Holding

The exemption under Notification No. 105/80‑CE is conditioned on the capital investment in the plant and machinery that manufactures the “said goods” (liquid nitrogen), and investment in other plants is irrelevant.

Summary

The Collector of Central Excise appealed against the Customs, Excise and Gold (Control) Appellate Tribunal’s order allowing Himalayan Cooperative Milk Product Union Ltd. to claim exemption from excise duty on liquid nitrogen under Notification No. 105/80‑CE. The notification exempts goods falling under Item 68 of the First Schedule of the Central Excise and Salt Act, 1944, provided the capital investment in the plant and machinery used to manufacture those goods does not exceed Rs 10 lakhs. The revenue argued that the total investment in all plants (including those for butter and skimmed milk powder) must be aggregated, while the respondent contended that only the investment in the liquid‑nitrogen plant is relevant. The Court examined the meaning of “said goods” and the phrase “industrial unit” in the notification, holding that the capital‑investment ceiling applies solely to the plant producing the exempted goods (liquid nitrogen). Consequently, the Tribunal’s decision was upheld and the Collector’s appeal dismissed.

Issues considered

The meaning of “said goods” in Notification No. 105/80‑CE and whether it limits the capital‑investment test to the plant manufacturing liquid nitrogen alone.
Whether the value of capital investment in plants producing other excisable goods (butter, skimmed milk powder) can be aggregated for the exemption limit.
Interpretation of “industrial unit” versus “factory” in the context of the exemption notification.

Legislation cited

Subjects

Excise duty exemptionNotification interpretationCapital investment limitLiquid nitrogenCentral ExciseIndustrial unitTariff Item 68Statutory construction

Judgment

COLLECTOR OF CENTRAL EXCISE A
v.
HIMALAYAN COOPERATIVE MILK PRODUCT UNION LTD.

NOVEMBER 7, 2000

[UMESH C. BANERJEE AND BRIJESH KUMAR, JJ.] B

- Excise Laws:

Central Excises and Salt Act, 1944:

Item No. 68 First Schedule-Liquid Nitrogen-Excise duty-Exemption
from-Held: Liquid Nitrogen falls under Item No. 68 Sch. /-Hence, not
liable to excise duty if the value of the plant manufacturing it does not exceed
the statutory limit-Central Excise and Salt Rules, 1944-Notification No.
105180-CE dated 19.6.1980.
D
Exemption Notification-Purpose of-Held: Benefits of exemption
notification are to be provided to the investor and manufacturers-Such
benefits not to be denied to those who are entitled to it by giving a different
meaning other than that plainly flowing from the notification-Interpretation
of Statutes. E
Words and Phrases:

"Said goods"-Meaning of-In the context of Notification No. 105180-
CE dated 19.6.1980 Central Excises and Salt Act, 1944.
F
The respondent manufactured butter and skimmed milk powder etc. in
its industrial complex. For purposes of chilling plant of Dairy unit, the
respondent had installed a plant manufacturing liquid nitrogen which item
fell under Item 68 of the First Schedule to the Central Excises and Salt Act,
1944. By means of Notification No. 105/80-CE dated 19.6.1980 excise duty
payable on goods falling under Item No. 68 was exempted on the condition G
that the total value of the capital investment made from time to time on the
machinery installed for manufacturing liquid nitrogen was not more than Rs.
ten lakhs.

According to the respondent-manufacturer the total capital investment H
431
432 SUPREME COURT REPORTS [2000] SUPP. 4 S.C.R.

A in the plant and machinery manufacturing liquid nitrogen was less than Rs.
ten lakhs and, therefore, the benefit of exemption from excise duty wa_s
admissible under the Notification dated 19.6.1980.

