V.K. Agrawal, Member (T) - (1.)The issue involved in this appeal filed by Ordnance Factory is whether the benefit of Notification No. 62/95 -C.E., dated 16 -3 -95 is available to the waste and scrap cleared outside the Ordnance Factory.
(2.)Shri U.S. Bhatt, learned Advocate, submitted that the Appellants manufacture arms and ammunitions and parts thereof which Factory in the manufacture of parts of ammunition which are ultimately used for defence purposes; that simply because the Appellants do not have capacity of conversion of brass scrap into strips and sends scrap to job workers for conversion into strips it does not mean that scrap in question is not intended for consumption by the Members of Armed Forces of the Union or by such Ordnance Factory. The learned Advocate, further, submitted that show cause notice dated 30 -8 -2001 was issued for demanding the duty for the period from 1 -8 -96 to 31 -3 -2001 and show cause notice dated 27 -1 -2001 was issued for demanding duty for the period from 1 -4 -2001 to 30 -6 -2001; that the extended period of limitation is not invocable as the Ordnance Factory was under the bona fide belief that exemption from duty on all goods manufactured in the factory solely for defence purpose are exempted under Notification No. 62/95; that they were also under the bona fide belief that removal of scrap is also covered under Notification No. 72/92 -C.E. which exempts goods manufactured by the job workers; that more over all the removal of usable scrap to job workers was within the knowledge of Central Excise Department as they were giving an undertaking as required under Notification No. 70/92 of sending the scrap to the job worker for conversion; that in fact, immediately after the amendment of Notification No. 70/92 by Notification No. 66/95 -C.E., dated 16 -3 -95 by which Indian Ordnance Factories were also inserted in the table annexed to the notification, they had intimated to the Asst. Commissioner under letter dated 5 -9 -95 that they would be supplying scrap as raw material to the job workers for conversion of the same into strips; that in view of this neither extended period of limitation is invocable for demanding the duty nor any penalty is imposable on the Appellants. He relied upon the decision of the Tribunal in the case of Sachin Textile (P) Ltd. v. CCE, 2000 (126) E.L.T. 1168 (Tribunal) wherein the Tribunal has held that extended period of limitation is not applicable in view of the existence of bona fide belief; that civil appeal filed by the Revenue has been dismissed by the Supreme Court as reported in 2002 (142) E.L.T. A283.
(3.)Countering the arguments Mrs. Charul Baranwal, learned SDR, submitted that Notification No. 70/92 provides exemption to the goods manufactured by the job workers and not to the scrap removed by the Appellants; that therefore, the Notification No. 70/92 as amended is not available to the Appellants; that Notification No. 62/95 (Sri. No. 1) exempts all goods if produced in Ordnance Factory and intended for consumption by the Members of Armed Forces of the Union or by such Ordnance Factories; that the scrap admittedly has been removed by the Appellants to the job workers and which cannot be said to have been consumed by the Members of Armed Forces or by the Ordnance factories; that accordingly scrap cleared from the Ordnance factory is not covered by Notification No. 62/95; that it has been held by the Supreme Court in the case of Novopan India Ltd. v. CCE, Hyderabad - 1994 (73) E.L.T. 769 (S.C.) that "a person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State." She also relied upon the decision in the case of Mangalore Chemicals and Fertilizers Ltd. v. Dy. Commissioner of Commercial Taxes - 1991 (55) E.L.T. 437 '(S.C.) wherein it has been held that "when the question is whether a subject falls in the notification or in the exemption clause then it being in the nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about the applicability is lifted and the subject falls in the notification then full pay should be given to it and calls for wider and liberal instruction". Reliance has also been placed on the decision in the case of CCE, Chennai v. Balmer Latvrie & Co. Ltd. - 2002 (149) E.L.T. 174 (Tribunal) wherein it has been held that notification calls for strict interpretation and there is no scope for any intendment or drawing an inference different than words used in the Notification. Regarding invocability of extended period of limitation period for demand of duty, the learned SDR contended that letter dated 5 -9 -95 nowhere mentions that scrap is being removed by the Appellants without payment of duty; that in any case said letter was never received by the Asst. Collector; that the Commissioner in the impugned order has specifically mentioned that the Asst. Commissioner, Jabalpur had informed that letter dated 5 -9 -95 purported to have been sent by the Assessee was not received in his office. The learned SDR, further, submitted that undertakings filed with the jurisdictional authority at Bombay having control over job workers' factory were required to be given for the purpose of availing exemption on strips and these undertakings were not given to the Excise authorities having jurisdiction over the Appellants' unit; that even in these undertakings it has not been mentioned that the scrap is being removed without payment of duty. She, therefore, contended that extended period of limitation is invocable and penalty is also imposable.