LexSARASWATI SUGAR MILLS versus COMMISSIONER OF CENTRAL EXCISE, DELHI-ILL
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[2011] 13 (ADDL.) S.C.R. 579 SARASWATI SUGAR MILLS v. COMMISSIONER OF CENTRAL EXCISE, DELHI-Ill (Civil Appeal No.5295 of 2003) AUGUST 02, 2011 [D.K. JAIN AND H.L. DATTU, JJ.j Central Excise Rules, 1944 - Rule 570 - Exemption Notification No.6711995-CE dated 16.03.1995 exempted duly A B in respect of "capital goods", as defined in Rule 570 if they C were manufactured in a factory and used within the factory of production - Assessee-appellant, manufacturer of Sugar and Molasses, fabricated Iron and Steel structures in its factory and captively used them within the factory for installation and effective functioning of sugar manufacturing machineries D falling under item nos. 2 and 3 of the table to Rule 570 - Whether the Iron and Steel structures were in the nature of components of the said sugar manufacturing machineries and therefore, required to be treated as capital goods falling under item no.5 of the table to Rule 570 and consequently E exempt from payment of excise duty by virtue of Notification No.6711995-CE dated 16.03.1995 - He(d: Anything required to make the goods a finished item can be described as a component part - If an article is an element in the composition of another article made out of it, such an article F may be described as a component of another article - For the purpose of manufacturing cane sugar in a sugar industry, the essential machineries that are required are sugar presses, diffusers, vaccum pans, evaporators and sugar handling equipments, crystallizers, sugar grader, elevator and cooling G tower - The iron and steel structures in question were not essential requirements in the sugar manufacturing unit and did not satisfy description of 'compbnents' of the machineries used in the installation of Sugar Manufacturing Plant - 579 H 580 SUPREME COURT REPORTS [2011] 13 (ADDL) S.C.R. A Assessee therefore not entitled to benefit of the said Exemption Notification - Central Excise Tariff Act, 1985 - Chapter Heading 73 of the Schedule. Notification - Exemption Notification - Interpretation of 8 - Held. Since exemption notifications are issued under delegated legislative power, they have full statutory force - An exemption .notification has to be strictly construed - The conditions for taking benefit under the notification are also to be strictly interpreted - When the wordings of notification is C clear, then the plain language of the notification must be given effect to - By way of an interpretation or construction, the Court cannot add or substitute any word while construing the notification either to grant or deny exemption - The Courts are a/so not expected to stretch the words of notification or add or subtract words in order to grant or deny the benefit of D exemption notification. Interpretation of statutes - Rules framed under the Statute - Interpretation of - Held: Th ~Y should be read as a part of the Statute itself and require to be interpreted as intra E' vires to the Act under which they have been issued. Words and Phrases - "Component" - Meaning of - Held: In order to determine whether a particular article is a component part of another article, the correct test would be to look both althe article which is said to be component part F and the completed article and then come to a conclusion whether the first article is a component part of the whole or not - One must first look at the article itself and consider what its uses are and whether its only use or its primary or ordinary use is as the component part of another article - In common G parlance, components are items or parts which are used in the manufacture of the final product and without which, final product cannot be conc;eived of The assessee-appellant is a manufacturer of Sugar H and Molasses. It was availing MODVAT credit facility on SARASWATI SUGAR MILLS v. COMMISSIONER OF 581 CENTRAL EXCISE, DELHI-Ill the excise duty paid for the capital goods used in the A factory for manufacturing process under Rule 57Q of the r.entral Excise Rules, 1944. However, certain machineries like cane milling plant, clarification plant, evaporator and pan boiling plant, power generation plant etc., which are specified as capital goods in terms of Serial Nos. 2 and B 3 of the Table below Sub-Rule 1 of Rule 57Q of the Rules, required the support of structural items for their installation. In view of this, the assessee started manufacturing iron and steel structure
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