TaxTMI 
TaxTMI 
2014 (1) TMI 1519
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.... the Tribunal is correct in equating the provisions of Explanations II and III to Notification No.175/86 CE dated 1.3.86 to the Explanation to clause (c) of para 3 of Notification No.16/97 CE dated 1.4.97 and Explanation (G) to Notification 38/97 dated 27.6.97, since the former deals with the inclusion or exclusion of the value of the inputs used in the manufacture of final product in computing the aggregate value of clearances and whereas the latter notifications deal with computing the aggregate value of clearances and demand of duty on inputs ? 3) Whether the CESTAT's interpretation of the decision of Honourable Supreme Court in the case of Jalaram Wood Crafts case and Universal Electrical case is right and relevant to the instant issue? And 4) Is the Tribunal right in restricting the department while ordering remand proceedings question, in view of the wrong interpretations and without following the case laid down by the Apex Court as to the retrospective effect of an Explanation clause to the Notification ?" C.M.A.Nos.582 to 593 of 2007:- "1. Whether the Tribunal is right in holding that the aforesaid Explanation to Notifications 16/97 CE dated 01.04.1997 and 38/97....
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....of which is not included in the assessable value of the final products under section 4 of the Central Excises and Salt Act, 1944 (1 of 1944)." In respect of Clause (ii) specified goods and specified inputs, the table gives the list of inputs and final products, which fall for consideration under Notification No.67/95. The Table is as under:- S.No. Description of inputs Description of final products 1 All goods falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than the following, namely, - (i) goods classifiable under any heading of Chapter 24 of the Schedule to the said Act; (ii) goods classifiable under heading Nos.36.05 or 37.06 of the Schedule to the said Act; (iii)goods classifiable under sub-heading Nos.2710.11, 2710.12, 2710.13 or 2710.19 (except Natural gosoline liquid) of the Schedule to the said Act; (iv) high speed diesel oil classifiable under heading No.27.10 of the Schedule to the said Act. All goods falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than the following, namely, - (i) goods classifiable under any heading of chapter 24 of the Schedule to the said Act; (ii....
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....97, options shall be exercised on or before the date of first clearances and shall be effective from the date of first clearance; (iii) The manufacturer does not avail of the credit of duty under rule 57A of the Central Excise Rules, 1944, paid on inputs used in the manufacture of the specified goods cleared for home consumption, the aggregate value of first clearances of which does not exceed rupees one hundred lakhs in the relevant fin iancial year. The manufacturer also does not utilise the credit of duty under rule 57Q of the said rules, paid on capital goods, for payment of duty, if any, on the aforesaid clearances, the aggregate value of first clearances of which does not exceed Rupees one hundred lakhs in the relevant financial year. (iv) The aggregate value of clearances of all excisable goods for home consumption (including clearances for export to Butan or Nepal) by a manufacturer from one or more factories, or from a factory by one or more manufacturers, has not exceeded rupees three hundred lakhs in the preceding financial year. (v) Where a manufacturer clears the specified goods from one or more factories, the exemption in his case shall apply for the total va....
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....ration under the notification. This Notification was amended by another Notification No.69/97 -C.E., dated 03.12.1997 by inserting clause (f) to paragraph 5 under the Explanation. The amended Notification inserting clause (f) reads as under:- " (f) where the specified goods are chargeable to nil rate of duty or are already exempt from the whole of the duty of excise leviable thereon under any other notification, the clearances of specified goods used as inputs, shall not be deemed to be exempt under clause (c) of paragraph 3." 5. In the context of the Notification 16/1997 dated 01.04.1997 read with Notification No.69/97 dated 03.12.1997, the Joint Commissioner of Central Excise issued show cause notice dated 22.07.2002 and 03.10.2002 calling upon the assessee in C.M.A.No.174 of 2008 to show cause why a sum of Rs.1,67,465/- should not be demanded for the period from 01.04.1997 to 31.03.1998. 6. After hearing the assessee, the Deputy Commissioner of Central Excise, Chennai, by order dated 31.01.2005, dropped the proceedings initiated in the show cause notice. Aggrieved by this, Revenue went on appeal before the Commissioner of Central Excise (Appeals). 7. Referring to the....
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.... that the order passed by the lower authority was liable to be set aside, thereby, confirming the proposal to demand duty of Rs.1,07,465/- under Rule 9(1) of Central Excise Rules, 1944 read with the proviso to sub section (1) of Section 11A of Central Excise Act, 1944. Apart from that, the Commissioner of Central Excise (Appeals) also confirmed the proposal to demand interest under Section 11AB of Central Excise Act, 1944. However, on the imposition of penalty under Section 11AC of Central Excise Act, 1944 and under Rule 173Q of Central Excise Rules 1944/Rule 25 of Central Excise Rules 2002, the Commissioner of Central Excise (Appeals) dropped the proceedings. Thus, Revenue's appeal was allowed. Aggrieved by this, the assessees went on appeal before the Customs, Excise and Service Tax Appellate Tribunal (hereinafter called as "CESTAT"). Similarly, were the appeals preferred by other assessees in C.M.A.Nos.582 to 593 of 2007, who had a similar problem in the matter of application of this Notification. 9. The CESTAT passed the common order after considering the scope of Notification in 16/1997 dated 01.04.1997 amended by Notification No.69/97 dated 03.12.1997 and ultimately held t....
