Page 240 - ELT_2nd_15th April 2020_Vol 372_Part

286 EXCISE LAW TIMES [ Vol. 372

15. The Appellant, ever since it started manufacturing “Laundry Soap”,
has not been paying Central Excise duty because initially up to 1996 the levy of
Central Excise duty was exempted under the Notification dated 1 March, 1994
and subsequently from 28 September, 1996 it was subjected to “nil” Central Ex-
cise Duty. With effect from 28 February, 2005, it was again subjected to 16% Cen-
tral Excise Duty, but the levy of Central Excise Duty was exempted by Notifica-
tion dated 24 February, 2005 that came into force on 28 February, 2005.
16. A show cause notice dated 17 July, 2006 was, however, issued to the
Appellant, Shri Mahendra Kumar Jain - Managing Director, Shri Anoop Kumar -
Authorized Signatory and Shri Anil Kumar Jain - Factory Manager. The Appel-
lant was required to show cause as to why Central Excise Duty should not be
recovered from it and the seized goods should not be confiscated. The Managing
Director, the Authorized Signatory and the Factory Manager were also required
to show cause as to why penalty should not be imposed upon them.
17. It was stated in the show cause notice that the Appellant has been
manufacturing “laundry soaps” with the aid of gas since January, 2002 and
therefore, would not be entitled to the benefit of exemption from payment of Ex-
cise Duty since soap was being manufactured with the aid of power. It was stat-
ed that though the term ‘power’ was not defined in the Central Excise Act, 1944
[the Act] or the Rules framed thereunder, but resort could be taken to the defini-
tion of ‘power’ under Section 2(g) of the Factories Act, 1948 wherein ‘power’ was
defined to be electrical energy or any other form of energy which was mechani-
cally transmitted and was not generated by human or any other agency. Resort
was also taken to the definition of ‘power’ in various dictionaries.
18. A detailed reply dated 12 September, 2006 to the show cause notice
was filed by the Appellant and the three officers. After referring to the case of the
Department that while using firewood the Appellant was eligible for exemption
provided under the Notification 12 of 1994, dated 1 March, 1994, but it would not
be entitled to the benefit of the exemption after it started using LPG from Janu-
ary, 2002 and CNG from 11 December, 2002, it was pointed out that the use of
gas would not amount to use of ‘power’ and, therefore, the Appellant could not
be subjected to any Excise Duty. The Appellant contended that even if ‘power’
was not defined in the Tariff Act or the Central Excise Act, then too the word
must derive colour from the context in which it appeared and if so considered it
would be ‘electricity’ and not any other power. In this connection reference was
made to certain decisions, to which reference shall be made at the appropriate
stage, to demonstrate that the definition of ‘power’ in the Factories Act would
not be relevant for the purposes of the Tariff Act. Reference was also made to the
Circulars dated 22 March, 1968 and 25 March, 1968 issued by the Board that clari-
fied that use of ‘gas’ for heating purpose cannot be treated as use of ‘power’ for
heating of chocolates and steel furniture. The Appellant also pointed that no ac-
tion had been taken by the Department against similar units using ‘gas’ for heat-
ing and this had resulted in hostile discrimination. The Appellant also stated that
the extended period of limitation could not have been invoked by the Depart-
ment.
19. The Commissioner, however, did not accept the submissions ad-
vanced on behalf of the Appellant. The Commissioner held that since the term
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