The, Assistant Collector, Central Excise, rejected the claim of the
respondent on the ground that the total value of investments in all the plants
B manufacturing butter and skimmed milk powder and other dairy products as
well as for manufacturing of liquid nitrogen was to be taken into account.
The appeal preferred against this order was rejected by the Collector -
(Appeals). Both the authorities had, however, held that liquid nitrogen itself
was a finished product and fell under Tariff Item 68. However, the Customs,
C Excise and Gold (Control) Appellate Tribunal allowed the appeal filed by the
respondent and held that the respondent was entitled for the benefit under
the Notification of exemption.

Dismissing the appeals, the Court

D HELD: l~ The expression "said goods" occurring in Notification No.
105/80-CE dated 19-6-1980 signifies or identifies the goods which are covered
under Item 68 of the First Schedule to the Central Excises and Salt Act, 1944
in respect of which exemption has been granted. In the Notification dated
19.6.1980 the goods falling under Item 68 are to be referred as "said goods".
Therefore, it is not possible to take into consideration the value of investment
E of all the plants and machinery manufacturing different items viz. goods other
than the "said goods". 1438-D, El
~

Devidayal Electronics & Wires Ltd. v. Union of India, (1984) 16 ELT 30
(Born.), approved

F Golden Press v. Deputy Collector of Central Excise, (1987) ELT 273
(AP), referred to.

2. The Notifications, by which exemption or other benefits are provided
by the Government in exercise of its statutory power, normally have some
G purpose and policy decision behind it. Such benefits are meant to be provided
to the investors and manufacturers. Therefore, such purpose is not to be
defeated nor those who may be entitled for it are to be deprived of it by
interpreting the notification, which may give it some meaning other than what
is clearly, and plainly flowing from it. 1438-H; 439-AI

H CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 77-78 of 1989.
C.C.E. v. HIMALAYAN CO-OP. MILK PRODUCT UNION LTD. [BRIJESH KUMAR, J.] 433
From the Judgment and Order dated 21.1.88 of the Central Customs A
Excise and Gold (Contra!) Appellate Tribunal, New Delhi in O.No. 34-35/88-
B in E/2019/84-C-E/2021of1984-C.

WITH

Civil Appeal No. 637 ofl99l. B

From the Judgment and Order dated 17.7.90 of the Central Excise Customs
and Gold (Control) Appellate Tribunal, New Delhi in A.No. E/2773/86-C in
O.No. 768 of 1990-C.

T.L.V. Iyer, Hemant Sharma, Rajiv Nanda and B.K. Prasad for the C
Appellant (Ex-Parte)

The Judgment of the Court was delivered by

.. BRIJESH KUMAR, J. Since the above noted two appeals involve a
common question for determination, as to the interpretation of a Notification D
issued by the Central Government under sub-rule (l) of Rule 8 of the Central
Excise Rules, 1944, exempting goods falling under Item No.68 of the First
Schedule to the Central Excise and Salt Act 1944, on fulfilment of certain
conditions, the appeals are being disposed of by this common judgment. As
usual in such cases, the Revenue is trying to bring manufacturers within its E
net to charge it with the excise duty whereas the manufacturer-respondents
trying to get out of it claiming benefit under the aforesaid Notification.

2. The brief facts of the case are that the manufacturer-respondent,
Himalayan Cooperative Milk Product Union Limited manufactures butter and
___,. skimmed milk powder etc. in its industrial complex. For purposes of chilling F
plant of Dairy Unit, the respondent seems to have installed a plant
manufacturing liquid nitrogen wh!ch item, undisputedly falls under Item 68 of
the Excise Tariff. By means of Notification No. 105/80-C.E. dated 19.6.1980 the
excise duty payable on goods falling under Item No.68, is exempted in respect
of the first clearances of the said goods for home consumption by or on G
behalf of a manufacturer from one or more factories up to a value not exceeding
rupees thirty lakhs inter alia on the condition that the total of the value of
the capital investment made from time to time, on the machinery installed for
manufacturing said goods is not more than rupees ten lakhs. According to
the manufacturer-respondents the total capital investment in the plant and
machinery manufacturing liquid nitrogen is less than rupees ten lakhs, therefore H
434 SUPREME COURT REPORTS [2000] SUPP. 4 S.C.R.

