SUPREME COURT RULING (CENTRAL EXCISE)

Transcription

1 SUPREME COURT RULING (CENTRAL EXCISE) 2015-TIOL-284-SC-CX CCE Vs M/s Virat Crane Industries Ltd (Dated: November 6, 2015) Central Excise - Branded Chewing Tobacco - Not relevant whether the brand is own or not: exemption to unbranded chewing tobacco - The definition, as stipulated, does not limit the brand name to third party brand name. Therefore, the irresistible conclusion would be that once the goods are sold under any brand name, whether that belongs to the assessee or the third party the goods would be treated as branded name TIOL-283-SC-CX M/s Shree Bhagwati Steel Rolling Mills Vs CCE (Dated: November 24, 2015) Central Excise - Section 3A - Omission" being tantamount to a "deletion" is a form of repeal: On a conjoint reading of the three expressions "delete", "omit", and "repeal", it becomes clear that "delete" and "omit" are used interchangeably, so that when the expression "repeal" refers to "delete" it would necessarily take within its ken an omission as well. This being the case, we do not find any substance in the argument that a "repeal" amounts to an obliteration from the very beginning, whereas an "omission" is only in futuro. Interest and Penalty provisions of Rules 96 ZO, ZP,ZQ quashed: it will have to be declared that since Section 3A which provides for a separate scheme for availing facilities under a compound levy scheme does not itself provide for the levying of interest, Rules 96 ZO, 96 ZP and 96 ZQ cannot do so and therefore on this ground the appellant has to succeed. A penalty can only be levie d by authority of statutory law, and Section 37 of the Act, does not expressly authorize the Government to levy penalty higher than Rs.5,000/. This further shows that imposition of a mandatory penalty equal to the amount of duty not being by statute would itself make rules 96ZO, 96 ZP and 96 ZQ without authority of law TIOL-282-SC-CX CCE Vs M/s Nestle India Ltd (Dated: November 24, 2015) Central Excise - EOU - goods manufactured wholly out of indigenous raw materials Valuation - Central Excise Valuation and not Customs FOB applicable: There is no doubt whatsoever that the duty of excise leviable under Section 3 would be on the basis of the value of like goods produced or manufactured outside India as determinable in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff act, However, the notification states that duty calculated on the said basis would only be payable to the extent of like goods manufactured in India by persons other than 100% EOUs. This being the case, it is clear that in the absence of actual sales in the wholesale market, when goods are captively consumed and not sold, Rule 8 of the Central Excise Rules would have to be followed to determine what would be the amount equal to the duty of excise leviable on like goods. Sold or allowed to be sold? The test to be applied under the said notification is

2 whether the goods in question are "allowed to be sold" in India. The aforesaid expression is obviously different from the expression "sold" and does not require any actual sale for the notification to be attracted. In fact, revenue's case is also that even though the said notification is attracted, yet because there is no sale somehow the FOB export price of like goods alone is to be looked at. If this were to be so, not only would the object of the notification not be sub-served but even its plain language would be violated. It is clear that the said notification has been framed by the Central Government, in its wisdom, to levy only what is levied by way of excise duty on similar goods manufactured in India, on goods produced and sold by 100% EOUs in the domestic tariff area if they are produced from indigenous raw materials TIOL-273-SC-CX CCE Vs M/s Brimco Plastic Machinery Pvt Ltd (Dated: September 29, 2015) Central Excise - Valuation - whether the installation, erection and commissioning charges for equipment installed at customer's premises and values thereof can be added/included for determining the assessable value? - CESTAT has relied upon the judgments of the Supreme Court in PSI Data System Ltd. v. Collector TIOL- 46-SC-CX, Mittal Engineering Works Pvt. Ltd. v. Collector TIOL-201-SC-CX, holding that inclusion of installation, erection and commissioning charges for equipment installed at customer's premises cannot be added/ included to determine the assessable value. - para 4 This is obvious conclusion on reading of Section 4 of the Central Excise Act as per which the transaction value is to be arrived at at the time of clearance of the goods at the factory gate. All the expenses which are incurred post clearance (that too, after the supply of equipment) in respect of installation, etc., could not have been taken into consideration in the facts of the present case as noted by the CESTAT. - para TIOL-272-SC-CX M/s Madras Cements Ltd Vs CCE (Dated: October 7, 2015) Central Excise Modvat /CENVAT credit of inputs used in mines entitled - the goods in question were captively used for the construction of the plant and had nothing to do with the mining which is accepted by the Department itself in the show cause notice. Yet the Tribunal remanded the matter to the Commissioner (A). There was no need to remand the case back to the Commissioner (Appeals) as on admitted facts when the principle laid down in Vikram Cement's case is applied, the assessee was not liable to pay any duty. The order of the CESTAT remitting the case back to the Commissioner (Appeals) is thus, set aside allowing these appeals TIOL-268-SC-CX CCE Vs M/s Godrej Hershey Ltd (Dated: September 17, 2015) CX - Classification of Apple Tree Top, Mango Tree Top, Guava Tree Top and Orange Tree Top - Appellant classifying the same in Tariff Heading of the CETA, on the ground that it was a preparation of fruit whereas Revenue classifying the same under heading which covers, inter-alia, other non-alcoholic beverages not including fruit and vegetable juices - In appeal filed by manufacturer, Supreme Court had by order dated set aside the order passed by Tribunal and remanded the matter - in remand, Tribunal arriving at the conclusion that the products in question manufactured by the appellant are "fruit preparation" within the meaning of Tariff

