2000 (4) TMI 55 - AT - Central Excise

Excise exemption for repair goods 'made in a workshop within a factory' under Notification 281/86 denied; appeals dismissed

The dominant issue was the interpretation of Notification No. 281/86-C.E. granting excise exemption to goods 'manufactured in a workshop within a factory' ... Scope and ambit of Notification No. 281/86-C.E., - exemption from central excise duty in respect of goods manufactured in a workshop within a factory - Interpretation of Statute - differences of opinion - definition of 'workshop' in the notification - HELD THAT:- The issue for decision is what is the effect of the words 'manufactured in a workshop within a factory' occuring in the notification. The appellants contend that in the absence of definition of 'workshop' in the exemption notification, the production in the entire factory should be treated as the manufacture contemplated in the notification and that the definition of the word 'factory' in Central Excise in Section 2(e) of the Central Excise Act is an extended one, as to cover premises including the precincts thereof. In view of this definition of 'factory' in the Central Excise Act and the dictionary meaning of the word 'workshop', the term 'workshop' used in the notification should be taken as extending to the whole factory and co-terminus with 'factory' itself. It is settled principle that a construction which would leave without effect any part of the language of the Statute will normally be rejected. Such an interpretation is also not warranted in the present case as there is no ambiguity in the meaning or intention emerging from the language of the notification. If the notification is read treating some words as surplus, the result would be to hold that exemption is available to all goods manufactured in a factory. A vastly expanded meaning, broadening the scope of the exemption. This is to almost re-write the notification according to one's own purposes ignoring the intention of the legislature. If the legislature meant to grant exemption on an extended scale so as to include all goods manufactured in a factory provided they are intended for maintenance or repair it would have stated so in plain terms by omitting the words which the appellants now submit to be surplus. This is a course which interpreting authorities should avoid. Further, this is not a case where intention is required to be ascertained through interpretation. Adherence to the ordinary meaning of the words used in Notification No. 281/86 and to the grammatical construction of those words do not lead to any manifest absurdity which would render the notification a futility. The intention is clear from the language of the notification itself. The Notification, as it is worded, grants exemption to a class of goods. That class would be, eligible for the exemption when the notification is construed treating all the words in the notification to be having effect. Thus, the exemption under Notification No. 281/86 is only in respect of goods separately produced in a workshop within a factory for repair/maintenance. Goods which are the commercial/mass production of the factory, when used for repair/maintenance shall not be eligible for the exemption. There was nothing in the facts of present cases. also to allow the benefit of the exemption to the appellants. There was no claim by either of the appellants that there were workshops in the factories or that the goods in respect of which exemption was sought were manufactured in such workshops. Therefore, the appellants' cases do not come within the eligibility criterion of the notification. As we have indicated earlier in this order, Notification No. 281/86 applies only to goods manufactured in a 'workshop within a factory'. There is no ambiguity about the intention or policy behind the exemption notification. The exemption would be available only to the production in a workshop within a factory and not to the produce of the factory. Even if the absence of a definition of 'workshop' in the notification causes some ambiguity, the notification's applicability to a particular assessee is to be arrived at by a strict construction and the benefit must go to the State. Viewed from this principle, it is clear that the eligibility to exemption under Notification No. 281/86 is limited to the production in a workshop within a factory, and not to the entire production of the factory. In the light of the above discussions, we hold that the appellants were not eligible for the exemption under Notification No. 281/86. The references are answered accordingly. The appeals are also dismissed. Issues Involved:1. Interpretation of the term 'workshop within a factory' in Notification No. 281/86-C.E.2. Eligibility for exemption u/s Notification No. 281/86-C.E. for goods manufactured in a factory and used for repairs or maintenance in the same or another factory of the same manufacturer.Summary:1. Interpretation of the term 'workshop within a factory':The core issue in these appeals was the interpretation of the term 'workshop within a factory' as used in Notification No. 281/86-C.E., dated 24-4-1986. The appellants argued that the absence of a definition for 'workshop' in the notification implied that the entire factory should be considered a workshop. They relied on the definition of 'factory' in Section 2(e) of the Central Excise Act and various dictionary meanings of 'workshop'. They also cited previous CEGAT decisions, such as Indian Iron & Steel Co. Ltd. v. C.C.E. and Steel Authority of India Ltd. v. C.C.E., Raipur, to support their interpretation.The Revenue, however, maintained a clear distinction between 'factory' and 'workshop', arguing that the exemption applied only to goods manufactured in a workshop within a factory, not to the general production of the factory. They emphasized that exemptions should be construed strictly, as supported by the Supreme Court decision in Novopan India Ltd. v. Collector of C. Ex. and Customs, Hyderabad.2. Eligibility for exemption u/s Notification No. 281/86-C.E.:The Tribunal examined the facts of the cases and found that the appellants did not have separate workshops within their factories where the goods in question were manufactured. The goods were part of the general production of the factories, not specifically produced in a workshop for repair or maintenance purposes.The Tribunal held that the notification's language was clear and unambiguous, granting exemption only to goods manufactured 'in a workshop within a factory'. The intention was to provide exemption to a specific class of goods, not to the entire production of a factory. The Tribunal emphasized that interpreting the notification to treat certain words as surplus would broaden the scope of the exemption beyond the legislature's intent.Conclusion:The Tribunal concluded that the appellants were not eligible for the exemption under Notification No. 281/86-C.E. The references were answered accordingly, and the appeals were dismissed. The Tribunal reiterated that the exemption was limited to goods separately produced in a workshop within a factory for repair/maintenance purposes, not to the commercial/mass production of the factory.