M/S. COMPACK PVT. LTD. versus COMMISSIONER OF CENTRAL EXCISE, VADODARA

Citation: [2005] SUPP. 4 S.C.R. 281 · Decided: 07-10-2005 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Case Partly allowed

Judgment (excerpt)

MIS. COMPACK PVT. LTD. 
V. 
COMMISSIONER OF CENTRAL EXCISE, VADODARA 
OCTOBER 7, 2005 
[S.B. SINHA AND R.V. RA VEENDRAN, JJ.] 
Central Excise-Exemption Notification-Rules of Interpretation-Held, 
a Notification has to be construed literally in terms of the language used 
therein-An eligibility criteria has to be construed strictly-Once the eligibility 
clause is satisfied, exemption clause may then be given a liberal meaning-
Plea taken by the Revenue that exemption could be granted only to containers 
manufactured exclusively out of base paper rejected. 
A 
B 
c 
Central Excise-Exemption Notification No.67182-CE dt. 28.2.1982 as 
amended on 28.2.1993-Central Excise Rules 1944, Rule 8, 57 G, Section AA D 
of Chapter V-Custom Tari.ff Act 1975, Section 3-Central Excise Tari.ff Act 
1985, Chapter 48 of the Schedule, Item No.48.02, 48.07-Appellant company 
engaged in manufacture of cardboard containers out of base paper and other 
inputs-Made MOD VAT declaration under Rule 57-G declaring LDPE Coated 
Paper as input which was intended to be used in the manufacture of Composite 
Paper Containers-It availed the MOD VAT credit of specified duties on LDPE E 
Coated Paper-It did not avail of any MODVAT credit in respect of base 
paper-It cleared containers on payment of basic excise duty in terms of 
Notification-Revenue Department issued Show Cause Notice alleging that 
appellant was not entitled to concessional rate of duty-Appellant's plea that 
three layers of containers consist of base paper and only one layer was plastic F 
coated paper-Held, appellant was entitled to the benefit of exemption 
notification to the extent of duty paid on paper board though not in respect 
of the entire container-However, since the question of composition of container 
has not been raised by the appellant before any authority, matter remanded 
to the Department on that point. 
The appellant company, a Small Scale Industry, was engaged in 
production of excisable goods i.e. cardboard containers manufactured out 
of base paper having three layers and an outer layer of LOPE coated paper 
which was said to have been manufactured from the base paper apart from 
281 
G 
H 
282 
SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R. 
A other inputs. The Company availed of the MODV AT credit of the specified 
duties on LOPE coated paper. It, however, did not avail of any MODV AT 
credit in respect of base paper. During the period November 1992 to 
February 1993, the appellant cleared composite containers on payment 
of duty at the concessional rate in terms of notification No.67/82-CE dt. 
B 28.2.1982. The Department raised a demand of differential duty holding 
that the appellant was not eligible for the concessional rate of duty under 
the notification. Appellant's appeal to the commissioner and then to 
Tribunal was dismissed. Hence the present appeal. 
The Company contended that it was entitled to claim the benefit of 
C exemption notification as taking of MODV AT credit on one of the inputs 
could not deprive it of the benefit of notification. It was also alleged that 
apart from one layer of LOPE coated paper, three layers of base paper 
was used in respect whereof no MODV AT credit was availed of'.. , 
.·. 
Department pleaded that exemption notification must be construed 
., 
D strictly and exemption could be granted only to those manufactureK who 
used base paper only for marnufacturing containers. 
Partly allowing the appeal, the Court 
HELD : 1. The principles as regard construction of an exemption 
E notification are no longer res integra; whereas the eligibility clause in 
relation to an exemption notification is given strict meaning where for the 
notification has to be interpreted in terms of its language, once an assessee 
satisfies the eligibility clause, the exemption clause therein may be 
construed literally. An eligibility criteria, therefore, deserves a strict 
construction although construction of a condition thereof may be given a 
F liberal meaning. (248-G, HJ 
Tata Iron & Steel Co. Ltd v. State of Jharkhand and Ors., (200514 SCC 
272; Commissioner of Central Excise, Chandigarh v. Bhalla Enterprises, 2004 
(173) ELT 225 (SC); Commissioner of Central Excise, Trichy v. Rukmani 
G Pakkwell Traders, (2004) 11 SCC 801 and Commissioners of Central E:xcise 
Chandigarh-Iv. Mahaan Dairies, (2004) 11 SCC 798, referred to. 
2. The eligibility clause contained in the notification is confined to 
use of base paper or paperboard used in the manufact

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