TMI Blog2019 (9) TMI 1429X X X X Extracts X X X X X X X X Extracts X X X X ..... considered opinion, cannot be taken aid of to determine the meaning of the expression power under the Tariff Act or the Exemption Notification as the purpose of defining power under the Factories Act is for an entirely different purpose and that the Finance Act does not deal with cognate subjects. That meaning of the expression power has to be adopted which people understand in commercial sense. The objective of providing no levy of duty or granting exemption is to discourage manufacturers of soaps by taking aid of electricity or of steam for heating - The meaning of the expression power as contained in dictionaries should also not be blindly applied to the meaning of the expression power as contained in the Tariff Act and the exemption notification and an attempt should be made to find out a meaning which would achieve rather than frustrate the object-of granting exemption and that meaning should be preferred which does not lead to uncertainty or unintended results. In the present case, soaps were exempted from payment of Excise Duty if, in or in relation to the manufacture of such soap no process was carried out with, the aid of power or of steam for heating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process has been carried on with the aid of power. The manufacture of soap by the Appellant, therefore, would be subjected to NIL rate of duty upto 27 February, 2005 and thereafter also would be subjected to NIL rate of duty because of the exemption Notification dated 24 February, 2005. The Commissioner has, however, confirmed the demand by order dated 15 November, 2006 holding that the Appellant has been manufacturing soap with the aid of power . Penalty - HELD THAT:- It is not possible to sustain the demand made in the impugned order. The imposition of penalty on the Appellant, the Factory Manager, the Authorized Signatory and the Managing Director are also not sustainable. Extended period of limitation - HELD THAT:- It is not necessary to examine the contention of the Learned Counsel for the Appellant regarding invocation of the extended period of limitation under the proviso to Section 11A of the Central Excise Act, 1944. Appeal allowed - decided in favor of appellant. - E/347-350/2007 - Final Order Nos. A/71865-71868/2019-EX[DB] - Dated:- 23-9-2019 - Justice Dilip Gupta, President and Shri Bijay Kumar, Member (T) Shri B.L. Narasimhan, Advocate, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , however, made clear by the Supreme Court that all the contentions available to the parties shall be decided afresh by the Tribunal on merits in accordance with law. The relevant portion of the judgment of the Supreme Court in the aforesaid four Civil Appeals is reproduced below :- 4. These appeals take exception to the judgment and order dated 23rd August, 2016 passed by the Customs, Excise and Service Tax Appellate Tribunal, Regional Bench Allahabad in final order Nos. A/70786-70789/2016-Ex (DB) in Appeal Nos. E-347-350/2007-Ex (DB), whereby the decision of the Commissioner has been reversed and appeals preferred by the assessee came to be allowed. 5. The sole grievance made in these appeals, which needs consideration, is that, the Appellate Tribunal has founded its decision on the basis of Circulars dated 22-3-1968 and 25-3-1968, which, however, are no longer in force. In paragraph 20 of the Order dated 15-11-2006 that fact has been noticed .by the Commissioner. 6. The Appellate Tribunal, however, has not examined that aspect at all. Resultantly, we are inclined to set aside the impugned judgment and relegate the parties before the Appellate Tribunal for reconsiderati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1996 seeking to amend Chapter 34 of the Tariff Act and the same is reproduced below :- Heading No. Sub-heading No. Description of Goods Rate of duty (1) (2) (3) (4) (10) in Chapter 34, - (i) for sub-heading No. 3401.10 and the entries relating thereto, the following sub-headings and the entries shall be substituted, namely :- - Soap in any form : 3401.11 -- Soap, other than for toilet use, whether or not containing medicament disinfectant 10% 3401.12 -- Soap, in or in relation to the manufacture of which, no process has been carried on with the aid of power or of steam for heating Nil 3401.19 -- Other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l . 15. The Appellant, ever since it started manufacturing Laundry Soap , has not been paying Central Excise duty because initially up to 1996 the levy of Central Excise duty was exempted under the Notification dated 1 March, 1994 and subsequently from 28 September, 1996 it was subjected to nil Central Excise Duty. With effect from 28 February, 2005, it was again subjected to 16% Central Excise Duty, but the levy of Central Excise Duty was exempted by Notification dated 24 February, 2005 that came into force on 28 February, 2005. 