TaxTMI 
TaxTMI 
2002 (4) TMI 684
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....elow : 3. I have given my careful consideration to the submissions of the appellants and have also perused the impugned orders. The issue for consideration here is whether the appellants are entitled to the exemption from duty under Notification 136/94 or not. As discussed below, I am disposing of the main appeals without personal hearing. 4. Notification 136/94, dated 10-11-94 extends exemption from excise duty to an E.O.U. for certain specified goods subject to certain terms and conditions. The dispute centers around the question whether the above said goods are required "in connection with" the production or manufacture or packaging of materials specified in the notification. The AC has taken the view that these items are not Green House equipment or its accessories and so cannot be covered by the notification. From the records it is seen that all the appellants are floriculture units engaged in the export of flowers/cut flowers and have explained that the refrigerated atmosphere is an essential requirement for production/packing and export of flowers. I find force in the above plea of the ....
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....ist of Annex.-I. 2. In the prayer portion in Appeal 1615/97 the revenue is restricting the grant of benefit of notification to the transformers alone and there is no indication in the ground challenging the benefit to the other items indicated in respective orders-in-original which have been delineated in Annex.-I supra. 3. Learned SDR contended that the transformer couldn't be considered to be capital goods for grant of the benefit of the notification. He pointed out to the notification which exempts excisable goods specified in the Annex.-I to this notification when brought in connection with the production or manufacture or packaging of articles specified in Annex.-II to this notification, as the case may be, into a 100% export oriented undertaking from the whole of (i) the duty of excise leviable thereon under Section 3 of the Central Excises and Salt Act, 1944 (1 of 1944); and (ii) the additional duty of excise leviable thereon under sub-section (1) of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) subject to the following conditions, namely :- (a)&....
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....production or manufacture or packaging of articles specified in Annex.-II of the notification. Hence, the impugned order is required to be modified suitably. 5. Learned SDR likewise submitted that in Revenue Appeal No. 1616/97, the revenue is seeking for setting aside the entire Order-in-Appeal No. 1617/97 C.B.E, dated 19-3-97, which extends benefit to the items like diesel generating sets, mobile refrigerating unit with cold storage unit on the same grounds as contended in the above appeal. 6. Revenue likewise have brought for setting aside the grant of benefit to the items refrigerated truck and diesel generating sets in Appeal E 1615 against the SIP Industries. 7. None appeared on behalf of the SIP Industries, Bangalore, while Shri H. Karthik Seshadri, Advocate accompanied by M/s. Elizebeth appeared for M/s. Suvarna Florex Ltd., Bangalore and M/s. SPA Agro Ltd., Bangalore. They have filed written submissions on behalf of the respondents. They have contended that the order is correct and proper. The respondents are Export Oriented Units (EOU) manufacture cut flowers for 100% export. They are two big features of this activity : (a)  ....
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.... the export products like floriculture, etc."........ ".....and for determining the eligibility of this notification to any item, the criteria adopted should be its essentiality with reference to production/manufacture/ packaging of an item specified in Annexure II to Notification No. 136/94-C.E.". "All pending disputes may be resolved in the light of the aforesaid clarification". Therefore, their alternative submission is that the transformer is an accessory of the green house which in itself is an equipment. It is indispensable to the proper functioning of the green house, it promotes the efficiency and is essential for the operation of the green house itself. 11. They further pointed out that the use of Air-conditioning Unit by which the cut flowers are maintained at a temperature of 2 to 5 degrees C till they are sorted, graded and packed. This could take between 12-24 hours, throughout which time the temperature is to be maintained with the use of the air-conditioning units. Therefore, it clearly comes within item 1 or item 7 of Annexure-I. Moreover, Diesel generator chassis with mobile refrigerating unit and cold storage unit is NOT a mobile truck. This is only a temp....
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....port of items mentioned in Annexure II. 14. They submit that in the case of Vishal Footwear Ltd. and Anr. v. Commissioner of Customs, New Delhi, 1999 (114) E.L.T. 60 (Tribunal) = 1999 (35) RLT 45 (CEGAT) and in the case of Kuntal Granites (P) Ltd. & Anr. v. Commissioner of Central Excise, Belgaum, 2001 (132) E.L.T. 214 (Tribunal) = 2001 (43) RLT 829 (CEGAT - Ban.), the above two notifications were considered and it was held that the matters relating to EOUs ought to be referred to the Development Commissioner before adjudication. They referred to the Board's Circular No. 122/95-Cus., dated 28-11-95 wherein the Board expressed the view that in these type of matters the issue should be examined before issue of show cause notices and legal position settled. They contented that the items in dispute have clearly been exempted from the payment of Excise duty by the order of the Joint Development Commissioner. They farther submit that under EXIM Policy the definition of capital goods is wide enough to bring within its fold all the three items in dispute, and hence, the items are exempted from payment of duty. 15. On a careful consideration of the submissions made by both t....
