Customs, Excise and Gold Tribunal - Ahmedabad
Whiteline Chemicals vs Cce on 3 April, 2008
ORDER Archana Wadhwa, Member (J)
1. As per facts on record, the appellants are engaged in the manufacture of Organic Chemicals and Optical Brightening Agent. With effect from 1.4.04, the appellants started availing the benefit of small scale notification No. 9/2003-CE, dt. 1.3.03, as amended by Notification No. 24/2004-CE and cleared their final product on payment of concessional rate of duty @ 9.6%. However, from May'04 to Aug.'04, the appellants opted out of the said exemption notification and paid the duty at full rate of 16% ad valerom. Thereafter, for the period from Sept'04 to Dec.'04, they again cleared the goods on payment of concessional rate of duty @ 9.6%. In as much as the notification No. 9/2003-CE does not allow to switch the option once exercised in the same financial year, proceedings were initiated against the appellant for confirmation of demand of differential duty in respect of clearances effected from Sept.'04 to Dec.'04, which stand confirmed by the impugned order passed by the authorities below.
2. After hearing both the sides, we find that Clause 2(i) of Notification No. 9/2003 dt. 1.3.03 as amended by the Notification No. 24/04, dt.9.7.04 is to the following effect.
2. The exemption contained in this notification shall apply subject to the following conditions, namely:
(i) a manufacturer who intends to avail the exemption under this notification shall exercise his option in writing for availing the exemption under this notification before effecting the first clearances and such option shall be effective from the date of exercise of the option and shall not be withdrawn during the remaining part of the financial year.
3. Thus, it is clear from the above provision of notification that the assessee does not have any choice to go on changing the option to avail or not to avail the notification. The appellants having opted for availing the benefit of notification at the start of the financial year was not permitted to withdraw from the same. The question now arises is as to what would be the consequences if such an option initially exercised by the appellant stands withdrawn by them and they started paying duty at full rate instead of concessional rate of duty. Further, such an option to pay full rate of duty having been exercised by them from May'04 onwards can they be allowed to come back to the exemption and their first option.
4. After giving careful consideration, we are of the view that during the period April'04, the appellant having cleared the goods at concessional rate of duty, in exercise of the option so chosen by them, cannot be held liable to pay any duty, when they opted out of the same for the simple reason that during the said period option to avail benefit of concessional rate of the duty exercised by them and all the conditions of the notification were fully satisfied by them. The violation, if any, starts from May'04 onwards, when they started paying full rate of duty. As such, violation of conditions can not act retrospectively and cannot result in demand of duty for the period prior to opting out of the exemption. However, we find that no duty stand confirmed by the order of the authorities below for the period prior to May'04. The duty stand confirmed for the period Sept'04 to Dec.'04 when the appellant again cleared the goods at concessional rate of duty. Having opted out of the said notification w.e.f. May'04, the appellant should not have gone back to claim the notification benefit again, and was bound to clear the goods in terms of option exercised by them i.e. full rate of duty. This is the mandate of Clause 2(i) of the notification in question. Having chosen to pay the duty at full rate from May'04 onwards, it was not permissible to the appellant to withdraw the said option again during the remaining part of the financial year. Of course, withdrawing of the option initially exercised in April was also not available to them, when they did so in May, but we find that such withdrawal can not be compelled by the Revenue in as much as the appellant started paying higher rate of duty. As such, there was no alternative available to the Revenue to stop the assessee from withdrawing such an option. As regards the withdrawal of second option exercised by them in May'04, same has to be stopped and the consequences arrived at, which resulted in confirmation of demand of duty against the appellant. We, accordingly, confirm the duty demand of Rs. 53,448/-.
5. However, we find that the issue involved is bonafide interpretation of notification and does not call for imposition of any penalty upon the appellants. The same is, accordingly, set aside.
6. Appeal is disposed off in above terms.
(Pronounced in Court on 3.4.08)