COLLECTOR OF CENTRAL EXCISE versus USHA MARTIN INDUSTRIES

Citation: [1997] SUPP. 3 S.C.R. 601 · Decided: 28-08-1997 · Supreme Court of India · Bench: S.C. SEN · Disposal: Dismissed

Judgment (excerpt)

COLLECTOR OF CENTRAL EXCISE 
A 
v. 
USHA MARTIN INDUSTRIES 
AUGUST 28, 1997 
[SUHAS C. SEN, B.N. KIRPAL AND K.T. THOMAS, JJ.) 
B 
Excise-Central Excises and Salt Act 194~S. 37-B-Exemption 
Notification dated 30.11.1963 as amended upto 7.4.1981-Assessee, a 
manufacturer of wire rods out of steel products including billets which were 
not subject to dutfBenefit of exemption held to be available to the assessee, C 
as benefit of exemption under the Notification was available in respect of 
commodities made out of raw materials, even when the materials were not 
exigible to duty. 
Issue of Circulars by Central Board of Excise and Customs-Circular D 
No. 125/36/95-CX dated 15.5.95-Binding effect of-Held, binding on 
Revenue even during the period prior to insertion of Section 37-B. 
Principles of Interpretation-Expression "on which appropriate amount 
· of duty of excise has already been paid" occuning in Notification dated 
30.11.1963 issued under Central Excises and Salt Act 194~Interpretation. of. E 
The common question involved in all these appeals was as to whether 
the benefit of excise duty exemption could be claimed in respect of com· 
modities made out of raw materials on which no excise duty was payable. 
The respondent in the main appeal was a manufacturer of wire-rods 
falling under T.I. 26-AA (ia) of the Central Excise Tariff. For the purpose 
F 
of manufacture of these wire-rods, the raw materials used were steel 
products, including billets. The assessee claimed exemption under 
Notification dated 30.11.1963 as amended up to 7 .4.1981. The said notifica-
tion provided that the commodities would be exempted from central excise G 
duty if they were produced from materials on which appropriate amount 
· of excise duty was already paid. The Assistant Collector of Central Excise 
upheld the Revenue's stand that exemption was available only if the 
finished goods produced were from raw materials on which duty of excise 
was paid and held that in the present case, duty of excise was Ieviable on H 
601 
602 
SUPREME COURT REPORTS [1997] SUPP. 3 S.C.R. 
A the wire rods since the billets used for their manufacture were totally 
exempt from duty. However, the said order was reversed by the Collector 
of Central Excise (Appeals) and the Central Excise and Gold Control 
(Appellate) Tribunal which held that the input goods cleared on nil rate 
of excise duty should be treated as goods cleared after payment of ap· 
B propriate amount of duty. In the connected appeals also, the same position 
was adopted by different Benches of the Tribunal, though the notifications 
under which exemption was claimed were different, nevertheless-similar. 
Disposing of the matters, this Court 
C 
HELD : 1.1. The benefit of exemption from duty is legitimately 
available in respect of those goods referred to in the notification under 
consideration, the raw materials of which were not exigible to any excise 
duty at all. (611-G] 
1.2. The Expression 'on which appropriate amount of duty of excise 
D has already been paid' as occurring in the notification cannot be narrowly 
construed as excluding all cases where nil duty was paid for input 
materials. (6116-B, 6118-E] 
1.3. The words 'already paid' occurring in the expression "on which 
the appropriate amount of duty of excise has already been paid" used in 
E the Notification when delinked from the other words employed therein, 
would perhaps lend support to the contention of the Revenue as the said 
combination relates to an antecedent act of payment. But the word 
'already' is not the decisive term in the context because the preceding word 
'appropriate' cannot be sidelined to piffie. (6118-B] 
F 
Ahura Chemical Products (P) Ltd. v. Union of India, (1981) ELT 613 
and A11dhra Re-Rolling Works Hyderabad v. Union of llldia & Ors., [1986] 
Supp. SCC 263, distinguished. 
Bidie v. General Accident, Fire and Life Assurance Corporation Ltd., 
G (1948] 2 All ER 995 and Boume v. Norwich Crematorium Ltd., (1967] 2 All 
ER 576, relied on. 
Webste1:I'' New Dictio11a1y; Thesaurus (Concise Edn.) and World 
Book Dictionary, relied on. 
H 
1.4. The idea behind granting exemption to the commodities indi-
' 
C.C.E. v. USHA MARTIN INDUSTRIES 
603 
cated in the notification is two-fold. One reason is that the Central Govern- A 
ment wanted to save certain raw materials and the end products made with 
them from double duty. Another idea, as could be discerned from it, is that 
the reason which prompted the Cent

Excerpt shown. Read the full judgment & AI analysis in Lexace.