Facts
The appellant, an advance licence holder, procured intermdiate goods without payment of duty from another advance licence holder under Notification No. 44/2001-C.E (N.T) dated 26.06.2001 as amended by 23/2009 -C.E (N.T) dated 25.09.2009 . The manufactured goods out of the same was cleared to ICB against Notification No. 108/95-CE dated 28.08.95 . Dispute The revenue disputed that the duty free procurement of intermediate goods under Notification No. 44/2001-C.E (N.T) dated 26.06.2001 required the final manufactured goods to be physically exported out of India and it does not cover deemed exports under Para 8.3 (C) of FTP . Tribunal Honourable CESTAT held the following :
The removal of intermediate goods without payment of duty, for manufacture and deemed export in terms of Para 8.3 (C) of policy is allowed .
It also held that a proviso to a Notification has to be read harmoniously , otherwise, the proviso inserted therein by amending notification would be nugatory and meaningless.
The litigation of M/s Techfab India Industries Limited was handled by Shri Anandaday Misshra, Advocate . it is reported in
M/s Techfab India Industries Limited Versus Commissioner of Central Excise-Daman – 2015 (11) TMI 1035 – CESTAT AHMEDABAD
The entire order is reproduced herein below : ————————————————————————————————————————————————————————————
In The Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad
Appeal No : E/11164/2014 (Arising out of OIO-DMN-EXCUS-000-COM-029-13-14 Dated 31/12/2013 passed by Commissioner of Central Excise-DAMAN)
M/s Techfab India Industries Limited : Appellant (s)
Vs
Commissioner of Central Excise-DAMAN : Respondent (s)
Represented by: For Appellant (s) : Shri Anand Mishra, Advocate
For Respondent (s): Shri J. Nagori, Authorised Representative
For approval and signature: Mr. P.K. Das, Honble Member (Judicial) Mr. P.M, Saleem, Honble Member (Technical)
CORAM: MR. P.K. DAS, HONBLE MEMBER (JUDICIAL) Mr. P.M, SALEEM, HONBLE MEMBER (TECHNICAL)
Date of Hearing/Decision:22.09.2015
Order No. A/11624 / 2015 Dated 22.09.2015
Per: P.K. Das
The relevant facts of the case, in brief, are that the appellants were engaged in the manufacture of the excisable goods, namely Non-woven Needle Punch Fabrics, Non Woven Geo Bags, Pre-Fabricated Vertical Drains, Wastage of Fibers, Wastage of Filter fabrics and Wastage of PP classifiable under Chapter 56,63,55 and 39 of the Schedule to the Central Excise Tariff Act, 1985. The appellants were issued Advance License, for Deemed Export License No. 0310668669/2/03/00 dated 02.12.2011 and 0310694583/2/03 dated 14.05.2012 by DGFT, Mumbai for manufacture and supply of the finished goods to Project Authority of Assam Integrated Flood and Riverbank Erosion Risk Management Programme (AIFRERMIP), and clear without payment of duty under Notification No. 108/1995-CE dated 28.08.1995. The appellants procured the intermediate goods from M/s Jay Corp Limited, Silvasa and M/s Kanpur Plastipack Limited, Kanpur without payment of duty under Notification No. 44/2001-CE (NT) dated 26.06.2001, as amended for use in final product. The jurisdictional Central Excise Officers of the appellant, issued Annexure-I in favour of the said suppliers for supply of the materials to the appellant, without payment of duty, in terms of the said notification No. 44/2001-CE (NT) (supra) after observing the procedure under Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules 2001 (in short Rules 2001).
2. A Show Cause Notice dated 12.12.2012 was issued to the appellant proposing demand of duty alongwith interest and to impose penalty for the period 2011-2012 and 2012-2013. It has been proposed to deny the benefit of exemption Notification No. 44/2001-CE (NT) availed on intermediate goods, on the ground that the appellant had not exported the goods i.e., the resultant products, out of India. It has been alleged that the appellant failed to fulfill the conditions of the Notification No. 44/2001-CE (NT) (supra). By the impugned order, the Adjudicating Authority confirmed the demand of duty alongwith interest and imposed penalty.