A the benefit of exemption from excise duty is admissible under the Notification
in question dated 19.6.1980.

B
3. The Assistant Collector, Central Excise, Siliguri Division by order
dated 5. 9. I 983 rejected the claim of the respondents and confirmed the demand
as raised by the Superintendent of Central Excise under Central Excise Rules,
observing that the respondents are using all the plants and machinery for
-
purposes of manufacturing all kinds/varieties of excisable goods falling under
different Tariff items, the total value of capital investment of all plants and
machineries, installed in the said factory are to be taken into account and no
exemption on investment which was more than ten lakhs was admissible.
C Thus according to the excise authorities the total value of investments in all
the plants manufacturing butter and skimmed milk powder and other dairy
products as well as for manufacturing of liquid nitrogen was to be taken into
account. According to the respondents Himalayan Cooperative Milk Produ~t
Union Limited the value of investment on liquid nitrogen plant which alone

D
is relevant is much less than rupees ten lakhs. The appeal preferred against
the order of Assistant Collector was also dismissed by the Collector (Appeals),
Central Excise, Calcutta by order dated 9. I. I 984. Both the authorities have,
-
however, held that liquid nitrogen itself is a finished product and falls under
Tariff Item 68.

4. The respondents preferred an appeal before the Customs, Excise and
E Gold (Control) Appellate Tribunal, New Delhi. The Appellate Tribunal by its
order dated 21.1.1988 allowed the appeal holding that the respondents would
be entitled for the benefit under the Notification of exemption. On facts
though the Tribunal remanded the matter to the original adjudicating authority
for computing the capital investment on plant and machinery referable to
liquid nitrogen and the common plant and machinery in the same industrial
'F complex so as to ascertain the capital investment on generator used for the
chilling water.

5. We feel it would be better to peruse the Notification dated 19.6.1980
exempting th~ payment of excise duty on goods falling under Item 68 of the
G Tariff. It reads as follows:

"In exercise of the powers conferred by sub-rule of rule {I) of rule 8
of the Central Excise Rules, 1944, and in supersession of the notification
of the Govt. of India in the Ministry of Finance (Department of
Revenue) No.89/79-Central Excises, dated the 1st March 1979, the
H Central Government hereby exempts goods, falling under Item No. 68
C.C.E. v. HIMALAYAN CO-OP. MILK PRODUCT UNION LTD. [BRIJESH KUMAR, J.] 435
of the First Schedule to the Central Excises and Salt Act, 1944 (1 A
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 a value not
exceeding rupees thirty lakhs, cleared on or after the 1st day of April
in any financial year, from the whole of the duty of excise leviable B
thereon:

Provided that during the period commencing on the 19th day of
June 1980 and ending on the 31st day of March, 1981, the value of
the clearances of the said goods eligible for exemption under this
notification shall be subject to the following conditions, namely:-
c
(i) The aggregate of the value of clearances eligible for exemption
contained in this notification during the aforesaid period, and the
clearances, if any, already effected by or on behalf of a manufacturer
in terms of the exemption contained in the notification No. 89/79-
Central Excises, dated the I st March 1979 aforesaid, during the period D
commencing on the I st day of April 1980, shall not exceed rupees
thirty lakhs; and

(ii) The value of clearances eligible for exemption contained in this
notification during the aforesaid period commencing on the 19th day
of June, 1980 and ending on the 3 I st day of March, 198 l shall, in no E
case, exceed rupees twenty four lakhs.

Provided further that an officer not below the rank of an Assistant
Collector of Central Excise is satisfied that the sum total of the value
of the capital investment made from time to time on plant and
machinery installed in the industrial unit in which the said goods, p
under clearance, are manufactured, is not more than rupees ten
lakhs.

2. Where a factory producing the said goods is run at different
times during a financial year by different manufacturers, the total
value of the clearances of the said goods from such factory eligible G
for exemption under this notification in such year shall not exceed
rupees thirty lakhs.

