Gujarat High Court
M/S. Mahendra Chemicals vs Commissioner Of Central ... on 21 November, 2024
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/TAXAP/1090/2007 JUDGMENT DATED: 21/11/2024
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 1090 of 2007
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
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Approved for Reporting Yes No
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M/S. MAHENDRA CHEMICALS
Versus
COMMISSIONER OF CENTRAL EXICSE[ADJUDICATION]
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Appearance:
MR HARDIK P MODH(5344) for the Appellant(s) No. 1
MR UTKARSH R SHARMA(6157) for the Opponent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 21/11/2024
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. This Tax Appeal is admitted by order dated 23.4.2009 on the following substantial questions of law:-
"(a) Whether the appellant was having an option to forego unconditional exemption to their final products by virtue of Notification Nos. 6/2002 dated 1.3.2002 and 6/2003 dated 1.3.2003 at the relevant time and pay duty at the Tariff rate and claim for Modvat/Cenvat credit on inputs used in the manufacture of final products?Page 1 of 17 Uploaded by BINA SHAH(HC00353) on Mon Dec 09 2024 Downloaded on : Sat Dec 14 01:19:48 IST 2024
NEUTRAL CITATION C/TAXAP/1090/2007 JUDGMENT DATED: 21/11/2024 undefined
(b) Whether the Tribunal is right in up-holding the order passed by the respondents and demanding for Cenvat credit in a situation where the assessee has paid the duty on the final products and utilized the credit on inputs for payment of final products.
(c) Whether the amendment provided in Section 5A by inserting sub-section 1A as is clarificatory nature or in prospective?"
2. The appellant-Company was a manufacturer of Anesthetic products which are fully and unconditionally exempted from payment of excise duty during the relevant period from 1 st March, 2000 to 14th August, 2003. The appellant however, chose to pay the duty on such unconditional exempted goods which were being cleared partly in the domestic market and partly for export. The appellant therefore, made a claim for benefit of credit of duty on the raw materials which were paid on the exempted goods and which was passed on to the customers in respect of the sale in domestic market and so far as the duty paid in respect of the goods which were exported, the claim was made for the benefit of rebate.
3. A show cause notice was issued pursuant to the search conducted at the premises of the appellant on 14 th August, 2003 calling upon the appellant to show cause as to why the amount of Rs. 40,81,632/- being the MODVAT/CENVAT credit availed on the raw materials used in the manufacture of exempted final product i.e. Anesthetic Products should not be disallowed and recovered under Rule 57 I of Central Excise Rules, 1944 as substituted by Rule 57 Page 2 of 17 Uploaded by BINA SHAH(HC00353) on Mon Dec 09 2024 Downloaded on : Sat Dec 14 01:19:48 IST 2024 NEUTRAL CITATION C/TAXAP/1090/2007 JUDGMENT DATED: 21/11/2024 undefined AH with effect from 1.4.2000, Rule 12 of the CENVAT Credit Rules, 2001 with effect from 1.7.2001 and Rule 12 of CENVAT Credit Rules, 2002 read with the proviso to Sub-Section (1) of Section 11A of the Central Excise Act, 1944. The appellant was further put to notice as to why the rebate of Rs. 28,91,424/- in respect of the export of exempted final product should not be disallowed and recovered under Section 11A of the Central Excise Act, 1944 together with the penalty and interest .
4. The appellant filed a detail reply to the show cause notice contending inter alia that there was no compulsion on the part of the assesseee to opt for the exemptions granted under the Notification and when two options are available to the appellant it is for the appellant to decide what is more beneficial and accordingly, the appellant had opted for availing the credit by payment of duty on the final exempted products. Reliance was also placed on the various decided cases in support of such contention.
5. The respondent by order dated 7.3.2005 relying upon the decision of the Hon'ble Apex Court in case of Collector of Central Excise Versus Parle Export (P) Ltd. reported in 1988 (38) ELT 741 (SC) confirmed the demand as per the show cause notice on the ground that the Notification is a part of statute and as course of law and the same cannot be optional. The appellant was therefore, liable to abide by the exemption notification and when it is decided by the legislature to exempt certain goods by notification, the Page 3 of 17 Uploaded by BINA SHAH(HC00353) on Mon Dec 09 2024 Downloaded on : Sat Dec 14 01:19:48 IST 2024 NEUTRAL CITATION C/TAXAP/1090/2007 JUDGMENT DATED: 21/11/2024 undefined appellant could not have opted for payment of duty and thereafter get the credit of such duty.