3. The Learned Advocate on behalf of the appellant submits that they have followed the procedure as laid down in Notification No. 44/2001-CE (NT) readwith Para 8.3 of the Foreign Trade Policy. It is contended that they have procured the intermediate goods, from Advance Authorization Holder and supplied the final products to AIFRERMIP, which is Deemed Export and covered under Para 8.3 (C) of the Policy. He submits that proviso to Notification no. 44/2001-CE (NT) (supra) would be read harmoniously with the opening paragraph of the Notification. He drew the attention of the Bench, case laws on interpretation of proviso to the notification and relied upon various case laws. He filed compilation of documents and case laws.
4. On the other hand, the Learned Authorised Representative for the Revenue contended that the opening paragraph of the notification provides that the said notification would apply only on the physical export of the goods, out of India and not deemed export. He further submits that the proviso to the notification would apply to the extent of transfer of goods from one Advance Authorization holder to another Advance Authorization holder and it can not be extended to the deemed export. He further submits that they have violated the conditions of the Rules, 2001 in so far as the said Rules would apply in respect of the goods exempted by notification issued under Section 5 A of the Central Excise Act, 1944. In the present case, the intermediate goods are not exempted by notification issued under Section 5 A of the Act, 1944. He further submits that the condition in the opening paragraph of the notification provides the exportation of goods, out of India, which is the essence of the Notification. In this case, the goods were not exported out of India. He relied upon the following decisions:-
(a) Commissioner of Central Excise, New Delhi vs Hari Chand Shri Gopal 2010 (2600 E.L.T. 3 (S.C.)]
(b) Supreme Lamps vs Commissioner of Central Excise, Meerut 2013 (296) E.L.T. 45 (Tri.-LB)
(c) Commissioner of Customs, Hyderabad vs M/s Pennar Industries Ltd and ANR 2015-TIOL-162-SC-CUS
5.After hearing both the sides and on perusal of the records, we find that the appellant was issued Advance Authorization holder License to manufacture Non Woven Needle Punch Fabrics, Non Woven Geo Bags etc. and supply the goods in the project of Assam Integrated Flood and Riverbank Erosion Risk Management Programme under international competitive bidding. It is a deemed export and the goods would be cleared without payment of duty under Notification No. 108/95-CE Dated 28.08.1995. By the said Notification No. 108/95-CE, the Central Government exempted all goods from the whole of duty falling under the Schedule to the Central Excise Tariff Act, 1985, when supplied to the United Nations or an international organization for their official use or supplied to the projects financed by the said United Nations of an international organization and approved by the Government of India. In terms of the said notification, the appellant submitted certificate to the jurisdictional Central Excise Officer for availing benefit of exemption notification issued by the Chief Executive Officer, AIFRERMIP Government of Assam. For the proper appreciation of the case, a specimen copy of certificate dated 11.08.2011 is reproduced below:-
To Whom It May Concern.
Certificate Under Notification No. 108/95, dated 28.08.1995.
This is certify that the work of Supply of Non-woven Geo-Textile Bags and Special Sewing Threads for the Assam integrated Flood and Riverbank Erosion Risk Management Investment Programme (AIFRERMIP) UNDER International Competitive Bidding has been awarded to M/s Techfab (India) Industries Ltd., Mumbai having their office at 712 Embassy centre, Nariman Point, Mumbai 400021, India and factory at Plot No. 147/2 & 3, 147/1 & 4, Near Polyole fibres Ltd. Opp. Debhel Talab, Village Dabhel, Daman : 396210 Union Territory of Daman & Diu. The project is being implemented with Asian Development Bank (ADB) finance through loan No. 268-IND duly approved by the Government of India and by the Government of Assam. Certificate further that M/s Techfab (India) Industries Ltd. Are required to supply the following materials:
SL No. Description of Goods Quantity Manufacturer Origin
1 2 3 4 5 1 Non-woven Geo-Textile Bags 1454400 Nos. M/s Techfa (India) industries Ltd. Mumbai having their office at 712 Embassy Centre, Nariman Point, Mumbai 4000021, India and factory at Plot No. 147/2 & 3, 147/1 & 4, Near Polyole Fibers Ltd. Opp. Debhel Talab, Village Dabhel, Daman : 396210, Union Territory of Daman & Diu. India 2 Special Sewing Threads 13000000 metre It is further certified that the aforesaid goods/materials are required for the execution of the aforementioned project and the Government of India has duly approved the said project for implementation by the government of Assam. The Project Implementing Authority is the Assam Integrated Flood and Riverbank Risk management Agency (AIFRERMA) of the Government of Assam. The necessary exemption from excise duty may be allowed against above referred goods/materials to M/s Techfab (India) Industries Ltd., Mumbai as per Government of India (Ministry of Finance, Department of Revenue) Notification No. 108/95-CE, dated 28.08.1995 as amended and other relevant notification. This certificate shall remain valid for a period 8 (eight) months time with effect from 10th August, 2011.
