TaxTMI 
TaxTMI 
2013 (9) TMI 103
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....use of Notification No. 21/2002-Cus. As per Serial No. 228 of the said Notification, goods falling under Chapter 84 or under other Chapters attract concessional rate of duty, if the same are goods specified in list 17, required for setting up of Crude Petroleum Refinery. List 17 of the Notification details various different types of goods under various Serial numbers. The Revenue has denied the benefit of the Notification that the cranes do not stand specifically covered under any of the entries in list 17. On the other hand the appellants have staked their claim under entries 44 & 45, which are reproduced below, for better appreciation :- "44. Special Maintenance Systems, including hydro jetting tools, pneumatic torque wrenches, EOT/Mobile cranes, hoists, grinders, high pressure cleaning systems, induction bending machines, auto welding machines, various welding equipments like girth welding, vertical flux cord, bottom saw, four-side edge preparation, angle rolls, rolling and leveling machines, sky climbers, hot tapping machines, bolt tensioners, high pressure test pumps, tube bundles pullers, tube nippers, ultrasonic leak detectors, machine condition monitoring systems an....
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.... goods specified in the list 17 required for setting up of Crude Petroleum Refinery. If the straight meaning is given to the said description, it will lead us to only one and inevitable conclusion that the goods required for setting up of Refinery are extended the benefit. However, if that strict meaning is given to the Serial No. 228, the goods mentioned at Entry No. 44 and 45 of list 17, which specifically provide for exemptions in respect of special maintenance systems and the other items used for running, repairing or maintenance of the goods would make the said entries redundant. If the interpretation of the main Entry 228 as contended by the learned DR is accepted, the same would render the said two entries 44 and 45 as meaningless and otiose. Admittedly the activity of running, repairing or maintenance is not covered by the expression "Setting-up". As such, if the benefit is restricted only to the goods required for setting-up of the Refinery, the same cannot be extended to the goods required for running, repairing or maintenance, in which case the entries 44 and 45, which are admittedly a part of list 17 of the Notification, would become redundant. It is well settled law th....
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...., their exclusion from the benefit of the Notification would not be in accordance with the legislative intent. 6. The appellants have relied upon the Tribunal's decision in the case of Mangalore Refinery & Petrochemicals Limited v. Commissioner being Order Nos. 224-226/2005, dated 14-2-2005 [2005 (187) E.L.T. 466 (Tri.)] wherein the objection of the Revenue that the goods required for "initial setting up" of Refinery can only be extended the benefit, was rejected by observing that no hair splitting of the phrase setting up and substantial expansion is required and even if the goods are imported subsequently for expansion of the Refinery, the same would be covered by the Notification. For the above proposition the Tribunal relied upon the Hon'ble Supreme Court decision in the case of CIT, Amritsar v. Straw Board Manufacturing Limited [AIR 1989 Supreme Court 1490] laying down that while interpreting the words "initial setting-up", the same is not inconsistent with phased implementation. The Apex Court further held that it is necessary to remember that when a provision is made in the context of the law providing for concessional rates of tax for the purpose of encouraging an i....
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.... up of Refinery, which have to be extended the benefit of the Notification but the goods required for running and maintenance of the refinery would also get covered. Keeping in view the various entries of the Notification and the long list of goods specified and the purport and object Notification seeks to achieve, the restrictive meaning given by the authorities below can not be upheld. Accordingly, we set aside the impugned orders and allow the appeal with consequential relief to the appellant. (Pronounced in the Court on _____ Aug 2009) Sd/- Archana Wadhwa Member (Judicial) 9. [Per : B.S.V. Murthy, Member (T)]. - I have gone through the order proposed by learned Member (Judicial). Since I am unable to agree with the conclusion reached, I record a separate order. Since the facts have already been enumerated in sufficient details, the same are not being reproduced. 10. In my opinion Sr. No. 228 of Notification No. 21/2002 provides exemption for goods listed in list 17 required for setting up Crude Petroleum Refinery only. Once the refinery is set up, the exemption under main Sr. No. 228 could not be avail....