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....red to maintain the harvested flowers at a temperature of 2 to 5 degree centigrade throughout till they reach the overseas market, therefore, the goods which are used for such export are required to be considered as essential and to have been brought in connection with the production or manufacture or packaging of the articles. It is well settled by Hon'ble Apex Court in the case of Rajasthan Chemicals Ltd., 1991 55 E.L.T. 444 (S.C.), that the definitions of manufacture bring with its all the items used in the process of manufacture. The Apex Court held that goods used for any of the processes in connection with the manufacture, it has to be construed to have been used within the process of manufacture. This judgment has a clear applicability to the facts of the case. The learned Commissioner has also examined the other judgments, which are applicable to the facts of the case, and has rightly drawn its ratio for upholding the claim of the respondents. There is no infirmity in the order as he also found that these items are essential and necessary in connection with the production or manufacture or packing of the articles in question. In the view of the matter, there is no merit in ....
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.... Transformer is claimed as meant for use in their unit for sub-station and the AC is claimed as meant for use in their packing room where export product is packed. Notification No. 136/94-C.E. does not cover above goods as these cannot be regarded as green house equipment or its accessories or machinery or equipment for packaging. They have admitted that transformer is meant to be used in the sub-station installed at their unit, the purpose of which is to supply electric power to the green house and other equipments installed both within and outside the green house. Since these goods are not used within the green house they cannot be regarded as green house equipment or its accessories 21. M/s. SPA Agro Ltd. (Respondents in Appeal No. E/1616/1997 have sought for exemption from levy of Central Excise duty in terms of Notification No. 136/94-C.E. in respect of Diesel Generator sets, Chassis of vehicle on which mobile Refrigeration Unit is mounted and Cold Storage units to be procured from an indigenous manufacturer against CT-3 certificate. They have admitted that as per Annexure I to the above notification, cold storage units (both stationery and mobile) have been excluded. ....
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....nal authority by different orders-in-originals have ruled in favour of the Revenue by rejecting the assessees' contention. Aggrieved by the orders-in-original the assessee moved the Commissioner (Appeals) with their appeals and the Commissioner (Appeals) by the common impugned order allowed their appeals and hence these appeals by the Revenue. 24. The Commissioner (Appeals) has misdirected himself in applying the ratio of the Hon'ble Apex Court judgment in the case of J.K. Cotton Spg. & Wvg. Mills Co. Ltd. reported in 1997 (91) E.L.T. 34 (S.C.) = AIR 1965 SC 1310 (V52 C 213) wherein the Apex Court has held that the expression "in the manufacture of goods" takes within its compass all processors which are directly related to the actual production without which commercial production would be inexpedient. I am of the view that the ratio of this decision is not applicable to the instant case for the reason that the notification extends exemption to such goods which are listed in the Annexure I to the said notification. 25. I would also like to observe that the Hon'ble Supreme Court in the case of M/s. Mehra Brothers v. Jt. CTO as reported in 1991 (51) E.L.T. 173 (S.C.) ....
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....aging. Learned Member (J) has referred to the Apex Court judgment in the case of Rajasthan Chemicals Ltd. reported in 1991 (55) E.L.T. 444 (S.C.) wherein it was held that the definition of manufacture brings with it all the items used in the process of manufacture. The Apex Court held that goods used for any process in connection with the manufacture, has to be construed to have been used within the process of manufacture. 30. As already discussed above, the use of various items involved in these appeals are as under : (1) Transformer is used in the sub-station for generation of electricity to supply electricity both inside and outside the green house. (2) Refrigerated truck is meant for transport of cut flowers after the process of packing is over. (3) DG sets are meant to be used in the sub-station outside the green house for supply of electric power to the green house and other equipments and installations both within and outside the green house. (4) Chassis of vehicle on which mobile Refrigeration unit is mounted is meant for transport of cut flowers after the process of packing is over. The vehicle used for transport of the cut flower ca....
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....p; Whether the Revenue appeals are required to be rejected by upholding the impugned orders passed by the Commissioner (Appeals) as held by Member (J) in his order. OR   Whether the impugned orders of the Commissioner (Appeals) are required to be set aside so far as all the items except the AC unit, in terms of the order passed by the Member (Technical) in his differing order. 35. I have heard Shri C. Mani, learned DR for the Revenue and S/Shri R. Parthasarathy, learned Advocate for M/s. SIP Industries Ltd. and Karthik Seshadri, learned Advocate for the other two respondents viz. M/s. Suvarna Florex Ltd. and M/s. SAP Agro Ltd. 36. I have carefully considered the submissions made before me. The facts of the case are given in details in the respective orders recorded by the learned Members which need not be repeated. The respondents are running a 100% EOU and export the cut flowers. The issue relates to the availability of exemption to the respondents under Notification No. 136/94-C.E., dated 10-11-94 on the procurement of certain machines/machinery and equipment used in the manufacture/production and export of such goods. The golden rule for inte....