6. Both the sides submit that in the present case, there is no dispute on eligibility of the benefit of exemption notification No. 108/95-CE (supra) in respect of clearance of the finished goods by the appellant, without payment of duty. The dispute relates to the eligibility of benefit of exemption notification no. 44/2001-CE (NT) dated 26.06.2001, as amended, for procurement of the inputs namely, Polypropylene Staple Fibres without payment of duty for use in the manufacture of the finished goods cleared for the project. Notification No. 44/2001-CE (supra) as amended by notification No. 23/2009-CE (NT) dated 25.09.2009 is reproduced below:- In exercise of the powers conferred by sub rule (3) read with sub-rule (2) of rule 19 of the Central Excise (No. 2) Rules, 2001, the Central Board of Excise and Customs hereby notifies the conditions, safeguards and procedures for removal of excisable goods (hereinafter referred to as the intermediates goods) [from the place of manufacture of warehouse] without payment of duty for the purpose of use in the manufacture or processing of all articles (hereinafter referred to as the resultant articles) by a manufacturer who is an holder of a Duty Exemption Entitlement Certificate and an Advance License under the Duty Exemption Scheme (hereinafter referred to as the ultimate exporter) and their exportation out of India, to any country except Nepal and Bhutan, namely:-
(i) the manufacturer of the intermediate goods holds an Advance Intermediate Licence or has applied for such licence to Licensing Authority and has obtained an acknowledgement for the same, or as the case may be, has been permitted by the licensing authority or the Committee to manufacture for supply of such goods to the ultimate exporter;
(ii) the provisions of the Central Excise (Removal of Goods at Confessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 shall be followed, mutatis mutandis;
(iii) the quantity of intermediate goods are removed without payment of duty shall not exceed the duty exemption entitlement indicated in the said Certificate;
(iv) the intermediate goods shall be utilized by the ultimate exporter for manufacture of resultant articles to be exported or for use as replenishment of duty paid excisable goods of identical specifications and technical characteristics which have been used in the manufacture of resultant articles already exported in discharge of export obligations under a Duty Exemption Entitlement Certificate: Provided that the intermediate goods obtained for replenishment of duty paid excisable goods may be utilised for further production in the factory of he ultimate exporter or may be disposed of in such manner as may e specified by the Commissioner of Central Excise having jurisdiction over the factory of the ultimate exporter in terms of the provisions of Export and Import Policy notified under the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992);
(v) the ultimate exporter makes necessary arrangements for facilitating drawl of samples and subjecting them to such tests as may be directed by the Commissioner of Central Excise having jurisdiction over the factory;
(vi) any waste or by-product arising from the process of manufacture undertaken by the ultimate exporter on the intermediate goods obtained under this notification shall be removed on payment of appropriate duty as if such waste is manufactured in the factory of the manufacturer.
(vii) That the export of resultant products made out of intermediate products, namely, nylon fiber, nylon yarn, nylon fabrics, polyester fiber, polyester yarn, polyester fabrics, stainless steel sheets, stainless steel strips, magnetic tapes, precious metals, metals clad with precious metals and articles thereof, be made only through (a) any of the sea ports at Kandla, Mumbai, Nhava Sheva, Cochin, Chennai, Visakhapatnam and Kolkata; or (b) any of the airports at Mubai, Kolkata, Delhi, Chennai and Bangalore, or (c) any of the internal container depots at Delhi and Bangalore;
(viii) the goods shall be exported be exported following the procedures specified in the Ministry of Finance (Department of Revenue) Notification No. 42 /2001-Central Excise (N.T.), dated 26th June, 2001.
