o Central Excise Vs The Himalayan Cooperative Milk Product Union Limited 
INSC (7 November 2000)
Brijesh Kumar BRIJESH KUMAR, J.
Since the above noted two appeals involve a common question for determination,
as to the interpretation of a Notification issued by the Central Government
under sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, exempting goods
falling under Item No.68 of the First Schedule to the Central Excise and Salt
Act 1944, on fulfilment of certain conditions, the appeals are being disposed
of by this common judgment. As usual in such cases, the Revenue is trying to
bring manufacturers within its net to charge it with the excise duty whereas the
manufacturer-respondents trying to get out of it claiming benefit under the
brief facts of the case are that the manufacturer-respondent, Himalayan
Cooperative Milk Product Union Limited manufactures butter and skimmed milk
powder etc. in its industrial complex. For purposes of chilling plant of Dairy
Unit, the respondent seems to have installed a plant manufacturing liquid
nitrogen which item, undisputedly falls under Item 68 of the Excise Tariff. By
means of Notification No. 105/80-C.E. dated 19.6.1980 the excise duty payable
on goods falling under Item No.68, is exempted in respect of the first
clearances of the said goods for home consumption by or on behalf of a
manufacturer from one or more factories up to a value not exceeding rupees
thirty lakhs inter alia on the condition that the total of the value of the
capital investment made from time to time, on the machinery installed for
manufacturing said goods is not more than rupees ten lakhs. According to the
manufacturer-respondents the total capital investment in the plant and
machinery manufacturing liquid nitrogen is less than rupees ten lakhs,
therefore the benefit of exemption from excise duty is admissible under the
Notification in question dated 19.6.1980. 3. The Assistant Collector, Central
Excise, Siliguri Division by order dated 5.9.1983 rejected the claim of the
respondents and confirmed the demand as raised by the Superintendent of Central
Excise under Central Excise Rules, observing that the respondents are using all
the plants and machinery for purposes of manufacturing all kinds/varieties of
excisable goods falling under different Tariff items, the total value of
capital investment of all plants and machineries, installed in the said factory
are to be taken into account and no exemption on investment which was more than
ten lakhs was admissible.
according to the excise authorities the total value of investments in all the
plants manufacturing butter and skimmed milk powder and other dairy products as
well as for manufacturing of liquid nitrogen was to be taken into account.
According to the respondents Himalayan Cooperative Milk Product Union Limited
the value of investment on liquid nitrogen plant which alone is relevant is
much less than rupees ten lakhs. The appeal preferred against the order of
Assistant Collector was also dismissed by the Collector (Appeals), Central
Excise, Calcutta by order dated 9.1.1984.
the authorities have, however, held that liquid nitrogen itself is a finished
product and falls under Tariff Item 68. 4. The respondents preferred an appeal
before the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi. The Appellate Tribunal by its
order dated 21.1.1988 allowed the appeal holding that the respondents would be
entitled for the benefit under the Notification of exemption. On facts though
the Tribunal remanded the matter to the original adjudicating authority for
computing the capital investment on plant and machinery referable to liquid
nitrogen and the common plant and machinery in the same industrial complex so
as to ascertain the capital investment on generator used for the chilling
water. 5. We feel it would be better to peruse the Notification dated 19.6.1980
exempting the payment of excise duty on goods falling under Item 68 of the
Tariff. It reads as follows:
exercise of the powers conferred by sub-rule of rule (1) of rule 8 of the
Central Excise Rules, 1944, and in supersession of the notification of the
Govt. of India in the Ministry of Finance (Department of Revenue)
No.89/79-Central Excises, dated the 1st March 1979, the Central Government
hereby exempts goods, falling under Item No.68 of the First Schedule to the
Central Excise and Salt Act 1944 (1 of 1944), (hereinafter referred to as the
said goods), in respect of the first clearances of the said goods for home
consumption by or on behalf of a manufacturer from one or more factories upto a
value not exceeding rupees thirty lakhs, cleared on or after the 1st day of
April in any financial year, from the whole of the duty of excise leviable
that during the period commencing on the 19th day of June 1980 and ending on
the 31st day of March, 1981, the value of the clearances of the said goods
eligible for exemption under this notification shall be subject to the
following conditions, namely:- (i) The aggregate of the value of clearances
eligible for exemption contained in this notification during the aforesaid
period, and the clearances, if any, already effected by or on behalf of a
manufacturer in terms of the exemption contained in the notification No.