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....cation has to be strictly interpreted. The conditions for taking the benefit of the exemption have to be strictly interpreted. In the present case, the Third Member has rightly rejected the contention advanced on behalf of the appellant that more than one view was possible on interpretation of exemption Notification No. 234/86. The Third Member has recorded a finding that the appellant has not disputed that a certain quantity of sorbitol solution and vitamin 'C' stood cleared to non-pharmaceutical units, namely, soaps, ceramics, rubber and cigarette units. The appellant had conceded before the Tribunal of having cleared 3.87% of the total clearances to non-pharmaceutical companies who could not have used the said solution as drugs or medicines. Moreover, in the present case, the department has not demanded the duty in respect of quantity sold to pharmaceutical concerns for pharmaceuticals or medicinal purposes. In the present case, the dispute was not whether the appellant was entitled to the benefit of the exemption notification in respect of the entirety of goods manufactured and cleared during the period in question, but the dispute was regarding the taking of exemption benefit ....
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....cation No. 202. It was claimed that value of goods specified in the table could not be counted for the purposes of counting the assessable value under Notification No. 1 of 1993. This contention appears to have found favour with the High Court. The further reasoning of the High Court appears to be confused and we have not been able to clearly understand the further reasoning of High Court. Once it is admitted that credit has been taken, it is not for the High Court to decide whether credit could have been taken or not. The Notification has to be read as a whole. If any of the condition laid down in the Notification is not fulfilled, the party is not entitled to the benefit of that Notification. In this case, admittedly, credit had been taken. The respondent was thus clearly not entitled to the benefit of Notification No. 202 of 1988. We see no justification in the argument that merely because goods were included in the table, they became exempted goods. The goods became exempted goods only provided all conditions of the Notification are fulfilled. If any condition of the Notification is not fulfilled, goods are not exempted goods." 18. The CESTAT in the case of Jyoti Ltd. v....
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....ot there in the notification. This is not permissible. We also feel that it is not necessary to do hairsplitting of the phrases 'initial setting up' and 'substantial expansion' here. It is always possible to extend the capacity of any Industrial unit by setting up an additional unit. Therefore, the Revenue's interpretation is not correct. We want to make it clear that if an existing unit sets up an additional unit, the exemption is available. Revenue is at liberty to call it substantial expansion. But benefit of the notification cannot be denied. The exemption is not limited to the goods imported for 'initial setting up'. The exemption is available for setting up a refinery any time in several phases. In this connection, we would like to mention that the Hon'ble Supreme Court in the case of CAT, Amritsar v. Straw Board Manufacturing Co. Ltd. [AIR 1989 SC 1490] while interpreting the words 'initial setting up', held that the phrase 'initial setting up' is not inconsistent with phased implementation. The Apex Court further held that it is necessary to remember that when a provision is made in the context of a law providing for concessional rates of tax for the purpose of encouraging ....
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....im, for entry 1 to 43 of List 17, the meaning of setting up should be for completion of the refinery whereas for entry 44 and 45, the meaning should be inclusive of running and maintenance. I do not agree with such an argument as same words should have same meaning in one statute. Yet another argument of the appellant is that if the meaning of setting up is limited to completion of the refinery, it will make entry 44 and 45 redundant or otiose and such an interpretation has to be avoided. This argument is also not sustainable. The wordings of Entry No. 44 and 45 can be interpreted in such a manner so that those are consistent with the broad heading 'setting up' in the body of the Notification. Thus, if the goods mentioned in entry No. 44 and 45 of the List 17 are imported during the completion of the refinery, those will get the exemption. However, if the same has been imported after the completion of' setting up of the refinery, those will not get exemption. Another argument of the appellant is that in past similar goods were imported falling under entry No. 44 and 45 for maintenance of the refinery and those were granted exemption under the aforesaid Notification. This cannot be ....
