Case: M/S. Novopan India Ltd Vs. Collector Of Central Excise &amp; Customs

2. The appellant is engaged in the manufacture of particle boards. It commenced the production in the year 1979. The first clearances were made in March of that year. The appellant sought to take advantage of the Exemption Notification No. 55 of 1979 issued by the Central Government under Rule 8(1) of the Central Excise Rules 1944. This notification exempted "plywood and boards specified in column (2) of the table hereto annexed and falling under ItemS. No. Description Rate of Duty(1) (2) (3)2. Batten boards and block boards Twenty per cent ad(including flush doors) having both valoremfaces of commercial plywood andveneered shooks and panels made up ofstrips of woods glued between two5. Veneered particle boards excluding Twenty per cent adparticle boards with decorative veneers valoremon one or both faces6. Unveneered panicle boards. Nil7. (Omitted as unnecessary)" *3. The appellants case was that the particle boards manufactured by it are "unveneered particle boards" within the meaning of Item 6 of the aforesaid table and, therefore, totally exempt from duty. This case was accepted by the department. A few months later, the appellant started manufacturing what are described as "melamine faced particle boards". The appellant claimed the benefit of the aforesaid exemption notification with respect to melamine faced particle boards as well, to which the authorities did not agree. According to them, the product fell and was dutiable under Tariff Item 68. The appellant accepted the said position and accordingly a classification list was filed and approved on. On, the Collector of Central Excise issued a notice under SectionA of the Act proposing to revise the order of the Assistant Collector dated. According to him, the melamine faced particle boards (MFPBs) were classifiable under Tariff ItemB but were not entitled to the benefit of exemption provided by the Notification No. 55 of 1979 aforesaidwith the result that the said boards became liable to a duty higher than the one prescribed under Tariff Item 68. The appellant showed cause whereupon the Collector dropped the proceedings. He held that the MFPBs fell under Tariff Item 68 and not under Tariff Item. Onthis occasion, however, the appellant questioned the order of the Collector by filing a revision before the Central Government wherein he put forward a composite claim. According to it, MFPBs were no doubt classifiable under Tariff ItemB but at the same time, they were entitled to the benefit of the Exemption Notification No. 55 of 1979 aforesaid. The idea evidently was to obtain total exemption from tax in this manner. The Tribunal examined the said claim but rejected it. The Tribunal agreed with the Collector that MFPBs were properly classifiable and dutiable under Tariff Item 68

Reasoning:
It is thus difficult to say that the melamine faced particle boards can be described as "unveneered particle boards". Nobody in the trade circles or in the market would consider both the products as one and the same. From whichever way one looks at them, they appear to be different products. As stated hereinbefore, even the process of manufacturing is different. It is not a case of mere processing of particle boards for giving it strength. It is a case of manufacturing an altogether different productOn the basis of the last sentence in the above extract, the learned counsel sought to contend that melamine faced particle board is the same as the particle board and that merely covering the particle boards withd paper, with a view to lend them strength and a smooth and attractive surface do not make MFPBs a different product. We do not think that the said description in Encyclopaedia is of any assistance in the matter of classification where the test is the one indicated hereinbefore, viz., whether they are commercially different goods. The Tribunal has held that they are not and no material has been brought to our notice to take a different viewSo far as Dr. Joseph, one of the experts is concerned, the Tribunal has pointed out, and rightly in our opinion, that he has been associated with they from the beginning, as admitted by the said person himself. The other person Shri A. C. Shekhar was also found to be associated with the. Both of them deposed before the Tribunal that they did not witness the process of manufacture nor were they able to comment upon the process of manufacture contained in the brochure referred to hereinabove. From a reading of their affidavits, the Tribunal concluded that they are not independent experts and that their affidavits were prepared with a view to bolster the appellants case in these proceedings. The said experts, the Tribunal observed, did not also try to support their opinions with reference to any technical literature or authority on the subject. For all the above reasons, the Tribunal declined to accept their bare assertion that MFPBs can be described as "unveneered particle boards". We cannot say that the reasons given by the Tribunal for rejecting the said affidavits are either irrelevant or unsustainable. The said affidavits, therefore, do not advance the appellants case in any manner14. It is true that in some decisions a contrary view appears to have been expressed16. We are, however, of the opinion that, on principle, the decision of this Court in Mangalore Chemicalsand in Union of India v. Wood Papers referred to thereinrepresents the correct view of law. The principle that in case of ambiguity, a taxing statute should be construed in favour of the assesseeassuming that the said principle is good and sounddoes not apply to the construction of an exception or an exempting provision; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Mangalore Chemicals and other decisions, viz., each such exception/exemption increases the tax burden on other members of the community, of course, the provision is found applicable to him, full effect must be given to it. As observed by a Constitution Bench of this Court in Hansraj Gordhandas v. H. H. Dave that such a notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i. e., by the plain terms of the exemption17. Applying the above principles, we must hold that the words "unveneered particle boards" in Item 6 of the table appended to the exemption notification cannot and do not take in melamine faced particle boards. Indeed, the learned counsel for the Revenue contends, and in our opinion rightly, that the said entry does not admit of any doubt, that it is clear and specific and that it covers only unveneered particle boards and nothing else