TMI Blog2003 (11) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... job work basis for M/s. Sapat Packaging Industry (P) Ltd. M/s. Sapat Agro Pack Industry (P) Limited purchases tea classified under sub-heading 0902.19 of Central Excise Tariff Act, 1985 from the garden on payment of duty. Thereafter, Sapat Agro Pack Industry (P) Limited blends the tea and sell the same to M/s. Sapat Packaging Industry (P) Limited without any payment of duty claiming benefit of Notification No. 425/86. M/s. Sapat Packaging Industry (P) Limited sends the tea so purchased to the Petitioner along with packing material. The Petitioners pack the tea in packets of different sizes and in terms of the Central Excise Tariff Act, a packet of less than 25 gms is classifiable under sub-heading 0902.11 whereas the packet of more than 25 gms but less than 20 Kgs is classifiable under sub-heading 0902.12. The duty payable on these two different classes of product also differs. Under Exemption Notification No. 193/86 dated 11th March, 1986 duty payable on goods falling under sub-heading 0902.11 is exempted in excess of 44 paise per Kg. if the duty payable on tea, falling under sub-heading 0902.19 and used in the manufacture of the said goods, has already been paid and no credit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed products cannot be denied, even though the notification granting exemption for such product provides that exemption would be available in case the duty is paid on the inputs. The contention is that the expression 'duty paid on inputs' would also include goods subjected to NIL duty. Secondly, in the said notification, clause (1) clearly provides that if the duty payable product is used in the manufacture of the goods, then such final product would be entitled to avail exemption under the said notification. Applying the law laid down by the Apex Court in Collector of Central Excise, Vadodara v. Dhiren Chemical Industries [2002 (139) E.L.T. 3 (S. C.)] and bearing in mind the said circular dated 15th May, 1995, the department could not deny the Petitioners the benefit of exemption from the payment of duty under the said notification in relation to the product manufactured by the Petitioners. The contention is that such product would also include the product manufactured by utilising the raw material subjected to nil duty. Thirdly, it is the contention of the Petitioners that similar benefit has been allowed to one of the competitors of the Petitioners and in that connection attentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en in Usha Martin Industries case was not a correct view and it was ruled that : "an exemption notification that uses the said phrase applies to goods which have been made from duty paid material - In the said phrase, due emphasis must be given to the words "has already been paid". For the purposes of getting the benefit of the exemption under the notification, the goods must be made from raw material on which excise duty has, as a matter of fact, been paid and has been paid at the "appropriate" or correct rate. Unless the manufacturer has paid, the correct amount of excise duty, he is not entitled to the benefit of the exemption notification." "where the raw material is not liable to excise duty or such duty is nil, no excise duty is, as a matter of fact, paid upon it. To goods made out of such material the notification will not apply." "The notification is intended to give relief against the cascading effect of excise duty - on the raw material and again on the goods made therefrom. There is no cascading effect when no excise duty is payable upon the raw material and the hardship that the notification seeks to alleviate does not arise." 7.Apparently, the law on the point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned order was passed on 26th April, 1991. 9.The learned Advocate for the Petitioners thereupon sought to draw attention to Para 4 of the circular dated 15th May, 1995 which relate to the instructions issued by the Board on 6th December, 1980. The said instructions dated 6th December, 1980 read thus : "I am directed that a doubt has been raised whether the benefit of concession of duty in respect of the four specified dyes in Notification No. 180/61, dated 23-11-1961 would be available when they are made from primary dyes which have availed full exemption of duty under the Notification 71/78, dated 1-3-1978 since superseded by Notification No. 80/80, dated 19-6-1980. The doubt has arisen in this case on account of the fact that while the primary dyes have availed full exemption of duty. Notification 180/61 allows the exemption to the specified secondary dyes only when the primary dyes are such "on which excise duty or countervailing customs duty has already been paid". The matter was referred to the Ministry of Law who have opined that the specified secondary dyes manufactured from primary dyes in this case are entitled to exemption under Notification No. 180/61 even though t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioners to interpret clause (1) and (2) of the said notification in a manner to mean that the payment of duty on the inputs could relate to any stage through which such inputs have passed through. If one reads clause (1) and (2) of the said notification, the same clearly state that, ".......... used in manufacture of the said goods, has already paid ......". In other words, the expression clearly refers to the goods which are supplied to the manufacturer by the immediate supplier. It does not relate to any other goods. Undoubtedly in case of the Petitioners, the goods supplied to them were not in the original form in which the supplier had obtained the same from the garden and they were supplied to the Petitioners after blending. The expression "has already paid" refers to the goods which formed the raw material for manufacture of the final product in respect of which the exemption is sought for under the said notification. The same does not relate to the goods in any form other than the one which has been supplied to the manufacturer as the raw material. There is no scope for interpretation of Clause (1) (2) of the schedule of the said notification as is sought to be argued on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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