6. The appellant being aggrieved by the aforesaid order preferred the appeal before the Customs Excise and Service Tax Appellate Tribunal, West Zone Bench (for short "CESTAT") . The appellant relied upon the provision of Section 5A(1A) of the Act of the Central Excise Act, 1944 which was inserted by the Finance Act, 2005 to contend that prior to such amendment which denies the assessee to get the credit of the duty paid on the goods which are exempted and therefore, in view of such amendment inserted for removal of the doubts prior to 01.07.2005, the appellant had an option to choose or not to choose the Notification for payment of of duty on the exempted final product.
7. The CESTAT by order dated 6.11.2006 negated the submissions of the appellant on the point of exercise of option holding that sub-Section (1A) of Section 5A inserted by the Finance Act. 2005 is clarificatory in nature and therefore, the Notification ought to have been adhered to by the appellant as per the provision of Section 5A(1A) of the Act.
8. The appellant thereafter, preferred an application for rectification of mistakes before the CESTAT pointing out that the Hon'ble Apex Court in case of Commissioner of Central Excise and Customs (A), Ahmedabad Vs. Narayan Polyplast reported in Page 4 of 17 Uploaded by BINA SHAH(HC00353) on Mon Dec 09 2024 Downloaded on : Sat Dec 14 01:19:48 IST 2024 NEUTRAL CITATION C/TAXAP/1090/2007 JUDGMENT DATED: 21/11/2024 undefined 2005 (179) ELT 20 (SC) wherein, the question whether the assessee was bound to avail exemption or can forego the same in order to avail MODVAT credit was considered and it was decided in favour of the assessee holding that it would have no revenue implications. However, the Tribunal by order dated 25.05.2007, dismissed the application for rectification of mistakes on the ground that the order of the Tribunal was passed after taking into consideration the change in law made subsequent to the judgement of the Hon'ble Apex Court.
9. The appellant thereafter has preferred this appeal which was admitted on the aforesaid substantial questions of law.
10. Learned advocate Mr. Hardik Modh appearing for the appellant submitted that as per the provisions of Section 5A of the Central Excise Act, 1944, the Central Government has power to grant exemption from duty of excise and accordingly the final produce of the appellant was exempted as per the Notification No.6/2002 dated 1st March, 2002 which was changed from time to time and Entry No.49 thereof provides the exemption for payment of excise duty for manufacturing of the Anesthetic products. It was therefore, submitted that the Tribunal ought to have considered the the fact that there is no prohibition prescribed in the statute regarding the option of the assessee to pay the duty on the exempted goods and thereafter to claim the Modvat/Cenvat credit on the duty paid on the raw materials. The Tribunal have misinterpreted the provision of Page 5 of 17 Uploaded by BINA SHAH(HC00353) on Mon Dec 09 2024 Downloaded on : Sat Dec 14 01:19:48 IST 2024 NEUTRAL CITATION C/TAXAP/1090/2007 JUDGMENT DATED: 21/11/2024 undefined sub-Section (1A) of Section 5A of the Central Excise Act, 1944 as clarificatory and therefore, applicable retrospectively without considering the fact that the nature and contents of Sub-Section (1A) of Section 5A which has been inserted by Section 75 of the Finance Act, 2005 was for removal of doubts to declare that the assessee cannot claim the credit of the duty paid on the exempted goods and therefore, the same could not have held to be retrospective but, it would have only the prospective operation and as such, the appellant -assessee had an option to pay the duty on the exempted goods and thereafter, the claim the Modvat/Cenvat credit thereof.
10.1 In support of his submission reliance was placed on the decision of the Hon'ble Apex Court in case of Commissioner of Central Excise, Pune Versus Pudumjee Pulp & Paper Mills Ltd. reported in 2006 (198) ELT 330 (SC) to submit that Section 5A(1A) was considered to be prospective as the Hon'ble Apex Court has observed that there is no substance in the submission that Clause (1A) would come into operation with retrospective effect. It was pointed out that however, the question with regard to the applicability of the said provision being retrospective in operation was kept open by the Hon'ble Apex Court.
