CTION Civil Appeal No 398890 of 1988
From Order No 590 5921988 dated 1881988 of the Customs Excise and Gold Control Appellate Tribunal New Delhi in Appeal Nos
E 37584 D SA No 99188 D  99288 D with CO No 283 84 D V Lakshmikumaran Madhava Rao and V Balachandran for the Appellant
AK Ganguli and P Parmeshwaran for the Respondent
Judgment of the Court was delivered by SABYASACHI MUKHARJI J This is an appeal under section 35L of the Central Excises  Salt Act 1944 hereinafter referred to as the Act  against the judgment and order dated 18th August 1988 passed by the Customs Excise  Gold Control Appellate Tribunal New Delhi hereinafter re ferred to as the tribunal 
The appellant was at all relevant times engaged in the manufacture inter alia of polyester fibre man made failing under tariff item 18 of the erstwhile Central Excise Tariff
In the manufacture of the aforesaid the appellant was using amongst other inputs ethylene glycol and DMT Dimethyl Tetraphthalate duty paid ethylene glycol falling under tariff item No 68 of the erstwhile Central Excise Tariff received by the appellant and used in the manufac ture
The notification No 20179 dated 4679 mentioned hereinafter exempted according to the appellant all excisable goods on which duty of excise was leviable and in the manufacture of which any goods falling under tariff item 68 had been used from so much of the duty of excise as was equivalent to the duty of excise paid on the inputs
The appellants claimed set off of duty on ethylene glycol used in the manufacture of polyester fibre under notification No 20179 dt
2361979
In response to the appellant s seeking set off the duty paid on ethylene glycol they received a letter from the Assistant Collector of Central Excise Ghaziabad dated 6th August 1980 by which the Asstt
Col lector held that no proforma credit was allowable in respect of ethylene glycol for the following a Methanol which is not excisable and is cleared without pay 266 ment of duty b Glycol residual waste which was being destroyed by the appellants by throwing in the field and c Polyester fibre waste which was used in the recovery of DMT and exempt from payment of duty under Central Excise Notification dt
19th May 1976
The appellants were further directed to furnish the exact percentage of ethylene glycol content usedconsumed in the methanol the ethylene glycol residual waste and polyes ter fibre waste and that not to utilise the proforma credit or set off credit till the data was furnished and the same was authenticated by the Chemical Engineer
The classifica tion list submitted by the appellants was modified in terms of the said letter
Thereafter classification list was filed claiming set off of duty on ethylene glycol falling under tariff item 68 under exemption notification No 20179 as amended by noti fication No 10281 dt
13th May 1981
By this amended notification a second proviso was added which provided that the credit of the duty allowed in respect of inputs could not be denied or varied on the ground that part of thee input was contained in any waste refuge or by product arising during the manufacture irrespective of the fact that such waste refuse or byproduce was exempt from the whole of duty of excise leviable thereon or was chargeable to nil rate of duty
Hence it is the case of the appellants that from 11th April 1981 even though some part of the input may be con tained in any waste refuge or by product which is charge able to nil rate of duty the credit of the duty paid on the inputs could not be denied
By this order the set off of duty in respect of duty paid ethylene glycol was allowed from 11th April 1981 onwards except in the case of ethylene glycol used consumed in polyester waste used for recovery of DMT on the ground that this polyester waste was charge able to nil rate of duty
Similarly duty paid on ethylene glycol which was used for recovery of DMT was held not to be allowable while paying duty on polyester fibre
Aggrieved thereby an appeal against the said order to the Collector of Central Excise Ghaziabad was filed
The main contentions of the appellants were that the ethylene glycon received in the factory after payment of duty was consumed in the manufacture of polyester fibre only
During the course of manufacture of polyester fibre two basic raw materials DMT and Glycol interact and thereby certain waste comes into existence
This 267 waste is recycled with glycol for the recovery of DMT in DMT recovery plant within the factory
Hence the entire set off of duty was to be allowed since no part of DMT produced was diverted for any other use other than production of polyester fibre nor was it taken outside the factory
The appellants contended that in case of proforma credit proce dure under rule 56 A of the Central Excise Rules clarifica tion had been issued by the Collector of Central Excise under trade notice No 72 CE80 dt
1980 to the effect that proforma credit is permissible even where at an in termediate state of manufacture a final product which is fully exempt from duty comes into being provided that the fully exempted product is consumed in the production or manufacture of the finished product
This trade notice categorically states that this clarification would also be applicable to exemption notification No 20179
By an order dated 17th November 1981 the Asstt
Collec tor held that the appellants were entitled to credit of duty paid on the ethylene glycol only to the extent of the per centage content as determined by the Chief Chemical Engi neer CRCL New Delhi
