In C.A.No.3269/2003:
The short controversy which arises for determination in this Civil Appeal
is: Whether the respondent-assessee was entitled to claim benefit of exemption
Notification No.3/2001-CE, dated 1.3.2001?
The assessee claims exemption under S.No.200 of the said Notification
which claim was denied by the Department on the ground that trimmed or
untrimmed circles of brass cannot fall under S.No.200 but they fall under S.No.201
where rate of duty is Rs.3500 PMT. It may be stated that if the product in question
falls under S.No.200, then the rate of duty is nil. This is the narrow controversy in
the present case.
To resolve this dispute, we quote hereinbelow relevant extract of
Notification No.3/2001-CE, dated 1.3.2001.
S.No. Chapter or Description of goods Rate under Rate under Condition No.
heading No. the First the Second
or sub- Schedule Schedule
heading No.
200 74.09 All goods other than Nil - 32
trimmed or untrimmed
If such goods are not sheets of circles of copper,
produced or intended for use in the
manufactured by a manufacture of utensils or
manufacturer who handicrafts
manufactures copper
from copper ore or
copper concentrate. 201 74.09 Trimmed or untrimmed Rs.3500 - 33
sheets of circles of copper, per metric
If,- intended for use in the tonne
manufacture of (a) no credit of duty
handicrafts or utensils paid on inputs under
rule 57AB or rule
57AK of the Central
Excise Rules, 1944
has been taken;
(b) the entire amount
of duty is paid in
cash or through
account-current; and
(c) such goods are
not produced or
manufactured by a
manufacturer who
manufactures copper
from copper ore or
copper concentrate:
Provided that the
duty shall not be
payable by a
manufacturer who
manufactures
trimmed sheets or
circles from duty
paid untrimmed
sheets or circles.
In this case it is not disputed by the Department before the Tribunal that
the circles manufactured by the assessee are from brass. According to the
Department, brass is an alloy of copper/zinc and, consequently, trimmed or
untrimmed circles of brass used in the manufacture of utensils would also fall in the
Entry at S.No.201 of the Notification and, therefore, the assessee was liable to pay
duty on such goods at the rate of Rs.3500 PMT. We find no infirmity in the
impugned order of the Tribunal. On comparing the two Entries, it is clear that if the
goods in question are goods other than trimmed or untrimmed circles of copper,
intended for use in the manufacture of utensils, then what is attracted is the nil rate
of duty under Entry at S.No.200. In this case, we are concerned with interpretation
of Entries in the Notification. The exemption Notification covers goods which
squarely falls under Chapter Heading 74.09. In fact, both S.No.200 and S.No.201 of
the Notification deal with Chapter Heading 74.09. However, while giving exemption,
a dichotomy is created between trimmed/untrimmed sheets of copper which attracts
duty at the rate of Rs.3500 PMT on one hand and, on the other, all goods other than
trimmed/untrimmed circles of copper intended for use in the manufacture of utensils
which attract nil rate of duty. In this case, circles manufactured by the assessee are
made from brass. Therefore, in our view, S.No.200 would apply and the assessee
would be entitled to claim nil rate of duty under the said Notification.
We may also point out at this stage that it is well settled position in law that
exemption Notification has to be read strictly. A notification of exemption has to be
interpreted in terms of its language. Where the language is plain and clear, effect
must be given to it. While interpreting the exemption notification, one cannot go by
rules of interpretation applicable to cases of classification under the Tariff. Tariff
items in certain cases are required to be interpreted in cases of classification disputes
in terms of HSN, which is the basis of the Tariff. In this case, we are not concerned
with interpretation of Tariff. In fact, as stated above, the product in question falls
under Chapter Heading 74.09. It is the dichotomy which is introduced by the
exemption Notification which needs to be interpreted. Items made from copper
attract duty at the rate of Rs.3500 PMT whereas circles made from brass attract nil
rate of duty. As stated above, in this case, the Department has not disputed the fact
that the circles were manufactured by the assessee from brass. This is expressly
recorded in the findings given by the Tribunal.
In the circumstances, we find no infirmity in the impugned decision.
Consequently, the Civil Appeal filed by the Department stands dismissed, with no
order as to costs.
In C.A.Nos.1269/2005,3688/2005,3636/2006,1477/2007,2725/2007, 383/2008 and S.L.P. (C) No.6398/2007:
Leave granted in S.L.P.(C) No.6398/2007.
Delay condoned in C.A.No.3636/2006.
In view of the order passed today in C.A.No.3269/2003, these appeals are
dismissed, with no order as to costs.
New Delhi, September 30, 2008.