16. A show cause notice dated 17 July, 2006 was, however, issued to the Appellant, Shri Mahendra Kumar Jain - Managing Director, Shri Anoop Kumar - Authorized Signatory and Shri Anil Kumar Jain - Factory Manager. The Appellant was required to show cause as to why Central Excise Duty should not be recovered from it and the seized goods should not be confiscated. The Managing Director, the Authorized Signatory and the Factory Manager were also required to show cause as to why penalty should not be imposed upon them. 17. It was stated in the show cause notice that the Appellant has been manufacturing laundry soaps with the aid of gas since Janua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defined in the Central Excise Act, 1944, its meaning could be ascertained with the help of other statutes, namely, Section 2(g) of the Factories Act, 1948. The finding of the Commissioner in this regard is reproduced below : Since the term Power is not defined in the Central Excise Act, 1944, and the rules made thereunder, therefore its meaning or definition is being taken from some other parallel statute. The GAS used by the Party in the manufacturing of Laundry Soaps conformed to the definition of Power as mentioned in Section 2(g) of the Factories Act, 1948 which reads as under : 2(g) Power means electrical energy, or any other form of energy which is mechanically transmitted and is not generated by human or animal agency . From the reading of the definition, it is seen that for anything to qualify as Power , it must satisfy three conditions namely : (i) It should be electrical energy or any other form of energy; (ii) It should be mechanically transmitted; (iii) It should not be generated by human or animal agency The GAS used by the Party in the manufacture of Laundry Soaps conformed to all the three standards mentioned above as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot have been invoked was repelled. Regarding the imposition of penalty upon Shri Anoop Kumar, Authorized Signatory, the Commissioner found that he controlled the day to day functioning of the unit and as such was supposed to know that goods manufactured with the aid of power were subjected to levy of duty. Likewise, penalty was also imposed upon Shri Anil Kumar Jain, Factory Manager and Shri Mahendra Kumar Jain, Managing Director. 23. It is this order dated 15 November, 2006 passed by the Commissioner that has been challenged in this appeal. 24. Shri B.L. Narasimhan, Learned Counsel appearing for the Appellant has made the following submissions : (i) The use of the gas for heating and boiling does not amount to use of power and hence the product manufactured by the Appellant could not have been subjected to levy of excise duty under Tariff Sub heading No. 3401.12 prior to 28 February, 2005. After 28 February, 2005 also, Central Excise Duty could not have been levied under Tariff Item No. 3401 19 42 because of the exemption Notification dated 24 February, 2005 that came into effect from 28 February, 2005; (ii) Admittedly, the expression power has not been def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authorized Representative of the Department has, however, supported the impugned order. It is his contention that the restricted meaning to power cannot be given in view of the definition of power in the Factories Act and the dictionaries. It is his contention that only when heat is generated manually by using wood in the manufacture of soap that it would not be subjected to levy of Central Excise duty. 26. The submissions advanced by the Learned Counsel for the Appellant and the Learned Authorized Representative for the Department have been considered. 27. The Appellant manufactures laundry soap under the brand name Doctor . The process of manufacture, as was explained by the Appellant in reply to the show cause notice, requires oil to be put in big kadhais followed by Caustic Soda and Silicate. This mixture is then boiled for a minimum of three hours. Thereafter some oil and Soap Stone are mixed in a small kadhai and this mixture is then put in the big Kadhai. The paste gathered from the big kadhai after an hour is then transferred in moulds and put in a shed. After 48 hours, the blocks that emerge are cut into sizes of required shape. Prior to January, 2002, the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en aid of while understanding the meaning of power in the Tariff Act and the Notifications. 32. The Commissioner has relied upon the definition of the expression as contended in Section 2(g) of the Factories Act. The Supreme Court in MSCO Pvt. Ltd. v. Union of India and Others [1985 (19) E.L.T. 15 (S.C.)] observed that while construing a word which occurs in a statute or a statutory instrument it must, in the absence of any definition in that very document, be given the same meaning which it receives in ordinary parlance or is understood in the sense in which people conversant with the subject matter of the statue or statutory instrument understand it and that it would be hazardous to interpret a word in accordance with its definition in another statute or statutory instrument, more so when such statute or statutory instrument is not dealing with any cognate subject. 33. The definition of power as contended in the Factories Act, in our considered opinion, cannot be taken aid of to determine the meaning of the expression power under the Tariff Act or the Exemption Notification as the purpose of defining power under the Factories Act is for an entirely different purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and restaurants were not entitled to the facility of exemption. The Supreme Court observed that for deciding whether toffee is sweetmeat in terms of the exemption notification, what has to be considered is the object of the notification and the context in which that word has been used in the notification. The relevant observations are as follow : 8. It is true that dictionary meaning of the word sweetmeat is very wide and any food which is sweet and rich in sugar can be described as sweetmeat . Toffee is a confection of sugar and other materials and being rich in sugar would sweetmeat in its wider sense. But for deciding whether toffee is sweetmeat as contemplated by the exemption Notification, what is required to be considered is the object of the notification and the context in which that word is used in the notification. 