The order covered the period from 1771979 to 104
As mentioned before the notification was amended from 11th April 1981 whereby the credit of the duty on any inputs was not to be denied to any waste refuse or by product arising during the manufacture of the output irre spective of whether the waste refuse or by product was chargeable to nil rate of duty or not
By a letter dated 27th November 1981 the appellants were informed that set off for Rs 154167360 was inadmis sible
By a subsequent letter of the Superintendent of Central Excise Ghaziabad dated 17th December 1981 it was stated to the appellant that they had received Rs 154274016 as set off which was inadmissible
The period mentioned was 1771979 to 1041981
The appellants case was that this related only to ethylene glycol content in methanol
There was a second appeal preferred to the Collector of Central Excise Delhi against the order dated 17111981 of the Asstt
Collector disallowing the set off of duty credit paid on ethylene glycol content in methanol and ethylene glycol waste and polyester fibre waste
A third appeal was filed before the Collector Appeals against the duty demand of Rs 154274016
Thereafter the appellants received a letter dated 23rd April 268 1983 from the Superintendent of Central Excise which stated that the stand of the appellants that the ethylene glycol contribute only H positive and not OH negative has been accepted by the Chief Chemical Engineer CERL New Delhi
Consequently since the ethylene glycol content in the methanoi wherein the ethylene glycol contribute only H positive and not OH negative ions the amount of inadmissi ble set off would stand reduced to Rs9074976
The aforesaid three appeals were decided by the Collec tor of Central Excise Appeals by passing a single order dated 15th December 1983 wherein he observed that the procedure under notification No 20 179 was materially the same as the procedure under rule 56A and in the circum stances allowed all the appeals and set aside the Asstt
Collector s order and the demands
Aggrieved thereby the revenue went up in appeal before the tribunal
The tribunal after examining the aforesaid contentions noted the contention of the parties
It was the case of the revenue that prior to 1 Ith April 1981 there was no provision in notification No 20179 entitling the manufacturer to obtain credit of the duty of excise already paid on the inputs resulting in waste or by product or refuge which arose in the manufacture of excisable products which used the inputs
Hence it was argued that the duty element in the quantity of glycol which was contained in the glycol residual waster polyester fibre waste and methanoi by product which was non excisable did not qualify for credit which could be subsequently used for discharging duty liability on dutiable finished product
The provision con tained in notification No 10281 was not available prior to 11th April 1981 it was submitted on behalf of revenue
It was further submitted that the trade notice issued by Pune Collectorate pertained to rule 56 A only and not to the notificaion
It was further submitted that the rule and notifications are different enactments and the provisions of one cannot be read into another even after 11th April 1981 and the exemption was only in respect of duty on inputs in the manufacture of excisable goods and their waste by product or refuge
It was submitted that since methanol was not excisable it was not eligible for set off of duty on the glycol content in its manufature
On behalf of the appellants however it was contended that glycol is used totally in the production of polyester fibre
methanol results out of the reaction of DMT and glycol and that the Government always maintained parity between rule 56 A and notification No 20179 hence the appellants were eligible to full set off
On behalf of the appellants reliance was placed on the decision of the High Court of Bombay in Indian Aluminium Co 269 Ltd  Anr
vs AK Bandyopadhyay  Ors The question that the tribunal had to decide was whether the set off of duty paid on inputs was admissible only if the finished excisable goods manufactured therefrom was not exempted from duty
The process of manufacture and the out come of ethynol are not in dispute
The tribunal was of the view that the judgment of the Bombay High Court had held that dross skimmings thrown off in the process of manufac ture and aluminium sheets were not end products or finished or by products merely because such refuge might fetch some price in the market
The High Court had further held that proviso to sub rule 56 A will have no application and the skimmings cannot be said to be finished excisable goods
These were not exempted from the whole of duty of excise or chargeable to nil rate of duty whereas the sub rule pre scribed that the credit is admissible if the material is used in the manufacture of finished goods which are exempt from duty or are chargeable to nil rate of duty
The Tribu nal was of the opinion that the factual background of the case before the Bombay High court was different and there fore it was of the opinion that the said decision was not applicable in the instant case
The Tribunal was of the opinion that the revenue was right that rule 56A and notification No 20179 were differ ent enactments and the amendment to one could not be read into the other
