Case: Commnr. Of Central Excise, Surat-I Vs. M/S. Favourite Industries

In Kohinoor Elastics (P) Ltd. v. Commissioner of Central Excise, Indore, (2005) 7 SCC 528 , this Court has held: "7. When the wordings of the notifications are clear and unambiguous they must be given effect to. By a strained reasoning benefit cannot be given when it is clearly not available." 28. In Compack (P) Ltd. v. Commissioner of Central Excise, Vadodara, (2005) 8 SCC 300 , this Court has observed thus: "20. Bhalla Enterprises laid down a proposition that notification has to be construed on the basis of the language used. Rukmani Pakkwell Traders is an authority for the same proposition as also that the wordings of some other notification are of no benefit in construing a particular notification. The notification does not state that exemption cannot be granted in a case where all the inputs for manufacture of containers would be base paper or paperboard. In manufacture of the containers some other inputs are likely to be used for which MODVAT credit facility has been availed of. Such a construction, as has been suggested by the learned counsel for the respondents, would amount to addition of the words "only out of" or "purely out of" the base paper and cannot be countenanced. The notification has to be construed in terms of the language used therein. It is well settled that unless literal meaning given to a document leads to anomaly or absurdity, the golden rule of literal interpretation shall be adhered to." 29. In Commissioner of Central Excise, Chandigarh-I v. Mahaan Dairies, (2004) 11 SCC 798 , this Court has held: "8. It is settled law that in order to claim benefit of a notification, a party must strictly comply with the terms of the notification. If on wording of the notification the benefit is not available then by stretching the words of the notification or by adding words to the notification benefit cannot be conferred. The Tribunal has based its decision on a decision delivered by it in Rukmani Pakkwell Traders v. CCE. We have already overruled the decision in that case. In this case also we hold that the decision of the Tribunal is unsustainable. It is accordingly set aside." 30. In Commissioner of Customs (Preventive), Gujarat v. Reliance Petroleum Limited, (2008) 7 SCC 220 , 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.31. 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 , (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 , 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-CE and the EXIM Policy 1997-2002. Therefore, we do not see any legal infirmity in the judgment and order so passed by the Tribunal.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]The Notification also makes it clear with regard to the nature or type of goods that the 100% EOU should be manufacturing in its industrial unit. It says that the exempted goods should be in a nature or type of goods which are, normally, produced/manufactured outside India and, but for any reason, they are imported to India. That only means, there must be a similarity between the goods manufactured by a 100% EOU with that of the goods produced or manufactured outside the country but if it is imported into this country. The Notification provides two conditions in order to avail the benefit provided under the Notification. They are conjoint and not disjoint. Firstly, the exemption is available only, if the goods are produced or manufactured in a 100% EOU or FTA or EHTP unit or STP unit and, secondly, they must be allowed to be sold as per EXIM PolicyProviso is appended to the Notification. A reference to the same may not be necessary for the purpose of the disposal of thisShri. K. Swami, learned counsel for the revenue strenuously contends that the assessee has purchased raw material/finished goods, for its manufacturing activity to produce or manufacture the finished products, from a 100% EOU which had imported the raw material which are exempted from the payment of duty and when it affects the sale of such raw material/finished goods manufactured in its industry to another 100% EOU, then, in the hands of the said EOU, it becomes an imported raw material/finished goods. In this regard, he submits that since the language employed in the Notificationdated 1.3.1997 is "raw material produced or manufactured in India", only such raw material, when used for the production or manufacturing of the finished goods which are, ultimately, sold in the DTA, are eligible for exemption and, therefore, the assessee cannot take the benefit of the Notification no.We are afraid that we can accept the argument canvassed by Shri. Swami, in the light of the unambiguous language employed in the Notification no.There is no ambiguity, whatsoever, in the Notification issued by the Central Government. The Notification speaks of finished goods produced or manufactured by a 100% EOU and if it is sold in a DTA, the said EOU can take the benefit of the Notification no.If for any reason, we accept the submission of Shri K.Swami, learned counsel for the Revenue, then we will be adding something into the notification and, in our opinion, the same is impermissible.25. The notification requires to be interpreted in the light of the words employed by it and not on any other basis. There cannot be any addition or subtraction from the notification for the reason the exemption notification requires to be strictly construed by the Courts. The wordings of the exemption notification have to be given its natural meaning, when the wordings are simple, clear and unambiguous.In our view, the Tribunal has rightly understood the purpose and the language employed in Notificationand the EXIM PolicyTherefore, we do not see any legal infirmity in the judgment and order so passed by the Tribunal.