10.2 Reliance was also placed on the decision of the Hon'ble Apex Court in case of Commissioner of Central Excise and Customs (A), Ahmedabad Vs. Narayan Polyplast (Supra) wherein, it was held that there is necessity to interfere with the Page 6 of 17 Uploaded by BINA SHAH(HC00353) on Mon Dec 09 2024 Downloaded on : Sat Dec 14 01:19:48 IST 2024 NEUTRAL CITATION C/TAXAP/1090/2007 JUDGMENT DATED: 21/11/2024 undefined decision of the Tribunal in the facts of the said case in view of the fact that it is admitted case that non-availing of exemption under the Exemption Notification No.53/88 dated 1 st March, 1988 was optional and the assessee was not bound to avail the exemption or can forego the same in order to avail the Modvat credit as the issue is merely technical and there was no revenue implication.
10.3 Reliance was also placed on the decision of the Hon'ble Apex Court in case of Union of India Vs. Martin Lottery Agencies Ltd. reported in 2009 (14) STR 594 (SC) in support of the contention that while considering the applicability of an amendment retroactive or prospective, the Court must be satisfied that the Parliament did not intend to introduce a substantive change in the law in the expressions like `for the removal of doubts' are not conclusive.
11. On the other-hand learned advocate Mr.Utkarsh Sharma for the respondent relied upon the order passed by the Tribunal and submitted that the Tribunal has rightly held that the exemption Notification is mandatory upon the appellant as the excise duty is in indirect tax and ultimate tax bearer is a consumer. It was therefore, submitted that as the final product of the appellant are exempted, the appellant was not entitled to the Modvat/Cendvat credit on the duty paid on such final product as the appellant was not suppose to pay such duty by burdening the consumers by passing on such duty to claim the credit of the Modvat/Cenvat on the raw material.
Page 7 of 17 Uploaded by BINA SHAH(HC00353) on Mon Dec 09 2024 Downloaded on : Sat Dec 14 01:19:48 IST 2024NEUTRAL CITATION C/TAXAP/1090/2007 JUDGMENT DATED: 21/11/2024 undefined 11.1 Learned advocate Mr. Sharma referred to and relied upon the findings of the adjudicating authority as well as the Tribunal and submitted that the the Tribunal has rightly referred to and relied upon the decision of the Apex Court in case of Commissioner of Central Excise and Customs (A), Ahmedabad Vs. Narayan Polyplast(Supra) as well as the decision in case of Collector of Central Excise Versus Parle Export (P) Ltd. (Supra) to hold that the Notification must be read as a whole in the context of the other relevant provision and such Notification is a part of statute which cannot be said to be optional. It was therefore, submitted that even if the appellant had paid the duty but, the same cannot be claimed as Modvat/Cenvat credit. It was further submitted that as per the provision of Section 5A(1A) of the Act which has been inserted by the Finance Act, 2005, the same would have retrospective applicability as the said provision starts with words "for removal of doubts" and as such the main provision of granting exemption is subjected to the verification which has been brought on statute by insertion of Clause (1A) in Section 5A of the Central Excise Act, 1944. It was therefore submitted that no interference is required to be made in the impugned order of the Tribunal as no question of law much-less any substantial question of law would arise from the impugned order as the appellant could not have any option to forego the unconditional exemption to the final products by virtue of the Notification Nos.6/2002 and 6/2003 at the relevant time and pay duty at the tariff rate and claim for Modvat/Cenvat credit on inputs Page 8 of 17 Uploaded by BINA SHAH(HC00353) on Mon Dec 09 2024 Downloaded on : Sat Dec 14 01:19:48 IST 2024 NEUTRAL CITATION C/TAXAP/1090/2007 JUDGMENT DATED: 21/11/2024 undefined used in the manufacture of final products as the amendment provided in Section 5 by clause (1A) to Section 5A of the Central Excise Act, 1944 is clarificatory in nature and therefore would apply retrospectively.
12. Considering the submissions made by the learned advocates appearing for the respective parties, it would be germane to refer to the provision of Section 5A along with the amendment made therein by the Finance Act, 2005 by inserting Clause 1A as under :-
"Section 5A. Power to grant exemption from duty of excise. :- (1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette exempt generally either absolutely or subject to such conditions (to be fulfilled before or after removal) as may be specified in the notification, excisable goods of any specified description from the whole or any part of the duty of excise leviable thereon :
Provided that, unless specifically provided in such notification, no exemption therein shall apply to excisable goods which are produced or manufactured -
(i) in a free trade zone or a special economic zone and brought to any other place in India; or
(ii) by a hundred per cent export-oriented undertaking and [brought to any place in India].