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....ting up of a refinery and if the contention of the appellant is accepted, they would be eligible for importation of the goods at a concessional rate for the refinery even after the same is set up and as rightly observed by the Commissioner (Appeals) if the contention of the appellant is accepted, it would amount to deletion of the word 'setting up' from the Sr. No. 228. As regards other contentions that Sr. Nos. 45 & 46 would be redundant if the contentions of the appellant are not accepted, I do not find how this can happen. Setting up of a refinery is not an affair which would be over within six months or one year. During the course of 3 to 5 years, that setting up of a refinery takes, many of the goods in the list which have already been imported would require repair, maintenance, accessories etc. Sr. No. 45 is meant for this purpose. It would facilitate importation of these items even though they are not directly required for setting up a refinery. The purpose of this entry is to facilitate importation of these items to ensure that spares, accessories required for the goods at Sr. Nos. 1 to 44 of the list during the period of setting up would also be available at concessional r....
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....s' at entry No. 45 of list 17 should be considered to include mobile crane. However, I am not able to agree with this view since I have viewed that before going to list, we have to see whether Sr. No. 228 of the Notification applies. Once Sr. No. 228 does not apply, the question of verifying the list No. 17 does not arise. Therefore, the appeal is rejected on merits. The cross objection filed by Revenue also gets disposed of. Sd/- B.S.V. Murthy Member (Technical) DIFFERENCE OF OPINION Whether the appeal is to be allowed with consequential relief as held by learned Member (Judicial) or is to be rejected as held by Member (Technical). Sd/- Archana Wadhwa Sd/- B.S.V. Murthy Member (Judicial) Member (Technical) 15.  [Per : B.S.V. Murthy, Member (T)]. - Vide order Nos. M/936-937/WZB/AHD/2009, dated 1-7-2009, difference of opinion was recorded as under : "Whether the appeal is to be allowed with consequential relief as held by learned Member (Judicial) or is to be rejected as held by Member (Technical)" 16. The matter was referred to the Hon'ble President to nominate a third Member t....
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.... (i) Whether straight meaning is required to be given to S. No. 228 of Notification No. 21/2002-Cus. thereby restricting the concessional rate to the goods specified in the list 17 required for setting up of crude petroleum refinery only as held by Member (Technical) or the benefit of the notification has to be extended to the goods required for running, repair and maintenance of the refinery as held by learned Member (Judicial). (ii) Whether the entries Nos. 44 & 45 of list 17 would become meaningless and otiose if a straight meaning is given to the S. No. 228 of the notification as held by learned Member (Judicial) or whether it would be the correct Interpretation of the notification and the entries at S. No. 44 & 45 are meant for I repairing and maintenance of the items in different entries under S. No. 17 as held by Member (Technical). (iii) Whether the terms running, repair and maintenance are to be restricted only till the setting up of refinery as held by Member (Technical) or the exemption is considered to have been extended to goods when imported for use in repair, running and maintenance irrespective of the stage at which they ....
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....ed at S. Nos. 44 & 45 will be redundant and would lead to the absurd interpretation. It is his submission that a notification must be read as a whole and different provisions of the notification must be harmonized and reconciled in order to give a harmonious construction to the provisions of notification. It is his submission that one provision of the notification cannot be so read and interpreted as to defeat another provision as has been held by the Apex Court in the case of British Airways v. UOI - 2002 (139) E.L.T. 6 (S.C.). He would also submit that Hon'ble High Court of Bombay in the case of Raymond Ltd. v. UOI - 2009 (240) E.L.T. 180 (Bom.) has held that a notification must be read as a whole and an interpretation which leads to anomalous or absurd result must be avoided. It is his submission that if this ratio is applied in the present case, the result would be absurd in-as-much as the items which are required only during the setting up of the refinery would get concession and the items which are required for the purpose of running, repairing or maintenance of the said refinery would be excluded from the benefit of exemption, which is not the intent of the legislature. It i....
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....y had already been set up and had been functioning much before the importation of the goods in question is itself enough for denying the benefit of Notification No. 21/2002-Cus. to the appellant. He would submit that this would indicate that the goods in question are not required for setting up of a crude petroleum refinery. He would submit that the appellant's claim that S. No. 45 of list No. 17 would cover the issue, is also misplaced inasmuch as that the items mentioned in S. No. 45 cannot be considered so as to cover the goods imported by the appellant. It is also his submission that S. No. 45 of list No. 17 cannot be read in isolation but has to be read along with parent entry i.e. S. No. 228 of the table appended to notification. It is his submission that the language used in the entry against S. No. 228 is quite clear and unambiguous and there is no need for finding out the intention of the notification. It is his submission that the appellant's argument as to entry at S. No. 45 of the list No. 17 is a sort of residual entry which covers goods equipments which are required by running, repairing or maintenance of refinery even after the completion of setting up of a refinery,....