In that view of the matter the Tribunal was of the view that the Collector s observation that the proce dure under notification No20179 was materially the same as the procedure under rule 56A and consequently the amending notification deemed to have retrospective effect was not in the absence of any such indication acceptable
In the premises the Tribunal allowed the appeals and rejected the cross objection
The question involved in these appeals is whether the Tribunal was right
On behalf of the appellants Shri V Lakshmikumaran contended that the Tribunal failed to appre ciate that the provisions of rule 56A and notification No 20179 were para materia
It appears to us that the provi sions of rule 56A and the notification No 20179 are iden tical
The relevant provisions of Rule 56A are as follows 56A1   56A2 The Collector may on application made in this behalf and subject to the conditions mentioned in sub rule 3 and such other conditions as may from time to time be prescribed by the Central Government permit a manu 270 facturer of any excisable goods specified under sub rule 1 to receive material or component parts of finished product like Asbestos Cement on which the duty of excise or the additional duty under section 3 of the 51 of 1975 herein after referred to as the countervailing duty has been paid in his factory for the manufac ture of these goods or the more convenient distribution of finished product and allow a credit of the duty already paid on such mate rial or component parts or finished product as the case may be Provided that no credit of duty shall be allowed in respect of any material or compo nent parts used in the manufacture of finished excisable goods i if such finished excisable goods produced by the manufacturer are exempt from the whole of the duty of excise leviable thereon or are chargeable to nil  rate of duty and ii   Explanation
Credit of the duty allowed in respect of any material or component parts shall not be denied or varied on the ground that part of such material or component parts is contained in any waste refuse or by product arising during the process of manufac ture of the finished excisable goods irrespec tive of the fact that such waste refuse or by product is exempt from the whole of the duty of excise leviable thereon or is charge able to nil rate of duty or is not notified under sub rule  1 Provided  
The notification No 20 179 prior to 1 Ith April 1981 in so far as relevant for the present purpose was as follows Set off of duty on all exciseable goods on use of duty paid goods falling under Item 68 Tariff Items I to 68 In exercise of the powers conferred by sub rule 1 of rule 8 of the Central Excise Rules 1944 and in supersession of the notification of the Gov ernment of India in the Ministry of Finance Department of Revenue No 17877 Central Excise dated the 18th June 1977 the Central Government 271 hereby exempts all excisable goods hereinaf ter referred as the said goods on which the duty of excise is leviable and in the manufacture of which any goods falling under Item No 68 of the first Schedule to the 1 of 1944 hereinafter referred as the inputs have been used from so much of the duty of excise leviable thereon as is equivalent to the duty of excise already paid on the inputs Provided that the procedure set out in the Appendix to this notification is followed Provided further that nothing contained in this notification shall apply to the said goods which were exempted from the whole of the duty of excise leviable thereon or are chargeable to nil rate of duty The amending notification No 10281 dated 11th April 1981 is as follows Provided also that credit of the duty allowed in respect of the inputs shall not be denied or varied on the ground that part of such inputs is contained in any waste refuse or by product arising during the process of manufacture of the said goods irrespective of the fact that such waste refuse or by product is exempt from the whole of the duty of excise leviable thereon or is chargeable to nil rate of duty or is not mentioned in the declaration referred to in the Appendix to this notifica tion Central Board of Excise  Customs issued Circular No 681CX
6 dated 31st January 1981 which reads as follows Central Excise Rule 56A Proforma Credit of duty paid on materialcomponent parts con tained in waste refuse or by product arising during the process of manufacture regarding
A doubt has been raised whether proforma credit of duty paid on materialcomponent parts used in manufacture of the finished excisable goods notified under rule 56A of the Central Excise Rules 1944 is to be denied to the extent such material or component parts are contained in any 272 waste refuse or by product arising during the process of manufacture of the notified fin ished excisable goods on the grounds that such waste refuse or by product is either fully exempt from duty or not notified under sub rule 1 of rule 56A 2
Since the Government s intention has been not to deny the benefit of proforma credit in such situation an Explanation has been added to sub rule 2 of rule 56A so as to remove the ambiguity in the rule
Notification No 88 I CE dated 311
1981 amending rule 56 A is enclosed
It may however be noticed that such credit cannot be utilised for payment of duty leviable on such waste refuse or by product