Explanation . - In this proviso, "free trade zone", "special economic zone" and "hundred per cent export-oriented undertaking" shall have the same meanings as in Explanation 2 to sub-section (1) of section 3.
Page 9 of 17 Uploaded by BINA SHAH(HC00353) on Mon Dec 09 2024 Downloaded on : Sat Dec 14 01:19:48 IST 2024NEUTRAL CITATION C/TAXAP/1090/2007 JUDGMENT DATED: 21/11/2024 undefined [(1A) For the removal of doubts, it is hereby declared that where an exemption under sub-section (1) in respect of any excisable goods from the whole of the duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods.]
13. The Notification No.6 of 2002 dated 1st March, 2002 exempts the final product produced by the appellant. As per sub-section 5A, the Notification was issued under Section 5A of the Central Excise Act, 1944 by the Central Government while exercising the powers conferred upon it. There is nothing in Section 5A which prohibits the Assessee from ignoring the exemption Notification and pay the duty on the final products and thereafter, claim the Modvat/Cenvat credit as per the provisions of the relevant rules.
14. Therefore, the question which arises is as to whether the appellant could have exercised option with regard to payment of duty or to avail the exemption Notification as per Section 5A of the Central Excise Act, 1944.
15. Once, the final product is exempted, if the appellant would not have paid any duty, there was no question of claiming any Modvat/Cenvat credit. However, in the facts of the case, the appellant has paid duty on the final products inspite of the exemption Notification being issued by the Central Government, the same was Page 10 of 17 Uploaded by BINA SHAH(HC00353) on Mon Dec 09 2024 Downloaded on : Sat Dec 14 01:19:48 IST 2024 NEUTRAL CITATION C/TAXAP/1090/2007 JUDGMENT DATED: 21/11/2024 undefined claimed as Modvat/Cenvat credit resulting into revenue neutralization.
16. Thus, there was no revenue loss even if the appellant has paid the duty on the final products. However, if the appellant is denied the claim of Modvat/Cenvat credit, the appellant would be subjected to the duty even though the products are finally exempted which would be contrary to the Notification and which would according to the decision of the Hon'ble Apex Court in case of Collector of Central Excise Versus Parle Export (P) Ltd. (Supra) would be a law. Therefore, the appellant once having paid the duty is bound to get the Modvat/Cenvat credit but, for the insertion of Clause 1A by the Finance Act, 2005 which specifically declares that where an exemption under sub-section (1) in respect of any excisable goods from the whole of the duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods. Thus, after the insertion the appellant- assessee was prohibited from payment of excise duty on the exempted excisable goods and therefore, there is no question of getting any Modvat/Cenvat credit in view of such prohibition.
17. In view of the above analysis, the insertion of Section 1A cannot be said to be clarificatory but, it is substantive in nature as it prohibits the assesseee from payment of duty on the exempted excisable goods. The Hon'ble Apex Court in case of Commissioner Page 11 of 17 Uploaded by BINA SHAH(HC00353) on Mon Dec 09 2024 Downloaded on : Sat Dec 14 01:19:48 IST 2024 NEUTRAL CITATION C/TAXAP/1090/2007 JUDGMENT DATED: 21/11/2024 undefined of Central Excise, Pune Versus Pudumjee Pulp & Paper Mills Ltd. (Supra) observed as und.
"4. Counsel for the Revenue relying upon Clause (1A) of Section 5A of the Central Excise Act, 1944, which reads as under:
"5A. Power to grant exemption from duty of excise.
xxxxx xxxxxx xxxxx (1A) For the removal of doubts, it is hereby declared that where an exemption under sub- section (1) in respect of any excisable goods from the whole of the duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods.
submits that the relief prayed by the assessee cannot be granted. We find from the foot note that Clause (1A) of Section 5A of the Act was introduced by Act No. 18/2005 with effect from 13th May, 2005. Counsel contends that Clause (1A) being clarificatory in nature would be retrospective in operation. Prima facie, in view of the fact that Clause (1A) came into effect w.e.f. 13th May, 2005, we do not find any substance in the submission that Clause (1A) would come into operation with retrospective effect. Counsel for the Revenue has not produced the speech of the Finance Minister. Leaving the question open and without recording any finding regarding the applicability or its being retrospective in operation at this stage, we reject the submission.
