Wool Worth (I) Ltd. vs Uoi & Others
2014 Latest Caselaw 63 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI


                                              Date of Decision: 03.01.2014
+                        W.P.(C)874/1998


      WOOL WORTH (I) LTD.                                   .... Petitioner
                         Through:     None.

                         versus

      UOI & OTHERS                                        ..... Respondents

Through:

CORAM:

HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.V.EASWAR

S. RAVINDRA BHAT, J. (OPEN COURT)

1. In this proceeding an order of the erstwhile Central, Excise & Gold

(Control) Appellate Tribunal (hereinafter referred to as "Tribunal") dated

11th December 1997, in appeal, preferred by petitioner, has been

challenged.

2. The petitioner at the relevant time was engaged in the manufacturing

of Wool Worsted Yarn. It was declared as 100% Export Oriented Unit and

entitled to beneficial treatment in terms of revenue and export-import laws.

Claiming that on account of its expansion which was sought to have been

undertaken sometime after 1993, the petitioner contended that cement and

other such inputs purchased for the construction activities undertaken by it

to house its unit, were entitled to the benefit of excise duty levied. It relied

upon the notification No. 1 of 1995. Since this claim was not accepted by

the authorities under the Central Excise and Salt Act 1944, the petitioner

approached the Tribunal wherein vide the impugned order his claim was

rejected. The Tribunal held as follows:

"We note that the applicant is 100% Export Oriented Unit. 100% export oriented units are entitled to certain benefits. We find that in the instant case cement was procured locally. The appellants claimed that cement is capital goods and, therefore, they were entitled to the benefit of duty paid on cement under Notification No. 1/95. We have perused this Notification. We find that this Notification covers the goods used in or in relation to the manufacture of the export product or the packing material used in packing the export goods. This notification does not cover any other item. No other Notification was brought to our notice which entitled them exemption from payment of duty on cement or treating it as capital goods. In the absence of such Notification we hold that no benefit of duty on cement will be available to the appellants under Notification No. 1/95 as the goods manufactured by them is worsted yarn. In this view of the matter the appeal is rejected."

3. This court has considered the contentions. The basic notification

relied upon in this case in the course of the proceedings before the Tribunal

was notification No. 1/95 CE dated 04.01.1995, subsequently amended on

26.05.1995, 14.09.1995 and 20.10.1995. The notification, inter-alia, states

that in exercise of the power conferred under Section 5A of the Act, the

Central government in public interest hereby exempts excisable goods,

specified in Annexure 1 of the notification No. 1/95 CE (hereinafter

referred to as „the said goods‟) specifically described in Schedule CE 1995

(5 of 1996) and produced in manufacture in a 100% export oriented

undertaking. The exemption notification relied upon in this case i.e. No. 1

of 1995, as amended subsequently, has been placed on record. It states

inter-alia that Central government after considering that it was necessary

in public interest that goods mentioned in Schedule I of the said

notification, when bought in connection with manufacturing and packaging

of articles or for manufacture or development of electronics hardware,

manufacture/development of electronics software of particular unit etc.

would be exempt from the whole of duty of excise leviable thereon under

Section 3 of the Central Excise Act, 1944. Annexure A-1 mentions

"capital goods and spares thereof". The petitioner attempted in this case to

persuade the Court to hold the expression "capital goods" to be including

cement used by it in the construction of the factory that would be used by

the manufacturing unit including machinery and equipment. On the face

of it the argument appears to be attractive. However, the Court has

considered the other entries in the list. Each of the entries mentions

specifically articles such as material handling equipments, office

equipments, spares and consumables thereof, raw materials, components,

packaging materials, tools, jigs, fixtures, prototypes, drawing, blue prints

and charts. This Court is inclined to reject the petitioner‟s argument that

inputs materials such as cement used for construction of industrial estates

or industrial property would fall within the description of capital goods. If

the intention of the government was to enable such a wide interpretation,

the specific mention of „capital power plant‟ and „raw materials‟, dispels

the notion. The only exception to the list of articles and goods which have

been specifically granted exemption is the reference to captive power plant

for which the government intends to provide exemption having regard to

the fact that the EOU will utilise the power plant in entirety. In all other

cases, the reference would be with respect to the specific matter. For

instance raw material would be primarily eligible to the end product i.e.

goods and articles produced for the purpose of 100% export. No other

interpretation would be without clear guideline and enable the statutory

authority as well as courts to keep increasing the number of articles and

goods which have per se no relationship with the manufacturing activities

undertaken.

4. For the above reasons, this court finds that there is no infirmity or

illegality in the impugned order. The writ petition is accordingly

dismissed.

S. RAVINDRA BHAT, J

R.V.EASWAR, J

JANUARY 03, 2014 acm