 On an analysis and comparison of aforesaid it is clear that the clarification in the form of trade notice issued by the Pune Collectorate in respect of rule 56A was as much applicable to that rule as to notification No 20 179
In the premises it is clear that the Tribunal should have held that even though a part of the ethylene glycol was contained in the by product methanoi yet the credit of duty could not be reduced to the extent of the ethylene gIycol contained in the mathanoi as ineligible
It is true that when in a fiscal provision if benefit of exemption is to be considered this should be strictly considered
But the strictness of the construction of exemption notification does not mean that the full effect to the exemption notification should not be given by any circuitous process of interpretation
After all exemption notifications are meant to be implemented and trade notices in these matters clarify the stand of the Government for the trade
It is clear therefore that the Tribunal failed to interpret the words of the exemption notification No 20179 properly and fully
The said notifi cation exempted all excisable goods on which the duty of excise was leviable and in the manufacture of which any goods falling under Tariff Item 68 ie inputs had been used from so much of the duty of excise leviable thereon as was equivalent to the duty of excise already paid on the inputs
It is clear however that ethylene glycol was used in the manufacture of polyester fibre
It appears that methanoi arises as a part and parcel of the chemical reac tion during the process of manufacture when ethylene glycol interacts with DMT to produce polyester fibre
It is not possible to use a lesser quantum of the ethylene glycol to prevent methanoi from arising for producing a certain quan tity of polyester fibre
Thus the quantity of ethylene glycol required to produce a certain quantum of polyester fibre is determined 273 by the chemical reaction
It may be mentioned herein that it is not as if the appellants have used excess ethylene glycol wantonly to produce the methanol
It is clear that the appellants are not engaged in the production of methanol but in the production of polyester fibre
That position is undisputed
Therefore it appears that the Tribunal erred when it held that the appellants were not entitled to a part of the credit of duty since ethylene glycol when it inter acts with DMT also gives rise to methanoi
This construction would frustrate the object of exemption if something which evidently arises out of the interaction is denied Credit
Even prior to amendment to notification No 20179 with effect from 1 Ith April 1987 the only situation where the credit of the duty paid on the inputs could be denied was only where the final products were wholely exempt from the duty of excise or chargeable to nil rate of duty
In the present case the excisable goods namely polyester fibre were not wholely exempt from duty nor chargeable to nil rate of duty
It cannot be read in the notification that the notification would not be available in case non excisable goods arise during the course of manufacture
In fact the Tribunal seems to have erred in not bearing in mind that exemption notification was pressed in service in respect of polyester fibre which is excisable goods and not in respect of methanoi which arises as a by product as a part and parcel of chemical reaction
It appears further on a com parison of the rule 56A and the notification No 20 179 that these deal with the identical situation
In this connection reference may be made to the deci sion of the Bombay High Court in Indian Alurninium Co and Anr s case supra
In that case the High Court came to the conclusion that dross and skimmings were merely the refuge scum or rubbish thrown out in the process of manu facture of aluminium sheets and could not be said to be the result of treatment labour or manipulation whereby a new and different article emerged with a distinctive name character or use which can ordinarily come to the market to be bought and sold
The High Court further held in that case that merely because such refuse or scum may fetch some price in the market does not justify it being called a by product much less an end product or a finished product
In the light of that fact the High Court was of the view that in that case the end product was aluminium sheets manufactured from aluminium ingots and dross or skimmings
Therefore the High Court was of the view that these were neither goods  nor end products  nor finished products  liable to duty under item 27 of Central Excise Tariff
The High Court was of the view that under proviso to section 56 A 2 proforma credit was not admissible if the material is used in the manufac ture of finished excisable goods which are exempt from duty 274 or chargeable to nil rate of duty
Since dross and skimmings are mere ashes  these could not be said to be finished excisable goods nor they were exempt from the whole of duty of excise or chargeable to nil  rate of duty
Therefore proviso to sub rule 2 of rule 56A would not have any application
The High Court was of the view that refuse or skum thrown off during the process of manufacture could not by any stretch of imagination be considered as a by product and merely because such refuse or scum may fetch some price in the market they could not be said to be finished excisa ble goods 
Under rule 56A the High Court was of the view if the material is used in the manufacture of any finished excisable goods and during the course of manufacture any non excisable by product emerged then it could not be said that the raw material was not used in the manufacture of the finished excisable goods
