SUPREME COURT RULING (CENTRAL EXCISE)

SUPREME COURT RULING (CENTRAL EXCISE) 2015-TIOL-256-SC-CX CCE Vs Amrit Food (Dated: September 3, 2015) Central Excise - Classification - milk shake mix and soft serve mix: The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has classified these products under Chapter sub-heading 0404.90 accepting the contention of the assessee in this behalf. However, the Revenue wants to have the same covered under Chapter sub- Heading 1901.19. 2015-TIOL-255-SC-CX Andaman Timber Industries Vs CCE (Dated: September 2, 2015) Central Excise - Adjudication - Cross Examination - not allowing the assessee to crossexamine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. The order of the Commissioner was based upon the statements given by the two witnesses. Even when the assessee disputed the correctness of the statements and wanted to crossexamine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, rejection of this plea is totally untenable. The Tribunal has simply stated that crossexamination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. 2015-TIOL-254-SC-CX CCE Vs Angadpal Indl Pvt Ltd (Dated: October 6, 2015) Central Excise - Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998 - The vires of the Rule was challenged before the Madras High Court in Beauty Dyers v. Union of India - 2003-TIOL-190-HC-MAD-CX and the High Court held the said Rule to be ultravires the erstwhile Section 3A of the Act. Special leave petition was preferred by the Union of India against the said judgment was dismissed by this Court. The judgment is reported by the Madras High Court in Commissioner of Central Excise v. M/s. Entex Pvt. Ltd. - 2015-TIOL-2123-HC-MAD- CX. 2015-TIOL-253-SC-CX CC & CE Vs 20 Microns Ltd (Dated: September 8, 2015) Central Excise - Classification - "Calcined China Clay": The question that arises for consideration in the instant appeal relates to the classification of the product

manufactured by the respondent-assessee which is known as " Calcined China Clay". According to the Revenue, it needs to be classified under Chapter sub-heading 3824.90 to the Schedule to Central Excise Tariff Act, 1985, whereas the assessee maintains that the appropriate classification is under Chapter Heading 25.05. Show Cause Notice proceeded on the basis that as China Clay was calcined, it could not be included under Chapter Heading 25.05 and since Chapter Heading 38.24 mentions about some specified product including those consisting of mixture of natural products, it would fall under Chapter Heading 38.24. Held: merely because the product of assessee, i.e., China Clay is calcined, it would not put it out of Chapter Heading 25.05. 2015-TIOL-251-SC-CX CCE Vs Raymond Ltd (Dated: October 1, 2015) Central Excise - Classification - Remand - The only objection raised by the Revenue is that when the issue was remitted back for re-determination it should have been open remand and should not have remarked that "Dry Weight Standards" should be applied and even in respect of that the matter should have been left open for the Adjudicating Authority to take a call thereof. This suggestion is accepted by the counsel for the assessee. The directions are modified with the observations that on remand when the matter is to be re -determined by the Adjudicating Authority, it is an open remand and it would be permissible for the Adjudicating Authority to go into all the relevant issues in determining the classification. 2015-TIOL-248-SC-CX CCE Vs Hitkari Fibres Ltd (Dated : September 3, 2015) Central Excise - Valuation - additional consideration - It is not in doubt that the time when the goods were cleared, the price which was charged from M/s. Maruti and the duty was paid on the said price. No doubt, some additional amount is received thereafter, on account of price escalation. However, it is not coming on record as to under what circumstances such price escalation was given. No such case was set up by the Revenue that the price was understated or depressed at the time of clearance of the goods and the additional amount was received subsequently, by a suspicious kind of arrangement. In the absence of any such facts, it is difficult to hold that the aforesaid additional amount received at a subsequent stage was to be added for the purpose of arriving at the transaction value. 2015-TIOL-247-SC-CX CCE Vs Honda Siel Power Products Ltd (Dated: September 3, 2015) Central Excise - Condition of exemption notification that duty has to be paid in cash/pla not fulfilled - Benefit of exemption denied : One of the conditions of the exemption notification was that the duty had to be paid in cash or through account current. However, the assessee cleared the goods through utilization of CENVAT Credit which is not the prescribed mode mentioned as per the condition. It is an admitted case that duty was neither paid in cash nor through account current as the duty was paid through CENVAT Credit Account and therefore the assessee did not fulfill the second condition mentioned in the notification. Exemption Notification - Benefit of doubt should be in favour of Department : It is