(ix) The ultimate exporter submits within thirty days of the expiry of the period specified in the Duty Exemption Entitlement Certificate or Advance Licence or within such extended period as may be permitted by the Licensing Authority or the Committee a detailed summary of the accounts maintained in the Performa specified under the Duty Exemption Entitlement Scheme, alongwith attested copies of the shipping bills, bills of lading and the Duty Exemption Entitlement Certificate with appropriate entries made by the officers of Customs :
Provided that this procedure shall also be available for the supplies made by an Advance authorization holder to a manufacturer holding another Advance authorization, if such manufacturer, in turn, supplies the resultant products to an ultimate exporter in terms of para 8.3 (C) of the Foreign Trade Policy, and the procedure, safeguards and conditions as prescribed in this notification shall apply mutatis mutandis.
Explanation For the purpose of this notification Advance Licence, Advance Intermediate Licence Import Policy notified under the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992). Notification No. 44/2001-CE (NT) was issued in exercise of powers conferred under Rule 19 (2) and 19 (3) of the Central Excise Rules 2001. Rule 19 of the Rules is reproduced below:-
Rule 19 Export without payment of duty. –
(1) Any excisable goods may be exported without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, as may be approved by the Commissioner.
(2) Any material may be removed without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, for use in the manufacture or processing of goods which are exported, as may be approved by the Commissioner.
(3) The export under sub-rule (1) or sub-rule (2) shall be subject to such conditions, safeguards and procedure as may be specified by notification by the Board.
7. Under the Central Excise Scheme, Rule 18 and Rule 19 of Rules are dealing with export of the goods.
Rule 18 provides any goods are exported, the Central Government granted rebate of duty paid on such excisable goods or duty paid on materials used in the manufacture or processing of such goods.
Rule 19 allowed to export any excisable goods without payment of duty. Sub Rule (2) of Rule 19 permitted to clear the any materials from a factory without payment of duty for use in the manufacture or processing of the export goods. Sub Rule (3) of Rule 19 empowered the Board to frame the conditions, safeguards and procedure to clear the excisable goods for export and any materials cleared without payment of duty for use in the manufacture of export goods.
8. By the said Notification No. 44/2001-CX, the Central Board of Excise and Customs, in exercise of power under Rule 19 (3) of the Rules, notified the conditions, safeguards, and procedure for removal of intermediate goods without payment of duty from the place of manufacture of warehouse, for use in the manufacture of processing of resultant product, who is a holder of an Advance License of a DEEC (Duty Exemption Entitlement Certificate) to export the goods out of India, to any country, except Nepal and Bhutan. Notification No. 44/2001-CE (NT) (supra) was amended by Notification No. 23/2009-CE (NT) dated 25.09.2009. By virtue of amended Notification No. 23/2009-CE (NT) (supra) after sub-para (ix) and before Explanation, a proviso was inserted in Notification No. 44/2001-CE (NT). The said notification framed the procedure conditions and safeguards for removal of intermediate goods, without payment of duty under Rule 19 of Central Excise Rules, 2001 for manufacture and export by Advance License holder under DEEC Scheme. By amendment of Notification No. 44/2001-CE (NT) as on 25.09.2009, vide notification 23/2009 CE (NT) it has enlarged the scope of the notification. The effect is that the procedure as laid down in the said notification shall also be available to a manufacture of Advance Authorization holder supplies the goods to another Advance Licence Holder, who in turn, supplies resultant products to an ultimate export in terms of Para 8.3 (c) of policy. Chapter 8 of Foreign Trade Policy refers to deemed exports.