3. Nothing contained in this notification shall apply to a
manufacturer, if the total value of the said goods cleared, if any, for
home consumption by him or on his behalf from one or more factories H
436 SUPREME COURT REPORTS [2000) SUPP. 4 S.C.R.

A in the preceding financial year exceeded rupees thirty lakhs.

Explanation I - While determining the sum total of the value of
the capital investment, only the face value of the investment at the ...
time when such investment was made shall be taken into account, but
the value of the investment made on plant and machinery which have
B been removed permanently from the industrial unit or rendered unfit
for any use shall be excluded from such determination.

Explanation II. - In this notification, the expression 'factory' has
the meaning assigned to it in clause (m) of section 2 of the Factories
Act, 1948 (63 of 1948).
c
Explanation Ill. - For the purpose of computing the value of
clearances under this notification, the clearances of the said goods
which are exempted from the whole of the duty of excise leviable
thereon by any other notification issued under sub-rule (I) of rule 8
of t~e Central Excise Rules, 1944, and for the time being in force, shall
D not be taken into account."

A bare perusal of the Notification quoted above shows that the Central
• Government under Rule 8(1) of the Excise Rules exempts goods in respect of
first clearance for home consumption by or ori behalf of the manufacturer from
E one or more factories upto a value not exceeding rupees thirty lakhs. The
exemption would however be allowable on fulfilment of a condition as
contained in the proviso to clause (ii) of the Notification which says that an
officer not below the rank of an Assistant Collector of Central Excise is to be
satisfied that the sum total of the value of the capital investment made on the
plant and machinery installed in the industrial unit manufacturing "said goods
F under clearance" is not more than rupees ten lakhs. On perusal of the proviso
under consideration, it would be clear that it does not refer to any other
goods under clearance except the goods falling under Item 68 of thP t:'',.st
Schedule Jo the Central Excise and Salt Act, 1944. In the beginning itself the
Notification says that the goods falling under Item 68 are to be referred to,
G in the Notification, as 'said goods'. According to own findings of the Assistant
Collector, liquid nitrogen is itself a finished product and falls under Tariff Item
No.68. In that view of the matter the question of taking into account the value
of the capital investment made on plants and machinery manufacturing goods
other than covered under Item No.68 does not arise. We find no force in the
submissions made on behalf of the appellants that value of all plants and
H machinery manufacturing butter and skimmed milk powder etc. has also.to be
C.C.E. v. HIMALAYAN CO-OP. MILK PRODUCT UNION LTD. [BRIJESH KUMAR, J.] 437
added up so as to find out as to whether total value of the capital investment A
in the plant and machinery is rupees ten lakhs or more. In our view the value
of the capital investment has to be in respect of the plant and machinery
manufacturing the "said goods" viz. goods covered under Item No.68 of the
Tariff, clearances of which alone is taken into account in exempting from
payment of excise duty under the Notification in question. The said goods
in the present case is only liquid nitrogen. Thus the value of investment in B
the plants and machinery manufacturing other goods not covered under Item
68 has no relevance nor it is to be taken into account.
6. The Tribunal while allowing the appeal followed a decision of Bombay
High Court reported in 1984 (16) E.L.T. 30 (Born.) Devidayal Electronics &
Wires Ltd. and another v. Union of India and another. The similar notification C
in respect of an earlier year was under consideration before the Court. It had
been noticed that two words have been used in the Notification namely, the
'factory' and 'industrial unit'. The two expressions would be presumed to
have been used for different meaning. It was held that industrial unit would
mean something other than the factory, which would be a separate isolate part D
of the plant which is exclusively used for manufacture of goods for which
exemption is claimed. Learned counsel for the appellants tried to distinguish
the case on facts. We, however, find that in principle what has been held in
Devidayal (supra) as followed by the Tribunal, cannot be said to be an
incorrect view. The factual deviation would be a matter on facts of each case.
The other case which the Tribunal has referred to is reported in 1987 (27) E
E.L.T. 273 (A.P.) Golden Press v. Deputy Collector of Central Excise,
Hyderabad and Another. In this case a notice was issued on the manufacturer
of cartons as to why penalty be not imposed since the goods manufactured
were removed without payment of duty. It was pleaded that cartons were
exempted under a notification exempting all products of printing industry. The F
Court, however, held that cartons though may be printed, cannot be held to
be product of printing industry. They will be relatable to packaging industry,
Hence, the benefit, as pleaded, was not admissible. In so far as the other
arguments raised about the value of the investment made for manufacture of
printed cartons, it was held that cost of cutting machines etc. could not be