trite that exemption notifications are to be construed strictly and even if there is any doubt same is to be given in favour of the Department. Tribunal has decided the case in favour of the assessee by observing that clearing of goods with payment of excise duty with current account was only an error and the assessee had not violated the more substantial condition viz no CENVAT Credit should be taken in regard to the goods. This is clearly a faulty approach on the part of the Tribunal. The assessee was required to fulfill the condition in stricto senso viz to pay the duty either in cash or through account current if it wanted to avail the benefit of exemption notification and not through adjustment of CENVAT Credit which is not the mode prescribed in the aforesaid conditions. Once we find that the conditions have not been fulfilled the obvious consequence would be that the assessee was not entitled to the benefit of this notification. 2015-TIOL-246-SC-CX CCE Vs I G Petrochemical Ltd (Dated: September 1, 2015) Central Excise - EOUs - Exemption for Goods manufactured with indigenous raw materials - Catalysts are not raw materials : The assessee is a 100% Export Oriented Unit(EOU) which is engaged in the manufacture of excisable goods viz., Phthalic Anhydride, Waste Water, Waste Steam and Low Boiling Component. If the goods are produce d or manufactured only from the raw material produced or manufactured in India, the assessee would be entitled to the concessional rate of duty as prescribed in the Notifications. Thus, in order to avail the benefit of these Notifications it was required to establish by the assessee that it was producing the aforesaid goods from the raw material produced or manufactured in India. On this aspect dispute has arisen inasmuch as while producing the aforesaid products the assessee was also using Vanadium Pentoxide which was imported by the assessee. As per the Revenue, Vanadium Pentoxide which is the material used for the manufacture of the products in question is the raw material and since the aforesaid components of raw material are imported, the assessee would not be entitled to the benefit of the aforesaid notifications. The assessee on the other hand submitted that Vanadium Pentoxide was only a catalyst. The Order-in-Original was passed holding that the assessee were not eligible to avail the benefit of the said Notifications. However, the Tribunal, in appeal, reversed the order with its finding that it is not the raw material. Since the term 'raw material has not been defined anywhere except in the EXIM Policy, as far as the Commissioner is concerned, he had adopted the definition therefrom. However, as per the Tribunal, the said definition contained in the EXIM Policy would be of no relevance. It is not in dispute that Vanadium Pentoxide, while influencing and accelerating the chemical reactions, itself remains uninfluenced and unaltered and retains its independent character. It is also not in dispute that it remains outside the product and does not form part of the product. This has been accepted even by the Commissioner and finding to this effect is given by stating that it is not directly consumed in the process of manufacturing and normal life of the catalyst is 36 months, after which this catalyst has to be replaced by a new one. Tribunal is right in its approach because under EXIM Policy catalyst is covered as capital goods inasmuch as the Supreme Court in various judgments on the subject has taken the view that the raw material is not a defined term. On that basis, it is held that the meaning to the expression 'raw material' has to be given in the ordinary well accepted connotation in common parlance of those who deal with the matter. Held: the catalyst could not be treated as raw material. No violation with the approach of the Tribunal in granting the benefit of the aforesaid Notifications to the assessee herein.

