Case: COMMISSIONER OF CENTRAL  EXCISE, NAGPUR Vs. M/S UNIVERSAL FERRO &amp; ALLIED CHEMICALS LTD. &amp; ANR.

excise leviable under the said Section 3 of the Central Excise Act or under any other law for the time being in force on like goods, produced or manufactured in India other than in a hundred per cent export-oriented undertaking or a free trade zone, if sold in India. 51. It could thus be seen, that the said notification specifically provides grant of exemption to the EOUs from the payment of duties, which are in excess of what is leviable under sub-section (1) of Section 3 of the Central Excise Act, 1944 on like goods, produced or manufactured in India. In our considered view, since the said Exemption Notification specifically mentions, that the goods produced or manufactured by an 100% EOU, which are allowed to be sold in India in accordance with para 9.9(b) of the EXIM Policy, the proviso would be inapplicable thereby, requiring the duties to be paid, as are required to be paid under sub- Section (1) of Section 3 of the said Act. The conditions which can be culled out for enabling to get the benefit of the said Exemption Notification are as under: (i) The finished products, rejects and waste or scrap specified in the Schedule to the Central Excise Tariff Act, 1985 should be produced or manufactured in the 100% export-oriented undertaking or a free trade zone; (ii) The said finished products should be manufactured wholly from the raw materials produced or manufactured in India; (iii) They are allowed to be sold in India under and in accordance with the provisions of sub-paragraphs (a), (b), (c), (d) and (f) of paragraph 9.9 or of paragraph 9.20 of the EXIM Policy. 52. Undisputedly, in the present case, the transaction between UFAC and TISCO satisfies all the three conditions. The goods are produced and manufactured by UFAC, an 100% export-oriented unit; they are manufactured wholly from the raw materials produced or manufactured in India and, thirdly, they have been allowed to be sold in India in accordance with the provisions of paragraph 9.9(b) of the EXIM Policy. 53. We will now consider the submission of Shri Radhakrishnan, learned Senior Counsel, that in view of substitution of the words allowed to be sold in India by brought to any other place in India, the said Exemption Notification shall stand impliedly overruled/repealed. 54. No doubt, that the reliance placed by the learned Senior Counsel on the judgments of this Court to the effect that if there are inconsistencies in two statutes, the later would prevail is well placed. This Court in Deep Chand vs. State of Uttar Pradesh AIR 1959 SC 648 has laid down the following principles to ascertain whether there is repugnancy or not: (1) Whether there is direct conflict between the two provisions; (2) Whether the legislature intended to lay down an exhaustive code in respect of the subject matter replacing the earlier law; (3) Whether the two laws occupy the same field. The said view has been consistently followed by this Court in catena of judgments. 55. We do not find, that there would be any conflict in the amended provisions of clause (ii) of the proviso to sub- section (1) of Section 5A of the Act and the said Exemption Notification. In any case, by the 2001 Amendment, the legislature has not laid down any exhaustive code in respect of the subject matter in replacing the earlier law. It appears, that the said Amendment has been incorporated to bring the said clause (ii) of sub-Section (1) of Section 5A in sync with the words used in clause (i) of the proviso to sub-section (1) of Section 5A of the Act and the words used in the proviso to sub-section (1) of Section 3 of the Act. In that view of the matter, we find, that the said contention is without substance. 56. Insofar as the reliance placed by the learned Senior Counsel on the judgment of this Court in the case of Siv Industries Ltd. (supra) so as to distinguish the terms allowed to be sold in India and brought to any other place in India is concerned, we find, that the said judgment would rather support the case of the respondent – Assessee. It would be relevant to refer to the following observation in paragraph 18 of the said judgment, which reads thus: Thus it is apparent that debonding and permission to sell in India are two different things having no connection with each other. It also becomes apparent that in view of the EOU Scheme as modified from time to time and corresponding amendments to Section 3 of the Act the expression allowed to be sold in India in the proviso to Section 3(1) of the Act is applicable only to sales made up to 25% of production by 100% EOU in DTA and with the permission of the Development Commissioner. No permission is required to sell goods manufactured by 100% EOU lying with it at the time approval is granted to debond. 57. It is to be noted that the case that fell for consideration before this Court was with regard to debonding. What this Court has held is, that no permission is required to sell goods manufactured by 100% EOU lying with it, at the time approval is granted to debond. It has been held, that the expression allowed to be sold in India in the proviso to Section 3(1) of the Act was applicable only to sales made upto 25% of production by 100% EOU in DTA and with the permission of the Development Commissioner. Admittedly, in the present case, the sales made by UFAC to TISCO are within the permissible limits and with the permission of the Development Commissioner. 58. The view taken by this Court in the case of Sarla Performance Fibers Limited (supra) is a similar view, taken following the decision of this Court in Siv Industries Ltd. (supra). As such, the said judgment also is of no assistance to the case of the appellant.