18. As the question is kept open by the Hon'ble Apex Court as to consider as to whether the insertion of sub-section 1A of Section 5A of the Act is retrospective in nature or not it would be necessary to consider the issue of retrospective and prospective amendment which starts with words "for removal of doubts". the Hon'ble Apex Court in case of Union of India & Anr. Vs. Vedanta Ltd. & Ors.
Page 12 of 17 Uploaded by BINA SHAH(HC00353) on Mon Dec 09 2024 Downloaded on : Sat Dec 14 01:19:48 IST 2024NEUTRAL CITATION C/TAXAP/1090/2007 JUDGMENT DATED: 21/11/2024 undefined reported in 2020 (10) SCC 1 while considering the amendment in Section 48 of the Arbitration and Conciliation Act,1996 by Amendment Act, 2016 has held as under:-
"106. The two Explanations in Section 48 begin with the words "For the avoidance of any doubt." It cannot, however, be presumed to be clarificatory and retrospective, since the substituted Explanation 1 has introduced new sub-clauses, which have brought about a material and substantive change in the section. A new Explanation 2 has been inserted which states that the test as to whether there is a contravention with the fundamental policy of Indian law, shall not entail a review on the merits of the dispute. Since the amendments have introduced specific criteria for the first time, it must be considered to be prospective, irrespective of the usage of the phrase "for the removal of doubts." Reliance is placed on the judgment of this Court in Sedco Forex International Drill vs. Commissioner of Income Tax, Dehradun, (2005) 12 SCC 717. wherein it was held that an Explanation if it changes the law, it cannot be presumed to be retrospective, irrespective of the fact that the phrases used are "it is declared" or "for the removal of doubts". In Ssangyong Engineering & Construction Co. Ltd. vs. NHAI, (2019) 15 SCC 131. this Court was considering the amendments made to Section 34, wherein two Explanations to Section 34 had been inserted, which are identically worded with the two Explanations to Section 48. In that case, a similar ground of retrospectivity had been urged. This Court held that since the Explanations had been introduced for the first time, it is the substance of the amendment which has to be looked at, rather than the form. Even in cases where "for avoidance of doubt", something is clarified by way of an amendment, such clarification cannot have retrospective effect, if the earlier law has been changed substantially.
19. From the above conspectus of law, it is clear that when the amendment changes the law it cannot be presumed to be retrospective, irrespective of the fact that the phrase used are 'it is declared' or 'for the removal of the doubts' . Similarly in case of Page 13 of 17 Uploaded by BINA SHAH(HC00353) on Mon Dec 09 2024 Downloaded on : Sat Dec 14 01:19:48 IST 2024 NEUTRAL CITATION C/TAXAP/1090/2007 JUDGMENT DATED: 21/11/2024 undefined Union of India Vs. Martin Lottery Agencies Ltd. reported in 2009 (14)STR 593(SC) in the facts of the said case held as under :-
"31. The question as to whether a Subordinate Legislation or a Parliamentary Statute would be held to be clarificatory or declaratory or not would indisputably depend upon the nature thereof as also the object it seeks to achieve. What we intend to say is that if two views are not possible, resort to clarification and/or declaration may not be permissible. This aspect of the matter has been considered by this Court in Virtual Soft Systems Ltd. v. Commissioner of Income Tax, Delhi-I [(2007) 9 SCC 665], holding :
"It may be noted that the amendment made to Section 271 by the Finance Act, 2002 only stated that the amended provision would come into force with effect from 1.4.2003. The statute nowhere stated that the said amendment was either clarificatory or declaratory. On the contrary, the statue stated that the said amendment would come into effect on 1.4.2003 and therefore, would apply to only to future periods and not to any period prior to 1.4.2003 or to any assessment year prior to assessment year 2004- 2005. It is the well settled legal position that an amendment can be considered to be declaratory and clarificatory only if the statue itself expressly and unequivocally states that it is a declaratory and clarificatory provision. If there is no such clear statement in the statute itself, the amendment will not be considered to be merely declaratory or clarificatory.
Even if the statute does contain a statement to the effect that the amendment is declaratory or clarificatory, that is not the end of the matter. The Court will not regard itself as being bound by the said statement made in the statute but will proceed to analyse the nature of the amendment and then conclude whether it is in reality a clarificatory or declaratory provision or whether it is an amendment which is intended to change the law and which applies to future periods."