2015-TIOL-245-SC-CX CCE Vs R D C Concrete (India) Ltd (Dated: September 8, 2015) Central Excise - appeals - a total mindless exercise on the part of the Revenue in filing such an appeal which is misuse and abuse of the process of law - Appeal by Revenue even after classification confirmed by Supreme Court in favour of assessee - After the affirmation of the view of the CESTAT by the Supreme Court, the Department not only accepted the view but Central Board of Excise and Customs, New Delhi, issued Circular No. 601/38/2001-CX dated 20.11.2001 affirming the classification of this product. what was the necessity in preferring the present appeal which was filed in the year 2006, i.e., much after the clarification issued by the even the Central Board of Excise and Customs, New Delhi? It was, thus, a total mindless exercise on the part of the Revenue in filing such an appeal which is misuse and abuse of the process of law. 2015-TIOL-244-SC-CX Caprihans India Ltd Vs CCE (Dated: September 9, 2015) Central Excise - Classification - Limitation : The appellant-assessee is engaged in printing of PVC films/ sheets at its factory located in Daman. The appellant has classified its goods under Chapter Heading 4901 of the Schedule to Central Excise Tariff Act, 1985, and were clearing the goods by paying the excise duty payable for the items covered by the said Heading. Show Cause Notice dated 18.02.1994 was issued by the Department asking the appellant to show cause as to why the aforesaid goods manufactured by the assessee be not classified under Chapter Heading 3926.90. The appellant contested the same. The plea of the appellant was accepted and orders dated 27.05.1994 were passed thereby dropping the proposed move in the Show Cause Notice and allowing the a ppellant to clear the goods with classification under Chapter Heading 4901. The goods in this manner were thereafter cleared from 1994 till 1999 when another Show Cause Notice dated 31.05.1999 was issued for the period 28.05.1994 to 30.06.1996 stating that during this period goods were wrongly cleared under Chapter Heading 4901 and instead appropriate classification was 3926.90. On that basis, differential duty was demanded and interest and penalty were also proposed, which were confirmed. Held: the present appeal warrants to be allowed only on the ground that the impugned show cause notice was time barred and it was not a case where the Revenue could invoke the provisions of proviso to Section 11A of the Central Excise Act and take benefit of the extended period of limitation. The Department had issued Show Cause Notice way back on 18.02.1994 asking the appellant to reclassify the goods under Chapter Heading 3920. Therefore, all relevant facts were within the knowledge/ notice of the Department. Not only this, after the appellant had filed the reply to the said Show Cause Notice and was heard in the matter, the proposed move in the said Show Cause Notice was even dropped. Therefore, by no stretch of imagination, the appellant can be treated as a person who had misled the authorities or made any mis-statement / mis -declaration. The appeal is allowed on this ground itself without going into the issue of classification setting aside the impugned order. As a result, the impugned orders passed by the authorities below are set aside. 2015-TIOL-242-SC-CX Headway Lithographic Company Vs CCE (Dated: April 7, 2015) CX - Simple printing is done on the wrappers which are cut to size for the purpose of wrapping the biris - printing of biri wrappers would not and can never fit under the

description 'transfer decalcomanias' - goods in question would fall under Item no. 4901.90 which attracts nil duty - in view of the aforesaid classification, it is not even necessary to go into the question whether the process amounts to manufacture or not Since the appeal is still pending before the Tribunal where the issue of classification is pending, and as that issue has been decided in the present order, the Tribunal will dispose of the appeal in terms of the judgment rendered giving consequential benefits of refund of duty/deposits, if any - Appeal allowed: Supreme Court [para 10, 11] Also see analysis of the order 2015-TIOL-240-SC-CX UoI Vs M/s DSCL Sugar Ltd (Dated: July 24, 2015) CX Bagasse emerging as residue/waste of sugarcane - Deeming fiction introduced by insertion of Explanation to section 2(d) of the CEA, 1944 by the Finance Act, 2008 - before the aforesaid fiction is to be applied, it is necessary that the process should fall within the definition of "manufacture" as contained in Section 2(f) of the Act - it could not be pointed out by Revenue as to whether any process in respect of Bagasse has been specified either in the Section or in the Chapter note - In the absence thereof, the deeming provision u/s 2(f)(ii) of CEA, 1944 cannot be attracted - Otherwise, it is not in dispute that Bagasse is only an agricultural waste and residue, which itself is not the result of any process - Therefore, it cannot be treated as falling within the definition of Section 2(f) of the Act and in the absence of manufacture, there cannot be any excise duty - Since it is not a manufacture, obviously Rule 6 of the Cenvat Credit Rules, 2004, shall have no application as rightly held by the High Court Appeals dismissed: Supreme Court Cenvat Credit in respect of electricity was denied only on the premise that Bagasse attracts excise duty and consequently Rule 6 of the Cenvat Credit Rules is applicable - Since this action of the appellant is found to be erroneous, all these appeals of the Revenue also stand dismissed: Supreme Court 2015-TIOL-239-SC-CX M/s Spentex Industries Ltd Vs CCE (Dated: October 9, 2015) Central Excise - Rebate - Both inputs and final products are entitled for rebate - "OR" means "AND" : Rule 18 stipulates that the Central Gove rnment may, by notification, grant rebate of duty paid on such excisable goods OR duty paid on material used in the manufacturing or processing of such goods. The word 'OR' which is used in between the two kinds of duties in respect of which rebate can be granted is the bone of contention and it is to be interpreted whether it postulates grant of one of the two duties or both the duties can be claimed. Once this scheme is kept in mind, it cannot be the intention of the Legislature to provide rebate only on one item in case a particular exporter/manufacturer opts for other alternative under Rule 18, namely, paying the duty in the first instance and then claiming the rebate. Giving such restrictive meaning to Rule 18 would not only be anomalous but would lead to absurdity as well. In fact, it would defeat the very purpose of grant of remission from payment of excise duty in respect of the goods which are exported out of India. It may also lead to invidious discrimination and arbitrary results. Interpretation of word 'OR' occurring in Rule 18: The only inevitable consequence is this : the word 'OR' occurring in Rule 18 cannot be given literal interpretation as that leads to various disastrous results and, therefore, this word has to be read as 'and' as that is what was intended by the rule maker in the scheme of things and to carry out the objectives of the Rule 18 and also to bring it at par with Rule 19.