r excluded which according to the manufacturer was not used for printed
cartons. The argument that the value of the investment in the plant and
G
machinery manufacturing a particular item under a separate tariff would alone
be taken into consideration was not accepted. The language of the exemption
notification as involved in that case was quoted which was to the effect:

"The sum total of the value of the capital investment made from time H
438 SUPREME COURT REPORTS [2000] SUPP. 4 S.C.R.

A to time on plant and machinery installed in the industrial unit in which the
goods under clearance are manufactured, is not more than rupees ten lakhs."
(As quoted in Para 22 (b) of the judgment).

It is then observed that according to the said notification total value
of the entire machinery in the industrial unit should be taken into account as
B there was no occasion for allocating the machinery between various goods
manufactured therein and by way of an example, it was observed that it may·
create complications where a factory manufacturing goods falling under more
than one tariff item but has only one generator of power plant, so in such
cases in what manner generator or power plant was to be allocated between
C two items. The plea raised was negatived and it wa_s held that total value of
the entire machinery in the industrial unit should be taken into account. At
this stage, it would be appropriate to point out the differenc~ in the language
used in two notifications. We find that in the Notification dated 19.6.1980,
with which we are presently concerned, the proviso to clause (ii) of the
Notification says " ... the capital investment made from time to time on plant
D and machinery installed in the industrial unit in which the said goods under
clearance are manufactured .... ". The expression "said goods" is not used in
the Notification interpreted ·in the case of Golden Press (supra). The "said
goods" signifies or identifies the goods which are covered under Item 68 in
respect of which exemption has been granted. But the word "said" is not used
E in the Notification under consideration in the case of Golden Press (supra)
as indicated above says " ......... industrial unit in which the goods under
clearance are manufactured ......... ". The goods have not been specified by
using the expression "said goods". In the Notification dated 19.6.1980, as
already indicated earlier, the goods falling under Item 68 are to be referred as
"said goods"'. Therefore, in our view it will not be possible to take into
F consideration the value of investment of all the plants and machinery
manufacturing different items viz. goods other than the "said goods".

7. In our view the Tribunal rightly preferred the view taken in the case
.of Devidayal (supra). The factual hurdles like a common generator may be in
use by· different units in the factory complex as indicated in the case of
G Golden Press (supra) can well be worked out by devising proper method
while· apportioning the value of different plants proportionately. In no way
such_ hurdle, as posed, would change the meaning of a Notification which on
' the face of it and by the plain language used therein has unambiguous and
clear meaning.

H 8. Such Notifications by which exemption or other benefits are provided
C.C.E. v. HI MALA YAN CO-OP." MILK PRODUCT UNION LTD. [BRIJESH KUMAR, J .] 439

by the Government in exercise of its statutory power, normally have some A
purpose and policy decision behind it. Such benefits are meant to be provided
to the investors and manufacturers. Therefore, such purpose is not to be
defeated nor those who may be entitled for it are to be deprived by interpreting
the notification which may give it some meaning other than what is clearly
and plainly flowing from it.
B
9. In view of the discussion held above, we fit:id no merit in the appeals
and they are hereby dismissed. No order as to costs.
v.s.s. Appeals dismissed.

-