Para 8.1 of the Policy provides Deemed Exports, to those transactions in which goods supplied do not leave country, and payment for such supplies is received either in Indian rupees or in free Foreign Exchange. Para 8.3 of policy states the benefit of deemed exports, as under:- 8.3 Deemed exports shall be eligible for any / all of following benefits in respect of manufacture and supply of goods qualifying as deemed exports subject to terms and conditions as in HBP v1 :-
(a) Advance Authorisation / Advance Authorisation for annual requirement / DFIA.
(b) Deemed Export Drawback.
(c) Exemption from terminal excise duty where supplies are made against ICB.
In other cases, refund of terminal excise duty will be given. Exemption from TED shall also be available for supplies made by an Advance Authorisation holder to a manufacturer holding another Advance Authorization if such manufacturer, in turn, supplies the product(s) to an ultimate exporter. Para 8.3 (C) had exempted from payment of terminal excise duty (TED) for supplies made by an Advance Licence holder to a manufacturer of another Advance License holder, in turn, supplies the products to an ultimate exporter (in the present case ICB). In terms of proviso to Notification No. 44/2001-CE (NT) as amended on 25.09.2009 Advance Licence holder supplies the goods to another Advance Authorization (i.e. appellant herein) has to follow the procedure as laid down in the notification. In the present case, there is no dispute on the fact that the appellants, Advance License holder, procured the goods from another Advance Licence holder and used in the manufacture of the resultant products, and supplied the goods, to ICB, which is covered within the proviso to Notification No. 44/2001-CE (NT), as amended.
9. The main contention of the Learned Authorised Representative for the Revenue is that the main paragraph in the said notification provides that the goods would be exported out of India to any country except Nepal and Bhutan, and therefore, deemed exports are not covered, within the scope of notification. He submits that the proviso inserted in the said notification cannot go beyond the scope of the opening paragraph of the notification, and therefore, the appellant is not eligible the benefit of Notification No. 44/2001-CE (NT).
10. We are unable to accept the submission of the Learned Authorised Representative for the Revenue. It is well settled that proviso would be construed harmoniously with the opening paragraph of the notification, to which it stands. A proviso in the statute must be considered with relation to the main matter to which it stands as a proviso. In the present case, the language of the proviso is clear and there is no ambiguity. The manufacturer of Advance Licence holder supplies the material to another manufacturer, who in turn supplied the resultant products to the ICB would be covered within scope of the notification. In our considered view, it is not justified to ignore the plain meaning of the proviso and interpret in such a manner, as it would render inconsistency with and meaningless of the notification.
11. It is noticed that the DGFT by letter dated 06.03.2013 informed the Assistant Commissioner of Central Excise, Customs & Service Tax, Daman as under:- Sub:- Verification of the raw materials procured under against Advance License No. 0310694583 dated 14.05.2012 & 0310668669 dated 02.12.2011 and follow up conditions of Notification 44/2001-CE (NT) dated 26.06.2001-reg. Sir, With reference to the above subject this is to inform you that as para 8.3) of the Foreign Trade Policy exemption from TED shall also be available for supplies made by an Advance Authorisation holder to a manufacturer holding another Advance Authorisation if such manufacturer in turn, supplies the products to an ultimate exporter. The said para has been added in the Notification No. 44/2001 dated 26.06.2001 and Notification No. 23/2009 dated 25.09.2009. Hence, we do not find any substance in the submission of the Learned Authorised Representative.
