Customs, Excise and Gold Tribunal - Delhi
Surya Roshni Ltd. vs Commissioner Of Central Excise on 4 January, 2007
Equivalent citations: 2007(117)ECC235, 2007ECR235(TRI.-DELHI)
ORDER P.K. Das, Member (J)
1. The issue involved in this appeal is that whether enhanced rate of duty on the goods manufactured by the assessee due to rescinding of Notification No. 5/99-CE dated 28.2.99 by notification No. 12/2000 CE dated 1.3.2000 shall be applicable to the clearance made under Rule 224(2A) of the Central Excise Rules, 1944 between 1200 hours of the Budget day i.e. 29.2.2000 till midnight i.e. 2200 hours on 29.2.00 i.e. on budget day.
2. The relevant facts of the case, in brief, are that the appellants were granted permission by the Commissioner of Central Excise for removal of the goods on pre-budget/budget day subject to the condition that they would pay enhanced rate of duty on clearance after 1200 hours on 29.2.2000. The appellant filed a refund claim of Rs. 3,94,352/- on 3.10.2000 under Rule 224(2) and 224(2A) of the erstwhile Central Excise Rules, 1944 for duty debited under protest over and above duty at concessional rate of 8% ad valoram under Notification No. 5/99-CE dated 28.2.99 on clearance made by them after 1200 hours on the budget day i.e. 29.2.2000. Both the authorities below rejected the refund claim.
3. The learned advocate on behalf of the appellants submits that the clearances were made before midnight of 29.2.2000 and Notification No. 5/99-CE dated 28.2.99 was applicable till that time as it was rescinded by notification No. 12/2000 dated 1.3.2000 which is applicable from midnight of 29.2.2000. He submits that the concessional rate was applicable till that period and they are not required to pay the duty at higher rates. He also submits that as per the Provisional Collection of Taxes Act making them effective from the time of presentation of Budget in parliament itself on Budget Day is beyond the rule making powers under Section 37 of the Central Excise Act, 1944. It is contended by the learned advocate that the Central Government under Section 37 of the Central Excise Act may make rules to carry into effect of the purpose of Act. It is submitted by them to pay duty at the enhanced rate under Sub-rule 2A of Rule 224 of Central Excise Rules is beyond the scope of Section 37 of the Act. It is contended that Rule cannot travel beyond the scope of the Act. Accordingly, Rule 224 (2A) is ultravirus. In this connection, he relied upon the following case laws:
1) NITCO Tiles Ltd. v. Designated Authority
2) Automotive India (Raipur) Pvt. Ltd. v. CCE, Raipur 2006(203) ELT 402 (Tri-Delhi)
4. The learned Departmental Representative on behalf of the respondent submits that the issue is squarely covered by the Larger Bench of this Tribunal in Vikram Tyres v. CCE, Banagalore . He submits that in this case, the appellants furnished the undertaking for clearance of goods on pre-budget day and budget day and therefore, it is squarely covered under Rule 224. He further, submits that on the basis of undertaking the appellant was allowed to clear the goods as per the condition as prescribed under the said Rules. He also relied upon the Manglam Cement v. Commissioner of Central Excise, Jaipur .
5. In a rejoinder the learned advocate submits that in this case, there is no enhancement of duty, in other words, it is a case wherein the concessional rate of duty was withdrawn and therefore the Larger Bench decision is not applicable herein. He also submits that their submission of Rule 224 (2A) of Central Excise Rules traveled beyond the scope of Section 37 of the Act was not discussed in the Larger Bench decision.
6. After hearing both the sides and on perusal of the records, I find that in this case, there is no dispute that the appellant was permitted to clear the goods on pre-budget day / budget day subject to the condition that they would pay enhanced rate of duty on clearance after 1200 hours on 29.2.2000. I find that this issue is squarely covered by the Larger Bench decision in the case of Vikrant Tyres Ltd. (supra). The relevant portion of the said decision is reproduced below-
13. In the instant case, admittedly the permission to remove the goods on the eve of the presentation of the Budget of the year 2000-2001 was accorded to the appellants on their request in writing under this Rule 224(2A). They furnished an undertaking that duty at the enhanced rate shall be paid by them in case of any increase. It also remains undisputed that in the Finance Bill when presented, increase in the duty (SED) was proposed on the goods and notification in this regard was issued on 1.3.2000. The appellants were therefore liable to pay the differential duty on account of the increase and they even accordingly paid the same, though under protest, which in our view, did not carry any legal sanctity. After having availed the special concession /benefit of removing the goods on the eve of the budget, which they otherwise legally could not do because of the restriction imposed on the removal by Rule 224(2), the appellants could not raise protest while making payment of differential duty. The doctrine of estoppel stands in their way, to raise such a protest. They are legally debarred from disputing their liability, under the said doctrine, for payment of enhanced duty on the ground that the notification enhancing the duty was issued on the date subsequent to their removal of the goods i.e. on 1.3.2000. The removal of the goods by them has to be related to that date (1.3.2000) on which they could only remove the goods from the factory, in view of the complete ban imposed, under Rule 224 (2) on such removal. They cannot be permitted to wriggle out of their own undertaking to pay duty at the enhanced rate, made applicable to the goods removed by them, after the presentation of the budget. Their undertaking had been rightly enforced by the Department and recovery of the differential duty from them on account of enhancement of rate of duty cannot be in any manner held to be illegal/non-justifiable, under the law.
7. Rule 224 of the Central Excise Rules, 1944 is a special provision for clearance of goods on pre-budget / budget day. It is an option given to the assessee for removal of goods on these days on fulfillment of the conditions as prescribed in the said Rules. I find that in this case, the assessee cleared the goods on fulfillment of the conditions as prescribed in the said Rules. As such, the special provision under Rule 224 of the Rules, 1944 enacted for the purpose of carry out the Act in a particular situation and therefore, Rule 224 cannot said to be traveled beyond the scope of the Act.
7. The contention of the learned advocate that enhanced rate of duty would be governed under the provisional clause of Tax Act and therefore, Rule 224(2A) is not applicable herein, is not correct in my view. I find that the Larger Bench decision in the case of Vikrant Tyres Ltd. (Supra) had also given a detailed finding on this issue as under:
14. ... Similarly, in Indian Explosive Ltd., Calcutta (supra) Special Excise duty was introduced for the first time in 1978 Budget on the Urea Fertilizer and the assessee cleared those goods on the eve of the budget and thereafter they were called upon to the duty in terms of the undertaking furnished by them under Rule 224(2A). Since no special duty existed on the goods at the time of removal, any undertaking given by them under the said Rule, was not of any help to the Revenue for claiming the duty. It was under these circumstances, the Bench after commenting on the interpretation and scope of Section 4 of the Provisional Collection of Taxes and Rule 224(2A), came to the conclusion that special duty could be claimed only after the midnight hours of the date of budget onwards and not prior to that. But such is not the situation in the instant case, in the light of facts and circumstances referred above.
8. In view of the above, I do not find any reason to interfere with the order of the lower appellate authority and accordingly, the appeal is rejected.
(Pronounced in the open Court)