This decision was further followed by the Hon'ble Apex Court in case of Sree Sanskaracharya University of Sanskrit and Ors. Vs. Page 14 of 17 Uploaded by BINA SHAH(HC00353) on Mon Dec 09 2024 Downloaded on : Sat Dec 14 01:19:48 IST 2024 NEUTRAL CITATION C/TAXAP/1090/2007 JUDGMENT DATED: 21/11/2024 undefined Dr. Manu and Anr. MANU & ANR. reported in 2023 SCC Online 640 wherein is held as under
"9. The proposition of law that a clarificatory provision may be made applicable retrospectively is so well established that we do not wish to burden this judgment by referring to rulings in the same vein. However, it is necessary to dilate on the role of a clarification/ explanation to a statute and how the same may be identified and distinguished from a substantive amendment.
9.1 An explanation/clarification may not expand or alter the scope of the original provision, vide Bihta Cooperative Development Cane Marketing Union Ltd. vs. Bank of Bihar, A.I.R. 1967 SC 389. Merely describing a provision as an "Explanation" or a "clarification" is not decisive of its true meaning and import. On this aspect, this Court in Virtual Soft Systems Ltd. vs. Commissioner of Income Tax, Delhi, (2007) 289 ITR 83 (SC) observed as under:
"Even if the statute does contain a statement to the effect that the amendment is declaratory or clarificatory, that is not the end of the matter. The Court will not regard itself as being bound by the said statement in the statute itself, but will proceed to analyse the nature of the amendment and then conclude whether it is in reality a clarificatory or declaratory provision or whether it is an amendment which is intended to change the law and which applies to future periods."
This position of the law has also been subscribed to in Union of India vs. Martin Lottery Agencies Ltd., (2009) 12 SCC 209 wherein it was stated that when a new concept of tax is introduced so as to widen the net, the same cannot be said to be only clarificatory or declaratory and therefore be made applicable retrospectively, even though such a tax was introduced by way of an explanation to an existing provision. It was further held that even though an explanation begins with the expression "for removal of doubts," so long as there was no vagueness or ambiguity in the law prior to Page 15 of 17 Uploaded by BINA SHAH(HC00353) on Mon Dec 09 2024 Downloaded on : Sat Dec 14 01:19:48 IST 2024 NEUTRAL CITATION C/TAXAP/1090/2007 JUDGMENT DATED: 21/11/2024 undefined introduction of the explanation, the explanation could not be applied retrospectively by stating that it was only clarificatory.
9.2 From the aforesaid authorities, the following principles could be culled out:
i) If a statute is curative or merely clarificatory of the previous law, retrospective operation thereof may be permitted.
ii) In order for a subsequent order/provision/amendment to be considered as clarificatory of the previous law, the preamended law ought to have been vague or ambiguous. It is only when it would be impossible to reasonably interpret a provision unless an amendment is read into it, that the amendment is considered to be a clarification or a declaration of the previous law and therefore applied retrospectively.
iii) An explanation/clarification may not expand or alter the scope of the original provision.
iv) Merely because a provision is described as a clarification/ explanation, the Court is not bound by the said statement in the statute itself, but must proceed to analyse the nature of the amendment and then conclude whether it is in reality a clarificatory or declaratory provision or whether it is a substantive amendment which is intended to change the law and which would apply prospectively.
20. In view of the above analysis and the dictum of law, we are of the opinion that insertion of Clause 1A in Section 5A of the Central Excise Act is not clarificatory in nature but, it is substantive in nature and therefore, it would be optional for the appellant to avail the exemption of the excisable goods or to pay duty on such Page 16 of 17 Uploaded by BINA SHAH(HC00353) on Mon Dec 09 2024 Downloaded on : Sat Dec 14 01:19:48 IST 2024 NEUTRAL CITATION C/TAXAP/1090/2007 JUDGMENT DATED: 21/11/2024 undefined exempted excisable goods and therefore, the tribunal was not right in upholding the order passed by the respondents demanding for Cenvat credit where, the appellant had paid the duty on the final products and utilized the credit on inputs for payment of the final products.
21. We therefore, answer the Question Nos. (a) and (b) in favour of the appellant and against the revenue and Question No. (c) to the effect that the amendment provided in Section 5A by inserting Clause 1A is prospective in nature.
21. The appeal is accordingly allowed and no order as to costs.
(BHARGAV D. KARIA, J) (D.N.RAY,J) BINA SHAH Page 17 of 17 Uploaded by BINA SHAH(HC00353) on Mon Dec 09 2024 Downloaded on : Sat Dec 14 01:19:48 IST 2024