LexM/S. SPORTS & LEISURE APPAREL LTD. versus COMMISSIONER OF CENTRAL EXCISE, NOIDA
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f2016] 4 S.C.R. 7 MIS. SPO~TS & LEISURE APPAREL LTD. v. COMMISSIONER OF CENTRAL EXCISE, NOIDA (Civil Appeal No. 1288 of2005) · MARCH 04, 2016 [A.K. SIKRI AND ROIDNTON FALi NARIMAN, JJ.) Excise Laws - Excise duty - On knitted garments - Exempiion from - Under Notification Nos. 1412002-CE and I 512002-CE da[ed OJ. 03.2002 - Assessee-manufacturer of· knitted fabric - Manufactured such fabric out of the duty paid yarn - It also did not take any MOD VAT credit of the duty paid on the yarn - Sought exemption from duty under the Notifications dated 01.03.2002 - Denied by the authorities c911cerned - Order upheld by the Tribunal - On appeal, held: As per· the .scheme under the Notifications, the manufacturers who did not want to avail MODVAT facility were allowed to clear the goods without payment of excise duty - Explanation 11 to the Notifications created legal fiction. that duty shall be deemed to have been paid even without production of documents evidencing payment of duty thereon - Jn the facts the assessee was entitled to the benefit of exemption under the Notifications. Interpretation of Statutes - Legal fiction - A fiction created by a provision of law is to be given its due play and must be taken to its lo1;ical conclusion. Allowing the appeals filed by the assessees and dismissing those filed by the Revenue,~the Court HELD: Jn the Union Budget 2002, a new excise duty scheme for textile sector was introduced, as per which manufacturers of the fabric or garments \Vere given choice to. opt under one of two schemes. The two notifications (Notification Nos. 14/2002-CE and 15/2002-CE dated 01.03.2002) provided exemption and concessional rates respectively. Those who wanted to avail the MODVAT credit of the duty paid on the inputs or the capital goods, were supposed to pay excise duty at concessional rate i.e. 75% of the normal rate of duty. Normal 7 A B c D E F G H .< 8 A B c D E F G SUPREME COURT REPORTS [2016) 4 S.C.R. rate of duty is 12%. Under the other scheme, full exemption from payment of duty was granted to those who did not wish to avail the MODVAT credit facility. These two schemes were explained in the Budget Explanatory Notes issued by the Central Government, whereby it is clear that those who did not want to avail MODVAT facility were allowed to clear the goods without payment of any excise duty. It is in this context that the authorities were asked not to insist upon any documentary proof for payment of duty and this was transported into the notification, in the form of Explanation II. It, therefore, becomes clear that when Explanation II states that the duty shall be deemed to have been paid even without production of documents evidencing payment of duty thereon, it was clearly meant that no duty was required to be paid by the manufacturers of knitted garments. Such an intention is clearly reflected in the Government's own Budgetary Notes. Thus, Explanation II to the said exemption Notification Nos. 14/2002 and 15/2002 create legal fiction and that was the precise purpose for which this explanation was added. It is trite law that a fiction created by a provision of law is to be given its due play and it must be taken to its logical conclusion. Therefore, benefit of exemption notification would be available to all the assessees. [Paras 14, 15 and 17) [13-B; 14-B-D, G) Union of India v. Jalyan Udyog (1994) 1 SCC 318 : 2001 (5) Suppl. SCR 607 - relied on. CCE, Vadodara v. Dhiren Chemical Industries (2002) 2 SCC 127 : 1993 (2) Suppl. SCR 293 - referred to. Case Law Reference 2001 (5) Suppl. SCR 607 1993 (2) Suppl. SCR 293 relied on. referred to Para9 Para 15 CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1288 of2006. From the Judgment and Order dated 11.11.2004 of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi in Appeal No. E/ 251 /04-NB-A WITH H C. A. Nos. 1752, 1753, 1856, 2267, 2856, 44 79 of2006 MIS. SPORTS & LEISURE APPAREL LTD. v. COMMNR. OF 9 CENTRAL EXCISE, NOIDA C. A. Nos. 6036-6038 of2008 A C. A. Nos. 4612, 4886, 6749-6769, 7247-7281, 8186, 8187-8189, 9145-9164 of2010 C. A. No. 2260 of20l l C.A.Nos.5473,5474of2013. B K. Radhakrishna, Balbir Singh, V. Sridharan, Sr. Advs., Rupesh Kumar, Ms. Nisha Bagchi, Ritin Rai, Jitin Singhal, Pratik Raoka, Ms. Rukhmini Bobde, Ms. Pooja Sharma, B. Krishna Prasad, Rupender Singh Mar, Rajesh Kumar, Ms. L. Charnya, Hemant Bajaj, Aditya Bhatta
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