SODANI CEMENT AND CHEMICALS (P) LTD.versusCOLLECTOR OF CENTRAL EXCISE, JAIPUR

A                 SODA NI CEMENT AND CHEMICALS (P) LTD.
                                           V.

                   COLLECTOR OF CENTRAL EXCISE, JAIPUR

                               SEPTEMBER I 0, 2002

B       [SYED SHAH MOHAMMED QUADRI AND S.N. VARIAVA JJ.]


            Central Excises Act, 1944:
                                                                                       -
         S.5-A(l)-Exemption Notification No. 2311989-CE dt. 1-3-1989-Small
C Scale 1ndus1ry--Manufacturing Portland cement classified under sub-heading
    2502.20 of Schedule to Central Excise Tariff Act-Excise authorities and
    Tribunal declining to give benefit of the Notification-Held, an S.S./ unit
    being exempt under Industries (Developmenl and Regulation) Ac/, 1951 is not
    required to have licensed production capacity-There being no controversy
D   about 1he fulfilment of other requirements of the No1ification by Lhe appellanl-
    manufaclurer, Portland cement manufactured by it is enti//ed to the benefit of     ,
    the Nolification--Requiremenls ofNotification explained-Authorities directed
    to extend benefit of exemption Notification to the cement manufac/ured by 1he
    appellanl-manufacturer-Cenlral Excise Tariff Act, 1985-Sub-heading
    2502.20-Portland cement-Classification of
E
            CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 537-38 of
    1994.

         From the Judgment and Order dated 29.10.1993 of the Customs
    Excise & Gold (Control) Appellate Tribunal New Delhi in E. Appeal No.
F   2155192-C with E-3058/92-C.

            Ramesh Singh, P.S. Sudheer and K.J. John, for the Appellant.

            Rajiv Nanda and B. Krishna Prasad, for the Respond~nt.

G           The following Order of the Court was delivered

         In these appeals, challenge is made to the judgment and order of the
    Customs, Excise and Gold (Control) Appellate Tribunal in E/Appeal No.
    2155/92-C with E/3058/92-C dated 29th October, 1993.

            The short question that arises for consideration is whether the cement
H                                          220
            SODANI CEMENT AND CHEMICALS (P) LTD. v. C.C.E.                  221

manufactured by the appellant is entitled to the benefit of the exemption           A
notification, No. 23/.1989-CE dated Ist March, 1989, issued by the Central
Government under sub-section (I) of Section 5-A of the Central Excises and
Salt Act, 1944, [for short, 'the notification']

      The appellant is a small scale industry. It manufactures ordinary Portland
cement, which is classified under sub- heading 2502.20 of the Schedule to           B
the Central excise Tariff Act, 1985. The excise duty leviable under that sub-
heading is Rs. 215 per metric tonne. However, 'cement' falling under the
said sub- heading, if entitled to evil the benefit of the notification, would be
liable to excise duty at the reduced rate of Rs. I I 5 per metric tonne. The
Excise authorities as well as the Tribunal held that the cement manufactured        C
by the appellant was not entitled to the benefit of the said notification; so the
appellant is in appeal before this Court.

      It would be apt to read the said notification here:

        "G.S.R. In exercise of the powers conferred by sub-section (I) of D
        Section 5A of the Central Excise and Salt Act, 1944 (I of 1944 ), the
        Central government being satisfied that it is necessary in the public
        interest so to do, hereby exempts cement falling under sub-heading
        No. 2502.02 of the schedule to the Central Excise Tariff Act, 1985
        (5 of 1986) and manufactured in a factory using vertical shaft kiln
        with the total licensed capacity as certified by the Director of Industries E
        in the State Government or the Development Commissioner for
        Cement in the Government of India, Ministry of Industry not exceeding
        200 tonnes per day, from so much of the duty of excise leviable
        thereon under the said schedule as in excess of the amount calculated
        at the rate of Rs. I 15 per tonne.
                                                                                    F
            Provided that nothing contained in this notification shall apply to
        such cement in respect of which a manufacturer avails of the exemption
        contained in the notification of the Government of India in the Ministry
        of Finance (Department of Revenue) No. I 75/86- Central Excise date
        1st March, I 986"
                                                                                    G
      A perusal of the notification shows that, on fulfilment of the following
requirements, cement, irrespective of who is the manufacturer, would be
covered by the said notification if: (I) cement in question is classified under
sub-heading 2502.20 of the Schedule to the Central Excise Tariff Act, (2)
such cement is manufactured in a factory using vertical shaft kiln, (3) the H
    222                      SUPREME COURT REPORTS (2002) SUPP. 2 S.C.R.

