguments that the process of painting the boxes with red phosphorous, packing the match splints in the boxes or bundling etc. does not amount to manufacture When the. assessee claims to have availed the benefit of notification and cleared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the rate .specified in the corresponding entry in column (4) of the said Table and subject to the relevant conditions specified in the Annexure to this notification, and the Condition number of which is referred to in the corresponding entry in column (5) of the Table aforesaid. Explanation.- For the purposes of this notification, the rates specified in column (4) of the said Table are ad valorem rates, unless otherwise speaified. S. no. Chapter or heading or subheading or tariff item of the First Schedule Description of Excisable Rate Condition No. 1 2 3 4 5 72 3605 00 10 or 3605 00 90 Matches, in or in relation to the manufacture of which none the following processes is ordinarily carried on with the aid of power, namely: (i) the process of giving-the veneer flats or strips, the configuration of a match box ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses and NOT who used it. The ratio of the judgment of the Hon'ble Apex Court in the case of Standard Fireworks Industries vs CCE [1987 (28) ELT 56 (SC)] (supra) squarely applies to the present case inasmuch as in both cases] the notification only specified the processes 'in which the power should not be used without specifying who should not be using the power in that processes and it is held that even if the power is not used in the factory of the manufacturer but it is used outsider the benefit of the exemption notification is not available. 4. To say that the exemption is not available only if the power was not used by the assessee, one needs to insert the words 'by the manufacturer or his job workers' in the notification and read it as Matches, in or in relation to the manufacture of which none of the following processes is ordinarily carried on with the aid of power by the assessee'. 5. To hold that the exemption is not available only if the power was not used by the assessee or his job workers, one needs to insert the words the manufacturer or his job workers' in the notification and read it as Matches, in or in relation to the manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be claimed by the subject/assessee and it must be interpreted in favour of the revenue. (3) The ratio in Sun Export case (supra) is not correct and al/ the decisions which took similar view as in Sun Export case (supra) stands overruled The ratio of the judgments of Standard Fireworks Industries vs CCE [1987 (2.8) ELT 56 (SC)] and Dilip Kumar co. [2018 (361) ELT 0577 (SC)] are binding on all courts and tribunals .leaving me with no option but to conclude that the appellant assessees are not entitled to the benefit of the exemption notification, 9. It has also been canvassed on behalf of the appellants that what they are doing is mere packing of the splints into boxes and no new commodity has come into existence and there is no Chapter note in the Central Excise Tariff to hold that packing of matches amounts to manufacture. It has also been argued that the Tariff heading indicates the standard unit as kg and not as boxes and hence there is no intention to tax matches packed in boxes. Even a child knows that the match box is not merely a packing material but it has half the chemicals required to make fire through friction. It does not take too much effort to under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y are not eligible for the exemption as held by Member (Technical). (Order pronounced in open court on ) (SULEKHA BEEVI C.S.) (P VENKATA SUBBA RAO) Member (Judicial) Member (Technical) PER P. DINESHA (THIRD MEMBER) : The above matter has come up for hearing as per the order of reference by the Hon'ble President vide letter in F.NO. 01(06)/DOO/CESTAT/Reg./2017 dated 18.09.2019. 2.1 When the matter was taken up for hearing on 16.10.2019, Shri. S. Venkatachalam, Ld. Advocate appearing for the appellants, submitted a Memo for withdrawal of Excise Appeal No. 40692 of 2013 in respect of M/se Jeyakannan Matches Pvt. Ltd., Sivakasi stating that the appellant is exploring the possibility of availing the benefit of. the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 and thus requested that the appeal may be permitted to be withdrawn. 2.2 The scope and cause of reference to the Third Member is limited to the difference of opinion between the Members and therefore, as a Third Member, I cannot go beyond the reference to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants have not satisfied the conditions for. claiming the benefit of the exemption Notification (supra). 5.3 He concluded that the ratio in the case of M/S. Standard Fireworks Industries Vs Collector of Central Excise, Madurai reported in 1987 (28) ELT 56 (S.C.) squarely applies and therefore, the ratio of the Tribunal or of other High Courts need not be considered in the light of a clear Supreme Court judgement. 6. I have considered the rival contentions and perused the documents placed on record. 7. Ld. Advocate submitted that there. is no issue with regard to the interpretation of the exemption Notification since the conditions are very clear and that the appellants/manufacturers have satisfied the conditions inasmuch as, they have not used the power in so far as their manufacturing activities are concerned. Ld. DR also contends that there is no issue with regard to the Notification since, according to him, the manufacturing activity is required to be looked into as a whole comprising of all the processes and hence, in one of the processes the power having been admittedly used, that is sufficient to dislodge claim of appellants that they are entitled to the bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 173 and Commissioner of Central Excise Vs. Kisan Sahkari Chinni Mills Ltd. Reported in (2001) 6 SCC 697, the Hon'ble Apex Court inter alia observed that .....in a taxing Act, one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used-. It is also an equally well-settled rule that exemption notifications are to be construed strictly to the extent that their applicability is being examined. 9.1 Now, I may proceed to apply these principles in figuring out if the appellants qualify for exemption notification no. 4/2006-CE dated 01.03.2006 which is presently under dispute and since appropriate extracts of the notification have already been reproduced by both the Ld. Members, I need not do so once again. 9.2 In view of broader principles laid down by any number of judgments including those quoted n the above paragraphs, it is imperative that all the words used in the notification/statute are to taken into consideration and all the words should be given the most natural/possible m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le the assessee to the exemption. 11. The very heading of the Notification, i.e., GENERAL EXEMPTION NO,47 reads thus: Exemption and effective rate of duty for SPECIFIED GOODS of chapters 25 to 49 and it applies. to exempt excisable goods of the description specified in column (3) of the table. So, the conditions upon which the exemption depends is relatable not to the assessee, not the manufacture and not even the manufacturer, but only to the goods specified. 12. It is the case of the appellants that they have procured dipped match splints from other manufacturers who have removed such goods on payment of that this would not make any difference since the entitlement to exemption is to be determined separately in each assessee's case. The fact that duty has been paid on some intermediate/ semi-finished goods not themselves entitled to exemption is in no manner relevant to whether exemption is to be granted at a subsequent stage to the finished goods. In any event, the cascading effect is effectively mitigated by CENVAT credit. The exemption notification must be applied only to the goods it seeks to cover. 13 There are also references to many Circulars/Notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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