Case: Liberty Oil Mills Private Limited Vs. Commissioner of Central Excise

This batch of 4 connected appeals under the Central Excises and Salt Act, 1944, is filed by the assessee by special leave granted by this Court. The Revenue issued six demand notices against the assessee for recovery of differential duty involved in the clearances for different periods. The first batch of demand notices (Item Nos. 1 to 3), dated 18-6-1983, 20-7-1983 and 28-2-1984 involved a duty total amounting to Rs 13, 45, 851.76, as evidenced by the order of the Assistant Collector, Central Excise, dated 11-6-1984. The second batch of demand notices (Item Nos. 4 to 6) involved a duty amounting to a total of Rs 4, 99, 874.85 as evidenced by the order of the Assistant Collector, Central Excise, dated 17-6-1984.2.The assessee (the appellant herein) preferred appeals before the Appellate Collector against the aforesaid orders of the Assistant Collector. By a consolidated order in Appeals Nos. M-1231-1232/TH-788-789/85, dated 6-8-1985 the Appellate Collector set aside the demands and allowed the appeals filed by the assessee. Thereupon, the Revenue filed two appeals before the Customs, Excise and Gold (Control) Appellate Tribunal, hereinafter referred to as "the Tribunal" or CEGAT, as evidenced by E/A 2563/85-C and A No. 448/86-C. The sole question that arose before the Appellate Tribunal was regarding the interpretation of Notification No. 61/71 dated 29-5-1971 as amended by Notification No. 40/72 dated 17-3-1972 Before the Appellate Tribunal the Revenue conceded that the demand issued against the appellant-Company would be enforceable only for a period of 6 months from the date of demand-cum-show-cause notices and not with reference to the extended time limit laid down in the Central Excise Law.This is seen recorded in paragraph 3 of the order of the Appellate Tribunal dated 21-5-1986. The Appellate Tribunal reversed the decision of the Collector, Central Excise (Appeals) and directed revision of the demands for duty within a period of six months from the date of the show-cause notice. The appellant filed a petition for referring certain questions of law to this Court against the common order of the Appellate Tribunal passed in the above two appeals dated 21-5-1986. The Tribunal dismissed the said petition holding that the questions formulated by the appellant related, among other things, to the determination of questions having relation to the rate of duty of excise and value of goods for the purpose of assessment and hence a reference application on that score does not lie. Against the order so passed by the Tribunal dated 30-1-1987, the appellant filed special leave petitions in this Court and leave having been granted by this Court, were registered as Civil Appeals Nos. 1308-09 of 1987. Against the common order passed in the appeals dated 21-5-1986, two appeals have been filed evidenced by CA Nos. 2221-2222 of 1987. In all the four appeals, the only question involved is interpretation of Notification No. 61/71 dated 29-5-1971 as amended by Notification No. 40/72 dated 17-3-1972. In the light of our decision in Civil Appeals Nos. 2221-22 of 1987, on the merits of the case, it is unnecessary to consider the questions posed in CA Nos. 1308-09 of 1987, which will be only academic. We holdappellants are manufacturers of a vegetable product falling under Item No. 13 of the Central Excises and Salt Act, 1944. At the relevant time it carried a rate of duty of 10% advalorem. By Notification No. 61/71 dated 29-5- 1971 as amended by Notification No. 40/72 dated 17-3-1972, exemption was granted to vegetable products produced out of indigenous rice bran oil. The appellants cleared their said vegetable products at concessional rate of Rs 10 per quintal under the said notification. The Revenue took the view that the appellants were not entitled to the benefit of the exemption under the said notification. It was in these circumstances that 6 demand notices for the recovery of the differential duty involved in the clearances for different periods were issued in two sets, amounting to Rs 13, 45, 851.76 and Rs 4, 99, 874.85. The demands were annulled by the Appellate Collector but restored by the Appellate Tribunal for a period of six months from the date of the show-cause notices issued to the appellants.

Court's reasoning:
6. On an anxious consideration of the matter we are of the view that the language in the notification is fairly clear. The Central Government has exempted such "vegetable product" "as is made from indigenous rice bran oil" from the duty of excise leviable thereon to the extent of Rs 1 0 per quintal subject to the conditions following. The crucial words in the notification "such vegetable product" "as is made from indigenous rice bran oil" from the "duty of excise leviable thereon" are important. The words " as is made from the indigenous rice bran oil" should be understood in a meaningful manner. The related or synonymous words for "as is" are m any. Keeping the related words of "as is" in mind, it appears to us that the natural and proper meaning to be given to the enacting or main clause of the notification is, that the Central Government exempts such vegetable product, to the extent "it is made" or "as shown to be made" or "as represented to be made" or "as seen made", from indigenous rice bran oil. The title itself is "exemption to vegetable product produced out of indigenous rice bran oil". It can only mean that the quantity of r ice bran oil contained in the vegetable product is exempt. The Appellate Tribunal has considered the matter at great length in paragraphs 9 and 10 of its order placing emphasis on notification as a whole and the two conditions following the enacting or main clause.We are of the view that the conclusion arrived at by the Tribunal is valid and tenable. The conclusion follows either by construing the plain language of the main clause alone or by construing the entire notification along with the conditions. No interference is called for with the decision rendered by the Appellate Tribunal.7.Appellants counsel submitted that if due stress is given to the conditions, what the notification means is that exemption is a vailable to the entire quantity of admixture of the vegetable product produced out of rice bran oil, the only condition being that the content of rice bran oil should be more than 1 % of the total, in any consignment, and such interpretation of the notification is equally possible. We are of the view that such a construction is not possible. Even assuming that it is so, in the case of an ambiguity or doubt regarding an exemption provision in a fiscal statute, the ambiguity or doubt will be resolved in favour of the Revenue and not in favour of the assessee. The matter is concluded by a recent decision of a three-member Bench of this Court in Novopan India Ltd. v. Collector of Central Excise and Customs