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

Explanation:
0[ds]19. We do not find any merit in the submission of Shri Radhakrishnan in this regard20. The perusal of the definition makes it clear that when there is a transfer of possession of goods in the ordinary course of trade or business either for cash or for deferred payment or any other valuable consideration, the same would be covered by the terms sale and purchase within the meaning of the Central Excise Act, 1944. Undisputedly, in the present case, there is a transfer of Manganese Ore by TISCO to UFAC for the purposes of processing the same and converting it into Silicon Manganese. Undisputedly, the same is also for a valuable consideration23. It is also equally well settled that the first principle of interpretation of plain and literal interpretation has to be adhered to. We are therefore of the considered view, that the narrower scope of the term sale as found in the Sale of Goods Act, 1930 cannot be applied in the present case. The term sale and purchase under the Central Excise Act, 1944, if construed literally, it would give a wider scope and also include transfer of possession for valuable consideration under the definition of the term sale27. It can therefore be seen, that under para 9.9(a) of the EXIM Policy, EOU is entitled to sell the rejects in the DTA on prior intimation to the Customs authorities. Such sales are to be counted against DTA sale entitlement under paragraph 9.9(b) of the EXIM Policy. The sale of rejects shall be subject to payment of duties as applicable to sale under paragraph 9.9(b) of the EXIM Policy30. It can thus clearly be seen, that paragraph 9.9(b) and paragraph 9.17(b) of the EXIM Policy operate in totally different fields. Under paragraph 9.9 (b), an EOU is entitled to sell upto 50% of the FOB value of exports to DTA subject to payment of applicable duties and fulfilment of minimum NFEP as prescribed in Appendix-I of the Policy, whereas under paragraph 9.17(b), an EOU is entitled to undertake job-work for export, on behalf of DTA units, with the permission of Assistant Commissioner of Customs, provided the goods are exported direct from the EOU/EPZ units. In such type of exports, the DTA units would be entitled for refund of duty paid on the inputs by way of Brand Rate of duty drawback34. We find, that failure on the part of the Commissioner, who passed the order-in-original, to notice the Circular dated 22.5.2000 has resulted in passing an erroneous order. It also appears, that after the show cause notice was issued to UFAC, the Commissioner had sought a clarification from the Sponsoring Authority i.e. the Development Commissioner, SEEPZ vide communication dated 6.11.200136. It is not in dispute that all transactions between UFAC and TISCO have been entered into after the necessary permission was obtained from the Development Commissioner37. It could thus be clearly seen, that the Original Authority itself has found that clearance of the goods manufactured on the basis of job-work had been effected on payment of duty vide Exemption Notification of 1997 against permission for DTA sales granted by the Development Commissioner, SEEPZ, Mumbai from time to time38. The combined reading of paragraph 9.9(b) of the EXIM Policy, the Circulars issued by the Board, particularly, the Circular dated 22.5.2000 and reply to the query of the Customs Authorities by the Development Commissioner, SEEPZ would clearly show, that the UFAC was entitled to carry out the job-work on behalf of TISCO on payment of duty as provided under Exemption Notification of 199746. We are of the considered view, that if such an interpretation is accepted, the words unless specifically provided in such notification in sub-section (1) of Section 5A will have to be ignored and the said words would be rendered otiose. It is a settled principle of law that while interpreting a provision due weightage will have to be given to each and every word used in the statute48. We therefore find, that the interpretation as sought to be placed by Shri Radhakrishnan would render the term unless specifically provided in such notificationin sub- section (1) of Section 5A otiose or useless. Such an interpretation would not be permissible. We find, that the harmonious construction of sub-Section (1) of Section 5A of the Act and the proviso thereto would be, that an EOU which brings the excisable goods to any other place in India would not be entitled for a general exemption notification