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Rainbow Industries Pvt. Ltd. Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1983)LC2111DTri(Delhi)
AppellantRainbow Industries Pvt. Ltd.
RespondentCollector of Central Excise
Excerpt:
.....for the purposes of central excise notification no. 44/82, dated 28-2-1982, the expression "home consumption" used therein, would take within its ambit consumption of excisable goods within the producing factory which, in popular parlance, is referred to and known as "captive consumption".the appellants contend that it does not whereas the department contends it does. "in exercise of the powers conferred by sub-rule (1) of rule 8 of the central excise rules, 1944, the central government hereby exempts synthetic organic dyestufss (including pigment dyestuffs) and synthetic organic derivatives used in any dyeing process, falling under item no. 14d of the first schedule to the central excises and salt act, 1944 (1 of 1944), (hereinafter referred to as the said goods), in respect of.....
Judgment:
1. This is an appeal under Section 35-P of the Central Excises and Salt Act and is directed against the order dated 23-2-1983 of the Collector of Central Excise (Appeals), Bombay.

2. The question arising for decision in this case is whether, for the purposes of Central Excise Notification No. 44/82, dated 28-2-1982, the expression "home consumption" used therein, would take within its ambit consumption of excisable goods within the producing factory which, in popular parlance, is referred to and known as "Captive Consumption".

The appellants contend that it does not whereas the Department contends it does.

"In exercise of the powers conferred by Sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts synthetic organic dyestufss (including pigment dyestuffs) and synthetic organic derivatives used in any dyeing process, falling under Item No. 14D of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), (hereinafter referred to as the said goods), in respect of the first clearances . of the said goods for home consumption by or on behalf of a manufacturer from one or more factories upto an aggregate value not exceeding rupees fifteen lakhs, cleared on or after the 1st day of April in any financial year, from so much of the duty of excise leviable thereon under the said Item [read with any other notification issued under Sub-rule (1) of rule 8 of the Central Excise Rules, 1944 and in force for the time being] as is in excess of fifty per cent of such duty : Provided that the aggregate value of clearances of the said goods from any factory by or on behalf of one or more manufacturers at the reduced rate of duty under this notification shall not exceed rupees fifteen lakhs in any financial year.

2. Nothing contained in this notification shall apply to a manufacturer,- (i) if the aggregate value of clearances of all excisable goods by him or on his behalf, for home consumption, from cue or more factories, during the preceding financial year, had exceeded rupees twenty lakhs ; (ii) if the aggregate value of clearances of the said goods by him or on his behalf, for home consumption, from one or more factories, during the preceding financial year, had exceeded rupees fifteen lakhs." 4. The appellants are manufacturers of synthetic organic dyestuff falling under Item 14D of the Central Excise Tariff Schedule (C.E.T.).

They filed two classification lists dated 3-4-82 and 21-5-82 claiming the benefit of the above notification on the basis that the value of clearances during the preceding year, excluding the value of dyes used for captive consumption, was less than Rs. 15 lakhs. The Assistant Collector did not accept the appellant's contention that the value of goods captively consumed could not be included in the value of goods cleared for home consumption and passed orders denying the benefit of the notification. The appeal against this order also did not meet with success. Hence the present appeal.

5. The appeal was heard on 10-10-1983. Shri Mehta, the learned Consultant, for the appellants strenuously contended that goods captively consumed within the producing factory could not be said to have been cleared from the factory for home consumption. In this connection, he referred to Rule 9 of the Central Excise Rules which talks of removal of goods from any place where they are produced or manufactured or any premises appurtemant thereto, whether for consumption, export or manufacture of any other commodity in or outside such place and sought to draw the conclusion that home consumption meant consumption ouside the factory and consumption within the factory for manufacture of any other commodity would not be home consumption but captive consumption. He also sought to devise support for this proposition by referring to the amended Rule 49. He also relied on Board's order in appeal reported in 1981 ELT 503. Attention was also drawn to Notification No. 80/80. dated 19-6-1980 in which Explanation V expressly excludes the value of captively consumed goods from the computation of the aggregate value of clearances under the notification. The said Explanation was only clarificatory and could be applied to Notification No. 44/82 as well. Shri Mehta also relied upon certain judgments in support of the submissions that notification should be construed having regard to their words and not with regard to any supposed intention. (This proposition is too well known that we do not think it necessary to refer to these judgments cited by Shri Mehta).

6. Shri Jain, the learned SDR, opposed the appeal equally strenuously by urging that "home consumption" should be understood in contradistinction to export. Unlike in Notification No. 80/80, Notification No. 44/82 did not provide for exclusion of captively consumed goods for computing the aggregate value of clearances.

7. We have considered the submissions of both sides. Frankly, we are unable to appreciate Shri Mehta's contention that "home consumption" would mean only consumption outside the producing factory and would not take in "captive consumption". We agree with the SDR that the expression "home consumption" should be understood and construed in contradistinction to export. Home consumption, in popular understanding, means consumption within the country no matter in which place in the country and how the goods are consumed. Shri Mehta has not cited any authority in support of his stand but for a reference to an order-in-appeal of the Central Board of Excise & Customs in the case of M/s. Bharat Metal Industries, Batala, reported in 1981 ELT 503. The Board, in that case, were concerned with Notification No. 176/77 dated 18-6-77 and they agreed with the "appellant' s contention the value of copper circles which were not actually cleared for home consumption but were utilised by them in the manufacture of circles (presumably uternsiles), adding the value of such circles to the value of the utensils manufactured out of such circles certainly amounted to the duplication in accounting". Apart from this aspect of double accounting, no other reason has been furnished in the said order. While there is force in the view taken by the Board, we have to see whether such a view follows from the Notification No. 44/82 which is involved in the present proceedings. When one compares this notification with Notification No. 80/80, one can see that the Government's intention to exclude the value of captively consumed goods for the computation of the aggregate value of clearances from the factory has been spelt out in clear terms in the latter notification. There is no such clause in Notification No. 44/82. While taking into account captively consumed goods for computing the aggregate value of clearances may work to the disadvantage of small manufactures, we do not see how we can rectify this omission, (if lines of explanation V to Notification No. 80/80.

Shri Mehta has laid much stress in the words emplyed in Notification No. 44/82 , namely, "if the aggregate value of clearances of the said goods by him or on his behalf, for home consumption, referred to therein must be those from the factory and not within the factory. We are not impressed with this contention. If there was any scope for argument on these lines, that has been set at rest by the amendment to Rule 9 and 49 effected by C.E. Notification No. 20/82 dated the 20th February, 1982. The Explanation inserted to Rules 9 and 49 by the aforesaid amendment provides that for the plurpose of those rules, where excisable goods manufactured in any place are consumed or those rules, where excisable goods manufactured in any place are consumed or utilised as such as after processing for the manufacture of any other commodity in such place or in any premises applurternant therto, they shall be deemed to have been removed from such place or premises immediately before such consumption or utilisation. In other words, it is no longer open for anyone to argue that goods which are removed within the factory. If goods removed for captive consumption cannot be construed to be goods removed for home consumption, there would be no question of levying duty on such goods. But Section 3 of the Central Excises &Salt Act, 1944, read with Rules 9 and 49 specifically authorised levy and collection of duty on excisable goods removed for captive consumption. There is no manner of doubt that goods removed for captive consumption are goods removed for home consumption.

8. Having regard to the foregoing discussions, we see no merit in the appellant's contentions. We uphold the order of the lower authorities and reject the appeal.


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