Supreme Court: Exemption notification to be construed strictly; No interference on fact findings of lower authorities, unless evidence to contrary.

M/s. Uttam Industries v. Commnr. of Central Excise, Haryana, dated 21 February, 2011

CIVIL APPEAL Nos. 3727-3728 OF 2005

Relevant Facts:

The appellants were engaged in the manufacture of aluminum circles and utensils. The appellants claimed benefit of Notification No. 1/93 dated 28.02.1993 as well as benefit of Notification No. 135/94-CE dated 27.10.1994. A show cause notice was issued to the appellants contending inter alia that the benefit of the second Notification was not available to the appellants.

The appellants filed an appeal before the Commissioner Central Excise (Appeals), wherein it was held that the appellants had not fulfilled the stipulated conditions laid down in Notification as the appellants availed Modvat Credit and therefore they are not entitled to the benefit of the said Notification. It was also held by the appellate authority that the appellants did not place any material on record to show that they had fulfilled conditions of the Notifications for availing benefit of Modvat Credit.

The appellants filed an appeal before the Customs, Excise and Service Tax Appellate Tribunal. By Judgment and Order dated 10.03.2004 the aforesaid appeal filed by the appellants was also dismissed holding inter alia that in this case it is not disputed by the appellants that they were availing the credit in respect of the inputs used in the manufacture of the aluminum circles and therefore they are not entitled to the benefit of the Notification granting exemption.

Still aggrieved the appellants filed the present appeals.

Held:

The court upheld the decisions of the lower authorities. It observed:

Para 8: ‘On going through the records it is clearly established that the appellants are availing Modvat Credit in respect of inputs used in the manufacture of aluminum circles. The order-in-original, the orders passed by the appellate authority and as also by the Tribunal concurrently held that admittedly the appellants are availing such Modvat Credit in respect inputs used in the manufacture of the aluminum circles. Consequently, the appellants are not entitled to avail the benefit of Notification granting exemption inasmuch as for availing such benefit under the said notification the pre-condition is that the aluminum circles are to be cleared for intended use in the manufacture of utensils and no credit of duty paid on inputs has been taken in respect of the inputs used in the manufacture of the aluminum circles. All the aforesaid three authorities below having held concurrently in the same manner as stated hereinabove. Such finding has become final and it is not open to the appellants to challenge the same. We also hold that the appellants failed to bring any evidence on record that the appellants were not availing of Modvat Credit on the same goods in respect of which they were also claiming benefit of exemption under Notification.’

Para 9: ‘That being the position we are not inclined to interfere with the aforesaid finding of fact recorded by the Tribunal and the authorities below on the aforesaid issue.’

Para 10: ‘It is by now a settled law that the exemption notification has to be construed strictly and there has to be strict interpretation of the same by reading the same literally. In this connection reference can be made to the decision of this Court in Collector of Customs (Preventive), Amritsar vs. Malwa Industries Limited reported at 10 (2009) 12 SCC 735 as also to the decision in Kartar Rolling Mills vs. Commissioner of Central Excise, New Delhi reported at (2006) 4 SCC 772 wherein also it was held by this Court that finding recorded by the Tribunal and the two authorities below are findings of fact and such findings in absence of evidence on record to the contrary is not subject to interference.’