Case: M/S. Compack Pvt. Ltd Vs. Commnr. Of Cent. Ex. &amp; Customs, Vadodara

2. The Appellant, a Company incorporated under the Companies Act, 1956, is engaged in the manufacture and production of excisable goods, i.e. cardboard containers. It is a Small Scale Industry. It opted for the benefit contained in Section AA of Chapter V of the Central Excise Rules, 1944 so as to avail the MODVAT credit of the specified duties on plastic coated paper known as LDPE coated paper. It, however, did not avail of any MODVAT credit in respect of base paper or base paperboard. According to the Appellant, the cardboard container is manufactured out of base paper having three layers and the outer layer consists of LDPE coated paper which is said to have been manufactured from the base paper apart from other inputs.

Court's reasoning:
18. Keeping in view the principles laid down in the aforementioned decisions, we have to construe the exemption notification in question.19. The said notification was issued in terms of sub-rule (1) of Rule 8 of the Central Excise Rules, 1944. By reason thereof , printed carton, boxes, containers and cases whether in assembled or unassembled condition falling under Chapter 48 of the schedule appended to the Central Excise Tariff Act, would receive the benefit of exemption subject to the condition that the appropriate duty of excise or additional duty leviable under Section 3 of the Customs Tariff Act has already been paid in respect of the base paper used in their manufacturing.15. In Commissioner of Central Excise, Chandigarh vs. Bhalla Enterprises [2004 (173) ELT 225 (SC)], it was heldbasic rule in interpretation of any statutory provision is that the plain words of the statute must be given effectIn Commissioner of Central Excise, Trichy vs. Rukmani Pakkwell Traders [(2004) 11 SCC 801] , it was heldis settled law that exemption notifications have to be strictly construed. They must be interpreted on their own wording. Wordings of some other notification are of no benefit in construing a particularThe said decision was followed in Commissioner of Central Excise, Chandigarh-I vs. Mahaan Dairies (2004) 11 SCC 798 ].Keeping in view the principles laid down in the aforementioned decisions, we have to construe the exemption notification in question.19. The said notification was issued in terms of sub-rule (1) of Rule 8 of the Central Excise Rules, 1944. By reason thereof , printed carton, boxes, containers and cases whether in assembled or unassembled condition falling under Chapter 48 of the schedule appended to the Central Excise Tariff Act, would receive the benefit of exemption subject to the condition that the appropriate duty of excise or additional duty leviable under Section 3 of the Customs Tariff Act has already been paid in respect of the base paper used in their manufacturing.The proviso appended to the notification contains an exception thereto stating that if MODVAT credit is availed of, no such exemption shall be available to the manufacturer. The Explanation, however, raises a legal fiction that if a base paper or a paperboard, if purchased from the market, would be deemed to be duty paid. The eligibility clause contained in the notification, thus, is confined to use of base paper or paperboard used in the manufacture of printed cartons, boxes, containers and cases. A container may consist of inputs other than base paper or paperboard. It has not been shown before us that to avail the exemption, the containers are required to be manufactured only or purely from the base paper or base paperboard. Had the same been the intention of the legislation making authority, they could have said so explicitly. Once the eligibility criteria is satisfied by the assessee, as noticed hereinbefore, the conditions are required to be construed liberally. [See Commissioner of Central Excise vs. M.P.V. & Engg. Industries (2003) 5 SCC 333 ].The only requirement for availing the benefit of the said notification was payment of excise duty on base paper or base paperboard, wherefor also a legal fiction has been raised in the explanation appended thereto.26. The Tribunal denied the benefit of the said notification to the Appellant herein without considering the import thereof that it refers to the MODVAT credit directly that too only on base paper. Similarly, the finding of the Tribunal that the container must be manufactured only from base paper may render the exemption notification inapplicable in a large number of cases.