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.... 17 which reads as under : "44. Special Maintenance Systems, including hydro-jetting tools, pneumatic torque wrenches, EOT/mobile cranes, hoists, grinders, high pressure cleaning systems, induction bending machines, auto welding machines, various welding equipments like girth welding, vertical flux cord, bottom saw, four-side edge preparation, angle rolls, rolling and levelling machines, sky climbers, hot tapping machines, bolt tensioners, high pressure tests pumps, tube bundles pullers, tube nippers, ultrasonic leak detectors, machine condition monitoring systems and associated sub-assemblies, vibration analysers and computerized alignment systems. 45. Sub-assemblies, tools, accessories, protective coating/paint materials, stores, spares, materials, supplies, consumables for running, repairing or maintenance of the goods specified in this List." It can be seen from the above reproduced entries at 44 & 45, the said list includes items which have been imported by the appellant under S. No. 44. It is also seen that S. No. 45 includes items which specifically are required for running, repairing or maintenance of the goods specified in the list. It is to be noted tha....
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....ents prior to initial setting up of the refinery, whereas another refinery which decides to act more efficiently by importing only the required equipments initially and deferring the import of future requirement for a future date will be denied the exemption. "Surely this is not the intent of exemption notification. In my view, the ratio of the judgment of this Apex Court in the appellant's own case as reported at 2008 (227) E.L.T. 3 (S.C.) has laid down the manner in which a particular notification should be interpreted. In that case, their Lordships were interpreting Notification No. 55/97 which was a predecessor notification and was worded as the current notification in question i.e. Notification No. 21/2002. With respect, I may reproduce the relevant paragraphs and portions, wherein their Lordships have laid down the guidelines for the interpretation of the notification. "18. The notification must be interpreted in a broad manner. Exemption had been granted to a large number of goods specified in List 8A required for setting up crude petroleum refinery. The project evidently was a huge one. In List 8A, as many as 45 items were listed. Some of the headings are over....
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....sion employed is 'initial setting up' and not merely 'setting up'. Applying the principle of harmonious construction, one will have to interpret the notification in such a way that no part of the said notification becomes meaningless. Viewed in the context of Entry No. 45, the word 'setting up' appearing in main body of notification will have to be interpreted in the context of list of items appearing in List No. 17, particularly at Sr. No. 44 & 45 and, if so interpreted, the said expression cannot be read to imply 'initial setting up' or commissioning of the refinery as the list expressly and unambiguously covers equipments which' are generally required to be imported only after the refinery has been commissioned and is in a running condition. The judgment cited by the appellant, in the case of British Airways Pvt. Ltd. v. UOI - 2002 (139) E.L.T. 6 (S.C.) is very appropriate, as it holds that a notification must be read as a whole and that effect should be given to all the provisions of the notification by applying principle of harmonious construction. Applying this principle, it must follow that Sr. No. 228 of the notification cannot be read in isolation and must be read in conju....
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....done by the Commissioner' (Appeals), whose order was agreed to by ld. Member (Technical).' The effect of such an interpretation would be to substitute the words 'initial setting up' in the notification instead of the words 'setting up', which is impermissible. It is seen from the records, that in this case the appellant has claimed that Board had in 2000-2001, clarified to the Commissioner that the goods required for repairs, running and maintenance of the refinery were eligible for exemption. Appellant has made this plea in its reply dated 7-9-2008 and there is no rebuttal to this claim made by the appellant, by any lower authority. The Board's Circular dated 14-3-2008, issued in the context of a similarly worded notification lends credence to the appellant's plea that a clarification to the same effect was issued by the Board to the Commissioner in the context of the Refinery Notification in the year 2000-2001. The absence of rebuttal from the lower authority as also subsequent issuance of a Board's circular would guide me to hold that the Board's own view is to extend the benefit of exemption to the specified capital goods and their spares even after the initial setting....