3 Heading Revenue in appeal before Supreme Court. Held: Nothing shown by Counsel for the Revenue to arrive at the conclusion that what has been stated by Tribunal is erroneous - Apple Tree Top, Mango Tree Top, Guava Tree Top and Orange Tree Top is correctly classifiable under heading as "fruit preparation" - reasoning of Tribunal approved and Revenue appeal dismissed: Supreme Court [para 3, 5] 2015-TIOL-264-SC-CX Bajaj Auto Ltd Vs CCE & C (Dated: July 29, 2015) Central Excise: Manufacture No manufacturing process involved in by-products : during the manufacture of die-casting of aluminium parts, dross and ash emerge as by-products and, therefore, insofar as these by-products are concerned, no manufacturing process is involved and on that basis, it has held that no excise duty shall be payable thereupon TIOL-262-SC-CX M/s Meridian Industries Ltd Vs CCE (Dated: October 27, 2015) Central Excise - EOU - Concessional rate to goods cleared to DTA, when manufactured from indigenous raw material. Exemption Notification - Strict Interpretation: Since it is an exemption notification, onus lies upon the appellant to show that its case fa lls within the four corners of this notification and is unambiguously covered by the provisions thereof. It is also to be borne in mind that such exemption notifications are to be given strict interpretation and, therefore, unless the assessee is able to make out a clear case in its favour, it is not entitled to claim the benefit thereof. Otherwise, if there is a doubt or two interpretations are possible, one which favours the Department is to be resorted to while construing an exemption notification. - para 13 Imported wax used in manufacture of cotton yarn - not eligible for exemption: The gravamen of the charge against the appellant is that wax disc which is admittedly imported and used for the production of cotton yarn constitutes 'raw material' and since imported material is used for the production of the aforesaid commodity, benefit of Notification No.8 /97- C.E. cannot be extended to the appellant. It is not in dispute that wax is used in the process which is an imported material. However, the refuta tion of the appellant is that wax is not 'raw material' and it is only used as 'consumable' in the process of manufacturing cotton yarn. - para 14 A particular item, though required for a manufacturing process or participates in the said process would be treated as 'consumable', if it does not form part of end product and instead it gets substantially or totally consumed during the manufacturing process. In contrast, if any materials or goods are required for the manufacturing process, such materials or goods would be treated as the 'raw material', whether they have actually been previously manufactured or are processed or are still in a raw or natural state. - para 15 Evidence has emerged on record, on which there is no dispute, that the final product which was cleared by the assessee, namely, cotton yarn was made of indigenous as well as imported cotton coated with imported wax. The wax coating is found to be essential for lubrication of the yarn and was allowed to remain on the yarn in order to facilitate its winding on cones and its use in knitting hosiery. - para 21

4 2015-TIOL-261-SC-CX CCE Vs M/s Nebulae Health Care Ltd (Dated: October 27, 2015) Central Excise - SSI Exemption - Exemption for own goods and duty payment with CENVAT Credit for branded goods - Permissible: It is not in dispute that the respondents - assessees fulfill eligibility conditions for availing the benefit of SSI exemption under the Notifications. However, in addition to manufacturing goods on their own account, they are also doing job work of manufacturing goods of certain other parties on job work basis. The goods manufactured for third parties bear the brand name of those third parties and in respect of such goods manufactured for third parties, the assessees paid the normal duty of excise but at the same time availed the benefit of MODVAT /CENVAT credit as well. - para 2 So far as manufacture of branded goods of third party on job work basis by the SSI Unit is concerned, they are to be dealt with differently in the sense that they do not come within the ambit of exemption on which normally excise duty, as per the provisions of the Act, is payable. As a sequitur, it also follows that once excise duty is paid by the manufacturer on such branded goods manufactured, the brand name whereof belongs to another person, on job work basis, the SSI Unit would be entitled to CENVAT/ MODVAT credit on the inputs which were used for manufacture of such goods as on those inputs also excise duty was paid. To put it otherwise, these branded goods manufactured by the SSI Units meant for third parties are regulated by the normal provisions of excise law and will have no bearing or relevance insofar as availing the benefit of those exemption notifications in respect of its own products manufactured by the SSI Units is concerned. - para 17 Admittedly, in respect of home production, the assessee had not availed the benefit of two options simultaneously as no CENVAT credit is claimed in respect of those goods. - para TIOL-260-SC-CX CCE & ST Vs M/s Aditya Birla Nuvo Ltd Etc (Dated: October 28, 2015) Central Excise - Exemption Notification No. 38/2003-CE dated Subject to process subsequent to purchase - A bare reading of the aforesaid Notification makes it clear that the benefit thereof is given to those assessees when, at their hands, article of apparel or clothing accessories is subjected to any one or more of the processes, which are mentioned herein. However, any of such process as mentioned herein is to be carried out by the assessee "subsequent to purchase" of the article of apparel or clothing accessories in question. The only question is as to whether such process was undertaken by these assessees after the purchase of material. The submission of the Department in this behalf is that since it is the assessees who had assigned the work, that is fabrication of the apparel etc. to the job workers with the supply of material as well, and the job workers after undertaking the job had supplied the said material back to the assessees, this does not amount to purchase. As per the Supreme Court judgement in Ujagar Prints, etc. etc. vs. Union of India & Ors TIOL-03-SC-CX-CB, for the purpose of arriving at the value of the job at the hands of job workers, factory gate is treated as "deemed" factory gate as if the processed fabric was sold by the assessee. It cannot be disputed that the fact situation in these cases is identical where the job workers had paid the excise duty at the time of supply of these processed fabric to the respondent assessees. Once that

5 could be treated as sale, the necessary corollary is that so far as the assessees are concerned, they had purchased processed fabric from the job workers and, therefore, would satisfy the condition of "subsequent purchase" contained in Notification No. 38/2003. The benefit of exemption notification is rightly extended by the Tribunal to the respondents-assessees. No merit in Revenue Appeal.