89/79-Central Excises, dated the 1st March 1979 aforesaid, during the period
commencing on the 1st day of April 1980, shall not exceed rupees thirty lakhs;
and (ii) The value of clearances eligible for exemption contained in this
notification during the aforesaid period commencing on the 19th day of June,
1980 and ending on the 31st day of March, 1981 shall, in no case, exceed rupees
twenty four lakhs.
further than an officer not below the rank of an Assistant Collector of Central
Excise is satisfied that the sum total of the value of the capital investment
made from time to time on plant and machinery installed in the industrial unit
in which the said goods, under clearance, are manufactured, is not more than
rupees ten lakhs.
by us for emphasis)
Where a factory producing the said goods is run at different times during a
financial year by different manufacturers, the total value of the clearances of
the said goods from such factory eligible for exemption under this notification
in such year shall not exceed rupees thirty lakhs.
Nothing contained in this notification shall apply to a manufacturer, if the
total value of the said goods cleared, if any, for home consumption by him or
on his behalf from one or more factories in the preceding financial year
exceeded rupees thirty lakhs.
1 While determining the sum total of the value of the capital investment, only
the face value of the investment at the time when such investment was made
shall be taken into account, but the value of the investment made on plant and
machinery which have been removed permanently from the industrial unit or
rendered unfit for any use shall be excluded from such determination.
II. In this notification, the expression factory has the meaning assigned to it
in clause (m) of section 2 of the Factories Act, 1948 (63 of 1948).
III. For the purpose of computing the value of clearances under this
notification, the clearances of the said goods which are exempted from the
whole of the duty of excise leviable thereon by any other notification issued
under sub-rule (1) of rule 8 of the Central Excise Rules, 1944, and for the
time being in force, shall not be taken into account.
perusal of the Notification quoted above shows that the Central Government
under Rule 8(1) of the Excise Rules exempts goods in respect of first clearance
for home consumption by or on behalf of the manufacturer from one or more
factories upto a value not exceeding rupees thirty lakhs. The exemption would
however be allowable on fulfilment of a condition as contained in the proviso
to clause (ii) of the Notification which says that an officer not below the
rank of an Assistant Collector of Central Excise is to be satisfied that the
sum total of the value of the capital investment made on the plant and
machinery installed in the industrial unit manufacturing said goods under
clearance is not more than rupees ten lakhs. On perusal of the proviso under
consideration, it would be clear that it does not refer to any other goods
under clearance except the goods falling under Item 68 of the First Schedule to
the Central Excise and Salt Act, 1944. In the beginning itself the Notification
says that the goods falling under Item 68 are to be referred to, in the
Notification, as `said goods. According to own findings of the Assistant
Collector, liquid nitrogen is itself a finished product and falls under Tariff
Item No.68. In that view of the matter the question of taking into account the
value of the capital investment made on plants and machinery manufacturing
goods other than covered under Item No.68 does not arise. We find no force in
the submissions made on behalf of the appellants that value of all plants and
machinery manufacturing butter and skimmed milk powder etc.
also to be added up so as to find out as to whether total value of the capital
investment in the plant and machinery is rupees ten lakhs or more. In our view
the value of the capital investment has to be in respect of the plant and
machinery manufacturing the said goods viz.
covered under Item No.68 of the Tariff, clearances of which alone is taken into
account in exempting from payment of excise duty under the Notification in
question. The said goods in the present case is only liquid nitrogen. Thus the
value of investment in the plants and machinery manufacturing other goods not
covered under Item 68 has no relevance nor it is to be taken into account. 6.