9. A close reading of the Notification discloses that the State intended to give benefit of exemption or reduction in rate to these new industrial units and existing units undertaking expansion, diversification or modernization which were to make substantial capital investment. Paragraph 2 of the Notification prescribing conditions of having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in holding that they gave an unlimited and unrestricted meaning to the word Mithai or sweetmeat . 12. The High Court has also not correctly applied the popular parlance test. As can be seen from the observations made by it that There is no doubt that a toffee is a sweetmeat, as understood by the people where toffee originated and that Toffee and other things of that nature are of foreign origin and are sweets or sweetmeat according to those people and their nature cannot be changed simply because their origin is different from what is usually conveyed by the word Mithai in this part of the country , the High Court preferred to decide the issue by relying upon how toffee is understood by the people of the country where it originated rather than by considering how toffee is understood in India and more particularly in the State of U.P. As held by this Court in Collector of Central Excise v. M/s. Parle Exports (P) Ltd. (1989) 1 SCC 345 The words used in the provision, imposing taxes or granting exemption should be understood in the same way for which they are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not manufactured in a factory having plants and machinery. The object of declaring exemption from payment of sales tax was to increase industrial activity within the State of Uttar Pradesh by encouraging setting up of new industrial units or expansion, diversification or modernization by the existing industrial units. The Supreme Court, therefore, observed that even though the word sweetmeat used in the exclusionary part of the exemption notification has a wide dictionary meaning or connotation, but only that meaning should be given to it which would achieve, rather than frustrate the object of granting exemption and a meaning which does not lead to uncertainty or unintended results should be avoided. The Supreme Court also observed that the High Court should have applied the test of popular parlance by finding out as how toffee is understood in the State of Uttar Pradesh. 38. In the present case, soaps were exempted from payment of Excise Duty if, in or in relation to the manufacture of such soap no process was carried out with, the aid of power or of steam for heating. In common parlance, power is understood as electricity . Thus, though power may have a wider di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the term Chamra would include leather in all its forms. 43. In the instant case, there is no apparent conflict in the English and Hindi version of the Tariff Act and the Exemption Notification and, therefore, assistance can be taken of the Hindi version. The Hindi version removes all doubts since the word vidyut has been used, which means electricity . 44. In view of the aforesaid, a restricted meaning to the expression power should be given by confining it to electricity , which view is duly supported by the Hindi version of the Tariff Act and the Exemption Notification. 45. The Appellant has also placed reliance upon the two circulars dated 22 March, 1968 and 25 March, 1968 that were issued by the Central Board of Excise Customs in the context of identically worded Central Excise Notifications that clarified that the use of gas would not be the same as use of power . The relevant portion of the Circular dated 22 Match, 1968 is as follows : 43. 1968 Budget-Central Excise-Definition of Power used in item No. 40-Steel Furniture. Reference C.C.E., Allahabad s letter No. V-40(30)183/68, dated the 5th March, 1968 (copy appended). The instruction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of coco powder cannot be treated as use of power . There is no reason why such a meaning to the expression power should not be given in the new Central Excise Tariff. As noted above, Item No. 40 in the First Circular relates to steel furniture made partly or wholly of steel, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power. The Circular clarified that if gas is used for welding steel furniture parts, steel furniture would not be subjected to levy of Central Excise duty. Under the Second Circular issued in relation; to confectionery, it has also been clarified by the Board that if gas is used for heating purpose in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power, it would not be treated as use of power . 50. The words now used in the Tariff Act and the Exemption Notification are also in or in relation to the manufacture of which, no process has been carried on with the aid of power . The meaning of the expression power will, therefore, not change even if fresh Circulars have not been issued by the Board to clarify the meaning of the expression power . The Com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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