Also see analysis of the order 2015-TIOL-238-SC-CX CC & CE Vs M/s Ispat Industries Ltd (Dated: October 7, 2015) Central Excise - Valuation - whether, by virtue of a transit insurance policy in the name of the manufacturer, excise duty is liable to be recovered on freight charges incurred for transportation of goods from the factory gate to the buyer's premises, treating the buyer's premises as the place of removal. No : in the present case all prices were "ex-works", like the facts in Escorts JCB's case. Goods were cleared from the factory on payment of the appropriate sales tax by the assessee itself, thereby indica ting that it had sold the goods manufactured by it at the factory gate. Sales were made against Letters of Credit and bank discounting facilities, sometimes in advance. Invoices were prepared only at the factory directly in the name of the customer in which the name of the Insurance Company as well as the number of the transit Insurance Policy were mentioned. Above all, excise invoices were prepared at the time of the goods leaving the factory in the name and address of the customers of the respondent. When the goods were handed over to the transporter, the respondent had no right to the disposal of the goods nor did it reserve such rights inasmuch as title had already passed to its customer. Also see analysis of the order 2015-TIOL-236-SC-CX M/s Larsen & Toubro Ltd Vs CCE (Dated: October 6, 2015) Central Excise - Exemption - 'Ready Mix Concrete' (RMC) vs Concrete Mix (CM) - They are two different products. it is the process of mixing the concrete that differentiates between CM and RMC. In the instant case, as it is found, the assessee installed two batching plants and one stone crusher at site in their cement plant to produce RMC. The batching plants were of fully automatic version. Concrete mix obtained from these batching plants was delivered into a transit mixer mounted on a self propelled chassis for delivery at the site of construction is in a plastic condition requiring no further treatment before being placed in the position in which it is to set and harden. Notification No. 4 dated March 01, 1997 exempts only 'Concrete Mix' and not 'Ready Made Mixed Concrete' and RMC is not the same as CM. Held : the assessee was producing RMC and the exemption notification exempts only CM and the two products are different. Even if there is a doubt, which was e ven accepted by the assessee, since we are dealing with the exemption notification it has to be strict interpretation and in case of doubt, benefit has to be given to the Revenue. 2015-TIOL-235-SC-CX CCE Vs M/s Fitrite Packers (Dated: October 7, 2015) CX - Manufacture - s.2(f) of CEA, 1944 - Blank paper could be used as wrapper for any kind of product, however, after the printing of logo and name of the specific product of Parle thereupon, the end use was now confined to only that particular and specific product of the said particular company/customer - printing, therefore, is not merely a value addition but has now been transformed from general wrapping paper to special wrapping paper - End use has positively been changed as a result of printing process undertaken by the assessee - printing has resulted into a product, i.e., paper with distinct character and use of its own which it did not bear earlier -

activity amounts to manufacture and CE duty payable under 4811.90 - Revenue appeal allowed: Supreme Court [para 9, 10, 12, 13] Also see analysis of the order