The Tribunal while allowing the appeal followed a decision of Bombay High Court
reported in 1984 (16) E.L.T. 30 (Bom.) Devidayal Electronics & Wires Ltd.
and another versus Union of India and another. The similar notification in respect of an
earlier year was under consideration before the Court.
been noticed that two words have been used in the Notification namely, the
`factory and `industrial unit.
two expressions would be presumed to have been used for different meaning. It
was held that industrial unit would mean something other than the factory,
which would be a separate isolate part of the plant which is exclusively used
for manufacture of goods for which exemption is claimed.
counsel for the appellants tried to distinguish the case on facts. We, however,
find that in principle what has been held in Devidayal (supra) as followed by
the Tribunal, cannot be said to be an incorrect view. The factual deviation
would be a matter on facts of each case. The other case which the Tribunal has
referred to is reported in 1987 (27) E.L.T. 273 (A.P.) Golden Press versus
Deputy Collector of Central Excise, Hyderabad and Another. In this case a notice was issued on the manufacturer of
cartons as to why penalty be not imposed since the goods manufactured were
removed without payment of duty. It was pleaded that cartons were exempted
under a notification exempting all products of printing industry. The Court,
however, held that cartons though may be printed, cannot be held to be product
of printing industry. They will be relatable to packaging industry. Hence, the
benefit, as pleaded, was not admissible. In so far as the other arguments raised
about the value of the investment made for manufacture of printed cartons, it
was held that cost of cutting machines etc.
not be excluded which according to the manufacturer was not used for printed
cartons. The argument that the value of the investment in the plant and
machinery manufacturing a particular item under a separate tariff would alone
be taken into consideration was not accepted.
language of the exemption notification as involved in that case was quoted
which was to the effect: The sum total of the value of the capital investment
made from time to time on plant and machinery installed in the industrial unit
in which the goods under clearance are manufactured, is not more than rupees
ten lakhs. (As quoted in Para 22 (b) of the judgment).
then observed that according to the said notification total value of the entire
machinery in the industrial unit should be taken into account as there was no
occasion for allocating the machinery between various goods manufactured
therein and by way of an example, it was observed that it may create
complications where a factory manufacturing goods falling under more than one
tariff item but has only one generator of power plant, so in such cases in what
manner generator or power plant was to be allocated between two items. The plea
raised was negatived and it was held that total value of the entire machinery
in the industrial unit should be taken into account. At this stage, it would be
appropriate to point out the difference in the language used in two
notifications. We find that in the Notification dated 19.6.1980, with which we
are presently concerned, the proviso to clause (ii) of the Notification says
the capital investment made from time to time on plant and machinery installed
in the industrial unit in which the said goods under clearance are manufactured..
The expression said goods is not used in the Notification interpreted in the
case of Golden Press (supra). The said goods signifies or identifies the goods
which are covered under Item 68 in respect of which exemption has been granted.
But the word said is not used in the Notification under consideration in the
case of Golden Press (supra) as indicated above says industrial unit in which
the goods under clearance are manufactured. The goods have not been specified
by using the expression said goods. In the Notification dated 19.6.1980, as
already indicated earlier, the goods falling under Item 68 are to be referred
as said goods.
in our view it will not be possible to take into consideration the value of
investment of all the plants and machinery manufacturing different items viz.
goods other than the said goods.
our view the Tribunal rightly preferred the view taken in the case of Devidayal
(supra). The factual hurdles like a common generator may be in use by different
units in the factory complex as indicated in the case of Golden Press (supra)
can well be worked out by devising proper method while apportioning the value
of different plants proportionately. In no way such hurdle, as posed, would
change the meaning of a Notification which on the face of it and by the plain
language used therein has unambiguous and clear meaning. 8. Such Notifications
by which exemption or other benefits are provided by the Government in exercise
of its statutory power, normally have some purpose and policy decision behind
it. Such benefits are meant to be provided to the investors and manufacturers.
such purpose is not to be defeated nor those who may be entitled for it are to
be deprived by interpreting the notification which may give it some meaning
other than what is clearly and plainly flowing from it. 9. 9. In view of the
discussion held above, we find no merit in the appeals and they are hereby
dismissed. No order as to costs.