unless it is so specifically provided in such a notification50. The bare reading of the aforesaid Notification would amply make it clear, that the Central Government after being satisfied that it was necessary in the public interest so to do, thereby exempted the finished products, rejects and waste or scrap which was produced or manufactured in a hundred per cent export-oriented undertaking or a free trade zone wholly from the raw materials produced or manufactured in India and allowed to be sold in India under and in accordance with the provisions of sub-paragraphs (a), (b), (c), (d) and (f) of paragraph 9.9 or of paragraph 9.20 of the EXIM Policy, from so much of the duty of excise leviable thereon under Section 3 of the Central Excise Act, 1944, as is in excess of an amount equal to the aggregate of the duties of excise leviable under the said Section 3 of the Central Excise Act or under any other law for the time being in force on like goods, produced or manufactured in India other than in a hundred per cent export-oriented undertaking or a free trade zone, if sold in India51. It could thus be seen, that the said notification specifically provides grant of exemption to the EOUs from the payment of duties, which are in excess of what is leviable under sub-section (1) of Section 3 of the Central Excise Act, 1944 on like goods, produced or manufactured in India. In our considered view, since the said Exemption Notification specifically mentions, that the goods produced or manufactured by an 100% EOU, which are allowed to be sold in India in accordance with para 9.9(b) of the EXIM Policy, the proviso would be inapplicable thereby, requiring the duties to be paid, as are required to be paid under sub- Section (1) of Section 3 of the said Act. The conditions which can be culled out for enabling to get the benefit of the said Exemption Notification are as under:(i) The finished products, rejects and waste or scrap specified in the Schedule to the Central Excise Tariff Act, 1985 should be produced or manufactured in the 100% export-oriented undertaking or a free trade zone;(ii) The said finished products should be manufactured wholly from the raw materials produced or manufactured in India;(iii) They are allowed to be sold in India under and in accordance with the provisions of sub-paragraphs (a), (b), (c), (d) and (f) of paragraph 9.9 or of paragraph 9.20 of the EXIM Policy52. Undisputedly, in the present case, the transaction between UFAC and TISCO satisfies all the three conditions. The goods are produced and manufactured by UFAC, an 100% export-oriented unit; they are manufactured wholly from the raw materials produced or manufactured in India and, thirdly, they have been allowed to be sold in India in accordance with the provisions of paragraph 9.9(b) of the EXIM Policy54. No doubt, that the reliance placed by the learned Senior Counsel on the judgments of this Court to the effect that if there are inconsistencies in two statutes, the later would prevail is well placed55. We do not find, that there would be any conflict in the amended provisions of clause (ii) of the proviso to sub- section (1) of Section 5A of the Act and the said Exemption Notification. In any case, by the 2001 Amendment, the legislature has not laid down any exhaustive code in respect of the subject matter in replacing the earlier law. It appears, that the said Amendment has been incorporated to bring the said clause (ii) of sub-Section (1) of Section 5A in sync with the words used in clause (i) of the proviso to sub-section (1) of Section 5A of the Act and the words used in the proviso to sub-section (1) of Section 3 of the Act. In that view of the matter, we find, that the said contention is without substance56. Insofar as the reliance placed by the learned Senior Counsel on the judgment of this Court in the case of Siv Industries Ltd. (supra) so as to distinguish the terms allowed to be sold in India and brought to any other place in India is concerned, we find, that the said judgment would rather support the case of the respondent – AssesseeAdmittedly, in the present case, the sales made by UFAC to TISCO are within the permissible limits and with the permission of the Development Commissioner58. The view taken by this Court in the case of Sarla Performance Fibers Limited (supra) is a similar view, taken following the decision of this Court in Siv Industries Ltd. (supra). As such, the said judgment also is of no assistance to the case of the appellant.