In our opinion the same analogy and reasoning would apply when the methanoi arises as a result of chemical reaction and not as a result of any by product
In the instant case the methanoi was nonexcisable
Just because methanoi arises as a part and parcel of the chemical reac tion during the process of manufacture it cannot be said that methanoi was not used in the manufacture of polyester fibre
The intention of the Government is evident further more from the trade notice of Pune Collectorate No 3181
The Tribunal therefore should have taken into considera tion the trade notice for interpretation of exemption noti fication No 20179 which was para materia with rule 56A
In the aforesaid view of the matter we are of the opinion that the Tribunal was in error in coming to the conclusion it did
The appeals are therefore allowed and the order and the judgment of the Tribunal are set aside and the combined orders of the Collector Appeals Nos
284 286CEMT83 dated 15th December 1983 are restored
In the facts and the circumstances of the case there will be no order as to costs
RSS Appeals allowed


Summary:
By a notification issued under Section 4 of the Land Acquisition Act and published in the Government Gazette on 26101967 the State Government declared its intention to acquire the land of the Respondent on 2321968
A notifica tion under section 6 of the Act was published in the Gazette and on 531969
The Land Acquisition Officer declared award determining compensation at the rate of 4 paise per square meter with solatium at 15 per cent
At the instance of the respondent claimant a reference under section 18 of the Act was made to the Distt
judge on May 28 1985
The Civil Court awarded compensation at Rs3 per square meter and also awarded solatium at 15 per cent and interest at 6 per cent from the date of taking possession of the land by the State till payment of compensation
Being dissatisfied the Respondent preferred an appeal to the High Court seeking enhancement both of compensation and solatium at the rate of 30 per cent
The High Court allowed the appeal and granted three reliefs viz 1 Additional amount at the rate of 12 per cent of the market value from the date of the notification under section 4 till the date of taking over possession 2 interest at the rate of 9 percent for the first year from the date of taking possession and 15 per cent for the subse quent
years and 3 Solatium at 30 per cent on the market value
The appellant has thus filed the instant appeal after obtaining Special Leave
There is no grievance as regards the interest awarded
The challenge relates to the grant of enhanced solatium and the additional amount of compensation
Appellants  conten tion is that sections 302 and 232 are not at all at tracted and the claim of the Respondent on the said two counts is not sustainable
337 Partly allowing the appeal this Court HELD Section 302 provides that the amended provisions of section 232 shall apply and shall be deemed to have applied also to and in relation to any award made by the Collector or Court between 30th April 1982 and 24th Septem ber 1984 or to an appellate order therefrom passed by the High Court or Supreme Court
The purpose of these provisions seems to be that the awards made in that interregnum must get higher solatium in as much as to awards made subsequent thereto
343G H If there is obvious anamoly in the application of law the Court could shape the law to remove the anamoly
The Legislatures do not always deal with specific controversies which the Court decide
They incorporate general purpose behind the statutory words and it is for the Courts to decide specific cases
If a given case is well within the general purpose of the legislature but not within the liter al meaning of the statute then the Court must strike the balance
So construing the Court held that benefit of higher solatium under section 232 should be available also to the present case
344A C In the instant case on October 26 1967 the notifica tion under section 4 was issued
On March 5 1969 the Collector made the award
The result is that on April 30 1982 there was no proceeding pending before the Collector
Therefore Section 30 sub section 1a is not attracted to the case
Since the proceedings for acquisition commenced before 30th April 1982 Section 30 sub section 1b is also not applicable to the case
The case is therefore really gone by both ways
The claimant is therefore not entitled to additional amount provided under Section 23IA
346E F The purpose of incorporating Transitional Provisions in any Act or amendment is to clarify as to when and how the operative parts of the enactments are to take effect
The transitional provisions generally are intended to take care of the events during the period of transition
343A Kamalajammaniavaru vs Special Land Acquisition Offi cer  Bhag Singh vs Union Territory of Chandigarh   State of Punjab vs Mohinder Singh  Union of India vs Raghubir Singh   Towne vs Eisher  425 1918 Lenigh Valley Coal Co vs Yensavage at 553 Mahadeolal Kanodia vs The Administrator General of West Bengal   referred to
338 Special Land Acauisition Officer Dandeli vs Soma Gopal Gowda AIR 1986 Karnataka 179 at 183 FB Jaiwant Laxman P Sardesai etc
vs Government of Goa Daman  Diu  Anr
 AIR 1987 Bom
214 at 217 FB overruled