Whether exemption available to agricultural produce also admissible to marine products?

PJ/CASE LAW/2015-16/2928

Case:- COMMISSIONER OF CENTRAL EXCISE VERSUS HARIPRIYA MARINE FOOD EXPORTS

Citation:- 2015 (325) E.L.T. 225 (S.C.)

Brief facts:- The assessee is engaged in processing and export of Shrimps/ Prawns. The issue is as to whether the respondent/assessee is entitled to the benefit of exemption under Notification No. 6/2002-C.E., dated 1-3-2002. It is a general exemption Notification and the item with which they are concerned is at Serial No. 196, which reads as under :

*S. No.*	*Chapter or heading No. or sub-heading No.*	*Description of goods*	*Rate under the first schedule*	*Rate under the second schedule*	*Condition No.*
196	84 or any other Chapter	Goods specified in list 8 intended to be used for the installation of a cold storage, cold room or refrigerated vehicle, for the preservation, storage or transport of agricultural produce.	Nil	-	4 & 5

Show cause notice dated 17-11-2003 was issued to the assessee stating that it had used the refrigeration compressor for processing/storage of Shrimps/Prawns and since Shrimps/Prawns are not agricultural produce, the assessee had wrongly availed the benefit of the aforesaid Notification No. 6/2002-C.E. The assessee filed its reply inter alia stating that such a benefit was given to the assessee on earlier occasion also and there was no reason not to continue the same in respect of the period in question. Accepting this contention the adjudicating authority dropped the show cause notice. However, feeling aggrieved by this order the Revenue took the matter in appeal before the Commissioner (Appeals) who reversed the aforesaid decision of the Adjudicating Authority. Accepting the plea of the Revenue that the product in question viz. Shrimps/Prawns is not agricultural produce but Marine produce which is squarely covered under Section 2(h) of Marine Products Export Development Authority Act, 1972 and on this basis the Adjudicating Authority could not apply the provisions of another Act viz. Andhra Pradesh (Agricultural Products and Livestock) Markets Act, 1966, the Commissioner (Appeals) held as under:
“I hold that the impugned goods viz., Shrimps/Prawns, squarely covered under the Marine Products Development Authority Act, 1972 and classify the impugned goods as marine produce rather than as agriculture produce. In view of the above discussion, the department’s action in demanding duty is just and proper and sustainable under the law. Therefore, the respondent is liable to pay the Central Excise duty and interest, under Section 11A and Section 11AB of Central Excise Act, 1944 respectively, as proposed in the show cause notice dated 17-11-2003. Hence, I pass this order:-
ORDER
I hereby confirm the demand of Central Excise duty of Rs. 1,01,670/- demanded in the show cause notice under Section 11A of Central Excise Act, 1944. I also order for recovery of interest on the demand confirmed as above, under Section 11AB of the Central Excise Act, 1944. Accordingly, the appeal filed by the department is allowed. The Order-in-Original No. 17/2004, dated 30-8-2004 is set aside.”
The assessee took the matter further by filing appeal before the Tribunal and the Tribunal has reversed the decision of the Commissioner (Appeals) holding that the assessee would be entitled to the aforesaid exemption notification. In coming to this conclusion, the Tribunal has primarily gone by the following two reasons :
(a) The assessee was enjoying the benefit of exemption notification in previous year and there was no reason not to continue the same;
(b) In the earlier proceedings, benefit of Notification No. 19/1999 was extended to the assessee by the order of the Tribunal and the Revenue had accepted the said view of the Tribunal. Therefore, on parity, there was no reason not to continue this benefit in favour of the assessee.

Appellant’s contention:-Mr. A.K. Sanghi, learned senior counsel, has argued the case on behalf of the Revenue. Mr. Sanghi has argued that the Tribunal has committed error on both the aforesaid counts. It is pointed out that the earlier Notification No. 19/99 was materially different which specifically exempted processing/storage of Shrimps/Prawns. They are shown that in the present notification the words Shrimps/Prawns are consequently missing and the exemption is confined only to ‘agricultural produce’. On that basis, it is submitted that the Tribunal in para 6 of the impugned order has wrongly recorded that both the notifications viz. Notification No. 19/99 and Notification No. 6/2002 are identically worded. It is submitted that this would answer the other reasons given by the Tribunal as well inasmuch as the acceptance of the earlier decision which was predicated on Notification No. 19/99 could not come in the way of the Revenue when the position had materially changed after supersession of the earlier notification with present Notification No. 6/2002.

Respondent’s contention:-Nobody appears on behalf of the assessee in spite of service of notice. However, the assessee had, by post, filed the counter affidavit which is taken on record and they have gone through the same.

Reasoning of Judgement:-Submissions of both were considered and they find substance in the aforesaid submissions of Mr. Sanghi. They have compared the two notifications. Mr. Sanghi is absolutely correct in pointing out that whereas Notification No. 19/99 specifically covered the produce, i.e., Shrimps/Prawns, present notification confines the exemption only to agricultural produce, Shrimps/Prawns cannot be treated as agricultural produce. This aspect is highlighted by the Commissioner (Appeals) in his analysis, which is extracted above, and the assessee in its counter affidavit has simply taken the plea that once similar benefit was granted to the assessee in the earlier year it was not open to the Department to agitate the issue once again and in support of the submission the assessee has relied upon the judgment of this Court in Commissioner of Central Excisev. Suntrack Electronics Pvt. Ltd. [2003 (156)E.L.T.163]. For the reasons given above, the aforesaid judgment would be no help to the assessee inasmuch as the earlier period was covered by different notification as already discussed.
Thus, they are of the view that the assessee is not entitled to exemption in terms of Notification No. 6/2002-C.E. The impugned decision of the Tribunal is, accordingly, set aside and this appeal is allowed with no order as to costs.

Decision:-The appeal is allowed.

Comment:-The crux of the case is that exemption notification is to be strictly interpreted and if exemption is available for agricultural produce, the same cannot be extended to marine products. Moreover, deletion of marine products from the subsequent notification also indicates conscious decision of the government to provide exemption to agricultural produce only.

Submitted By:-Somya Jain

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PJ/CASE LAW/2015-16/2928

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