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....nation inserted in Notification being clarificatory in nature is retrospective in nature. He thus contended that in these circumstances, the order of the CESTAT is be set aside. 11. Per contra, learned counsel appearing for the assessees supported the order of the CESTAT and pointed out that when a specific Notification is introduced for Small Scale Units and when clause (c) of paragraph 3 of Notification 16/1997 points out to aggregate value of clearances, any restriction thereon to paragraph 3(c) cannot be brought in by way of insertion to the Explanation; strictly speaking if the Revenue thought of steering clear the scope of para 3(c), the amendment ought to have been under para 3(c) of Notification 16/97 itself. He submitted that being new provision introduced in the matter of determining aggregate value of clearances, the scope of the inserted clause could not be held to be retrospective one but only as prospective. 12. Heard Mr.K.Mohanamurali, Mr.S.Thirumavalan, learned Standing Counsel appearing for Revenue and Mr.K.Jayachandran and Mr.Lakshmi Kumaran, learned counsel appearing for the assessees and also perused the materials placed on record. 13. Apart from the fa....
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....the same financial year. It is further seen that in respect of units for which the date of clearances happened to be a date beyond the 1st day of May, 1997, option was to be exercised on or before the date of first clearances and would be effective from the date of first clearance. The Notification further pointed out that the aggregate value of clearances of all excisable goods for home consumption by a manufacturer from one or more factories, or from a factory by one or more manufacturers, does not exceed rupees three hundred lakhs in the preceding financial year. Apart from this, the Notification pointed out that when the specified goods are cleared by one or more manufacturers from a factory, the exemption must be applied for the total value of clearances mentioned against each of the serial numbers in the said Table and not separately for each manufacturer. Having thus prescribed the conditions, the Notification further pointed out the manner of determining the aggregate value of clearances. Paragraph 3 of the Notification on the determination of the aggregate value of clearances, as is relevant to our case, reads as under:- "3. For the purpose of determining the aggregate ....
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....marily concerned about the determination of aggregate value of clearance. This clause deals with cases of clearance of specified goods chargeable to nil rate of duty or exempt from duty under any of the provisions in the manufacture of which specified inputs are used. As per this newly inserted clause, clearance of specified goods used as inputs in the manufacture of specified goods suffering nil rate or exempted under any notification shall not be deemed to be exempt under clause (c) of paragraph 3, which means the aggregate value of clearance of the inputs will get into the computation and shall not be excluded as per paragraph 3(c). 19. As already pointed out in the preceding paragraphs, paragraph 3 is the only provision which deals about the determination of the aggregate value of clearance. Paragraph 3 lists out which shall not be taken into account in determining the value of clearance, excluded item given in paragraph 3(c). As per this, specified inputs used for manufacture of any specified goods within the factory of production of the specified goods are excluded from the aggregate value of clearance, such inputs are deemed to be exempt from the whole of the duty of exci....
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....d to the assessee. This was on the premise that Explanation III to the notification would be attracted only when the inputs as well as the finished goods were cleared under the notification and as the finished goods were granted exemption, the inputs could not be excluded from the aggregate value of clearance. The assessee contested that when there was a general exemption of clearance of finished goods, in computing the aggregate value of availing of the benefit of notification, Explanations II and III have to be read together. The Apex Court pointed out that on a plain reading of the notification, it was evident that it exempted excisable goods of the description specified in the annexure thereto. Explanations II and III, which fell for consideration reads as under: "Explanation II.--For the purpose of computing the aggregate value of clearances under this notification, the clearances of any excisable goods which are chargeable to nil rate of duty or, which are exempted from the whole of the duty of excise leviable thereon by any other notification (not being a notification where exemption from the whole of the duty of excise leviable thereon is granted based upon the value or ....
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....egate value of clearances under this notification. There appears to be a rationale behind this Explanation; firstly, when the value of the finished goods, which are exempted under different notifications, is to be excluded, having regard to the wording of Explanation II, on the same analogy, the value of inputs which are being used for manufacture of finished goods are also excluded as both are specified goods, subject, of course, to the limit of the notification. Secondly, the notification provides relief to small scale industries; when the inputs which enjoys the exemption under the notification have already been dealt with, there is no reason why the value of the same inputs again be added for the purposes of aggregate value. It follows that the assessee would be entitled to the benefit of Explanation III while computing the aggregate value for the purposes of availing exemption under the notification." 23. Applying the said decision to the present Notification No.69 of 1999 dated 03.12.1997, one may note that the rationale behind the insertion is that when the specified goods are chargeable to nil rate of duty or exempted under any notification, as the case may be, the speci....