12. The Learned Advocate referred judicial decisions on interpretation of proviso to notification as under:- (a)?In Commissioner of Customs (Preventive), Gujarat v. Reliance Petroleum Limited, (2008) 7 SCC 220 = 2008 (227) E.L.T. 3 (S.C.), this Court has held : 30.?We are not oblivious of the proposition of law that an exemption notification should be construed directly but it is also well settled that interpretation of an exemption notification would depend upon the nature and extent thereof. The terminologies used in the notification would have an important role to play. Where the exemption notification ex facie applies, there is no reason as to why the purport thereof would be limited by giving a strict construction thereto. The comparison made by the learned Solicitor General that mobility of a person would depend upon his personal fitness and not when he is placed on a wheelchair, in our opinion, is not apposite. The purpose of grant of exemption is different. The object for grant of notification shall be considered in a broad based manner. The wordings used therein have to be given their natural meaning. The purpose must be allowed to be achieved. The words all types of materials should be construed widely. 31.?Moreover, a liberal construction requires to be given to a beneficial notification. This Court in Commissioner of Customs (Preventive) Mumbai v. M. Ambalal and Company, (2011) 2 SCC 74 = 2010 (260) E.L.T. 487 (S.C.), (in which one of us was the party) has observed that the beneficial notification providing the levy of duty at a concessional rate should be given a liberal interpretation :
16.It is settled law that the notification has to be read as a whole. If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification. The rule regarding exemptions is that exemptions should generally be strictly interpreted but beneficial exemptions having their purpose as encouragement or promotion of certain activities should be liberally interpreted. This composite rule is not stated in any particular judgment in so many words. In fact, majority of judgments emphasise that exemptions are to be strictly interpreted while some of them insist that exemptions in fiscal statutes are to be liberally interpreted giving an apparent impression that they are contradictory to each other. But this is only apparent. A close scrutiny will reveal that there is no real contradiction amongst the judgments at all. The synthesis of the views is quite clearly that the general rule is strict interpretation while special rule in the case of beneficial and promotional exemption is liberal interpretation. The two go very well with each other because they relate to two different sets of circumstances. 32.?In Commissioner of Sales Tax v. Industrial Coal Enterprises, (1999) 2 SCC 607, this Court has observed thus : 11.?In CIT v. Straw Board Mfg. Co. Ltd. this Court held that in taxing statutes, provision for concessional rate of tax should be liberally construed. So also in Bajaj Tempo Ltd. v. CIT it was held that provision granting incentive for promoting economic growth and development in taxing statutes should be liberally construed and restriction placed on it by way of exception should be construed in a reasonable and purposive manner so as to advance the objective of the provision. 33.?In Commissioner of Central Excise, Shillong v. North-Eastern Tobacco Co. Ltd., (2003) 1 SCC 161 = 2002 (146) E.L.T. 490 (S.C.), this Court has observed thus : 10.?The other important principle of interpreting an exemption notification is that as far as possible liberal interpretation should be imparted to the language thereof, provided no violence is done to the language employed. See State Level Committee v. Morgardshammar India Ltd. 34.?In our view, the Tribunal has rightly understood the purpose and the language employed in Notification No. 8/97-C.E. and the EXIM Policy 1997-2002. Therefore, we do not see any legal infirmity in the judgment and order so passed by the Tribunal. 35.?Accordingly, while rejecting the appeal filed by the revenue, we confirm the findings and conclusions reached by the Tribunal. In the facts and circumstances of the case, the parties are directed to bear their own costs. (b) Kush Sehgal & Ors Vs. M.C Mitter & ORS [2000] INSC 148 on 28n March, 2000 (SC):- This we say because the normal function of a Proviso is to except something out of the enactment or to qualify something enacted therein which but for the Proviso would be within the purview of the enactment. (See: Kedarnath Jute Manufacturing Co. Ltd. vs. Commercial Tax Officer, AIR 1966 SC 12). Since the natural presumption is that but for the Proviso, the enacting part of the section would have included the subject matter of the Proviso, the enacting part has to be given such a construction which would make the exceptions carved out by the Proviso necessary and a construction which would make the exceptions unnecessary and redundant should be avoided (See: Justice G.P. Singhs Principles of Statutory Interpretation Seventh Edition 1999, P-163). This principle has been deduced from the decision of the privy Council in Govt. of the Province of Bombay vs Hormusji Manekji AIR 1947 PC 200 as also the decision of this Court in Durga Dutt Sharma vs Navaratna Pharmaceutical Laboratories AIR 1965 SC 980. (C) M/s Coastal Paper Ltd. Vs Commissioner of Central Excise, Visakhapatnam Civil Appeal No. 4908 of 2005. We have considered the aforesaid submissions with reference to record