A total licenced capacity of the kiln is not exceeding 200 tonnes per day, and
  (4) the afore-mentioned requirements must be certified by the Director of
  lndustl'ies in the State Government or the Development Commissioner for
  Cement in the Government of India, Ministry of Industry. The proviso says
  that the notification does not apply to cement manufactured by a person who
B avails exemption under Notification No. 175/1986-CE dated !st March, 1986.
           ihe appellant approached the office of the Development Commissioner
    of Industry for certification of tot:il licensed capacity. The reply says that as
    S.S.I. units are not required to take industrial licence, the question of certifying
    'licenced capacity' by that office does not arise .. He had also produced a
C   certificate from the Deputy Director of the District Industries Centre. The
    certificate notes that the appellant was registered with the District Industries
    Central, Government of Rajasthan, vide Registration No. 17124/00225 (ABU)
    PMT/SS! dated 15th February, l 986, and manufactures Portland cement, the
    capacity being 12,000 metric tonnes per annum. The certificate was found to
    be not in conformity with the requirements of the notification by the Assistant
D   Collector, so he declined to extend the benefit of the said notification to the
    appellant. That order was upheld, as noted above, by the Collector (Appeals).
    It appears, before the Tribunal, a certificate from the Director of Industries,
    being Reference No. F/22/36-C/16-CA/88 dated 1st December, 1990, was
    placed on record. We have verified this fact by looking into the original
E   record and perusing the certificate. It, inter alia, mentions the installed
    production capacity of the unit from 15th January, 1986 to !st February, 1989
    as 20 tonnes per day and thereafter as 40 tonnes per day. It further certifies
    that the unit is producing with the capacity of 40 tonnes per day with effect
    from 2nd February, 1989 and is having vertical shaft kiln technology. It is
    also stated therein that the unit is producing less than 200 tonnes per day and,
F   therefore, eligible to the benefit of the notification.

           A perusal of the order under appeal shows that, with reference to this
    certificate, a contention was raised that it satisfied the requirements of the
    notification and, therefore, the appellant ought to be granted the benefit
    thereunder, However, the Tribunal confirmed the order of the Collector
G   (Appeals) taking the view that the certificate does not answer the description
    required under notification.

          Mr. Ramesh Singh, learned counsel for the appellant, submits that the
    appellant, being a small scale industry is exempt from the previsions of the
H   Industries (Development and Regulation) Act, 1951, and, therefore, the
             SODA NI CEMENT AND CHEMICALS (P) LTD. v. C.C.E.               223
requirements of licensed production capacity is incapable of compliance. He        A
further submits that the proviso directs that a manufacturer who avails the
exemption contained in Notification No. 175/1986-CE, which applies only to
S.S. I., cannot avial the benefit of exemption Notification No. 2311989-CE. In
other words, what the learned counsel submits is that as the exemption
notification applies to cement manufactured by a small scale industry (for         B
which no licensed capacity could be certified), so to prevent S.S.I. units
availing double advantage, the proviso excludes the application of the
notification where the benefit of Notification No. 175/1986-CE was availed.

       A reading of Notification No. 175/1986-CE shows that it relates to
small scale industry, as is evident from paragraph (4) thereof. From the           C
certificate issued by the Development Commissioner, it is evident that S.S.!.
units are not required to take industrial licence, therefore, the question of
certifying licensed capacity does not arise. So far as the production capacity
of the S.S.I. unit is concerned, the certificate issued by the Director mentions
that the production capacity of the appellant is 40 tonnes per day, which is
far less that 200 metric tonnes per day. It is gainsaying that the licensed        D
capacity will always be less than the production capacity. It has never been
the case of the Revenue that the notification does not apply to cement
manufactured by S.S.!. It cannot also be disputed that an S.S. I. unit, being
exempt under the Industries (Development and Regulation) Act, 1951, is not
requir.~d to have licenced production capacity. There being no controversy         E
about the fulfilment of the other requirements of the notification by the
appellant, we are of the view that Portland cement manufactured by the
appellant is entitled to the benefit of the notification.

     For the reasons mentioned above, the order under challenge is set aside.
The authorities are directed to extend the benefit of the exemption Notification   F
No. 23/1989-CE to the cement manufactured by the appellant.

       Accordingly, the civil appeals are allowed. There shall be no order as
to costs.

R.P.                                                         Appeals allowed.      G