and the plethora of material produced before us by both the sides. It cannot be denied that if one has to look into the ordinary meaning of the expression rags and on that basis construe the Notification in question, the assessee would not be entitled to the consessional rate of excise duty inasmuch as the waste of gunny bags or jute bags would be called rags in ordinary sense of the term. However, whether case can be decided with such simplistic overtones, is the question. We are of the view that the expression rags appearing in the Notification has to be construed having regard to the attendant circumstances, the context in which the same is used in the said Notification as well as the purpose for which this term has appeared in the Notification. At the same time, it is also necessary to go behind the objective for which Notification itself is issued thereby giving it a purposive interpretation, which has become cardinal rule of interpretation. In our opinion, it is only after examining all these factors that the final decision should be arrived at. (d) A.N. Sehgal & Ors. V. Raja Ram Sheoran & Ors. 1991 AIR 1406 (SC). It is a cardinal rule of interpretation that a proviso to a particular provision of a statute only embraces the field which is covered by the main provision. It carves out an exception to the main provision to which it has been enacted by the proviso and to no other. The proper function of a proviso is to except and deal with a cause which would otherwise fall within the general language of the main enactment, and its effect is to confine to that case. Where the language of the main enactment is explicit and unambiguous, the proviso can have no repercussion on the interpretation of the main enactment, so as to exclude from it, by implication what clearly falls within its express terms. The scope of the proviso,, therefore, is to carve out an exception to the main enactment and it excludes something which otherwise would have been within the rule. It has to operate in the same field and if the language of the main enactment is clear, the proviso cannot be torn apart from the main enactment nor can it he used to nullify by implication what the enactment clearly says nor set at naught the real object of the main enactment, unless the words of the proviso are such that it is its necessary effect. By the above decisions, the Honble Supreme Court analyzed the scope of exemption notification and its proviso extensively, in different context. In the present case, by Notification No. 108/95-CE, the final product of the appellant is exempted from duty supplied to Assam Integrated Flood and Riverbank Erosion Risk Management Programme, which will be a deemed export as per Para 8.1 of Foreign Trade Policy. Revenue is demanding duty on the intermediate goods used in the manufacture of finished goods cleared as per Para 8.1 of policy, by denying the benefit of notification No. 44/2001-CE (NT) dated 26.06.2001 as amended. After amendment of the said Notification No. 44/2001-CE (NT) by Notification No. 23/2009-CE (NT) dated 22.09.2009, it has extended the removal of intermediate goods without payment of duty, for manufacture and export in terms of Para 8.3 (C) of policy, otherwise, the proviso inserted therein by amending notification would be nugatory and meaningless.
13. The Learned Authorised Representative for the Revenue submits the procedure under Rule 2001 would be followed in the case, where the goods are exempted under Section 5 A of the Central Excise Act, 1944. Notification No. 44/2001-CE (NT), in this case, is issued in exercise of prior Rule 19 of the Rules. Rule 19 of the Central Excise Rules permitted to export the goods without payment of duty. Sub Rule (2) of Rule 19 further permitted to removal any material without payment of duty for use in the manufacture of goods, which are exported. Central Board of Excise and Customs by virtue of power under Sub Rule (3) of Rule 19 of the said Rules framed the procedure, conditions and safeguards for removal of the goods from the factory without payment of duty for used in the exported goods. As per Clause No. (ii) of the notification, the Central Government notified to follow the procedure of Rules 2001 for removal of intermediate goods for manufacture and except of goods by holder of DEEC and Advance License. Proviso to the said notification have wider amplitude, to extend the goods cleared by on Advance Licence holder to another Advance Licence holder for use in the manufacture of export of goods to ICB, by following the procedure laid down therein. So, the submission of the Learned Authorised Representative on this issue has no force.
14. The Learned Authorised Representative strongly relied upon the decision of the Honble Supreme Court in the case of Hari Chand Shri Gopal (supra). In that case, the Honble Supreme observed that the substantial compliance of conditions of notification comply strictly for duty exemption. In the present case, it is already observed that the appellants followed the procedures as required under the said notification. Hence, the said case law is not applicable herein.
15. In view of the above discussions, we find that the demand of duty alongwith interest and penalty cannot be sustained. Accordingly, the impugned order is set-aside. The appeal filed by the appellant is allowed.
(Dictated & Pronounced in open Court)
(P.M.Saleem) (P.K. Das)
Member(Technical) Member (Judicial)
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