Customs, Excise and Gold Tribunal - Delhi
Sirpur Paper Mills Ltd. vs Collector Of Central Excise on 10 April, 1992
Equivalent citations: 1993ECR722(TRI.-DELHI), 1992(60)ELT335(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. The appellants are aggrieved with the order-in-appeal dated 27-8-1987 passed by the Collector of Central Excise (Appeals) Madras.
2. The appellants had preferred a claim for refund of Rs. 2,91,103.23 P. through their letter dated 9-10-1986 addressed to the Asstt. Collector on the ground that under exemption Notification No. 225/86 dated 3-4-1986 and No. 258/86 dated 24-4-1986, the Central Excise authorities had allowed them, set-off of duty from the date of the notification. But they had contended that under the Central Duties of Excise (Retrospective Exemption) Bill. 1986 B No. 99/1986 of 12-8-1986 under Section 2, they are eligible to get the exemption benefit with effect from 1-3-1986.
3. A show cause notice dated 30-8-1986 was served on them on the ground that Section 2 of Central Duties of Excise (Retrospective Exemption) Act, 1986 covers such notification issued on or after 3-3-1986 but before 8-8-1986 for maintaining the effective rates of duties of excise at the level pertaining prior to 28th day of February 1986/lst March 1986 and not under notification providing set of under Notification No. 225/86-C.E., dated 3-4-1986 and therefore, they were required to show cause as to why their claim should not be rejected. They had filed a very detailed reply inter alia contending that their claim is available under the referred two notifications and that the notifications were covered by the Central Duties of Excise (Retrospective Exemption) Act. They had contended that prior to coming into force of Central Excise Tariff Act, they were entitled to duty relief under Notification No. 201/79-C.E. It was their submission that these notifications seeking to restore the same benefit should take effect not from the date of issue of such notification but from 1-3-1986 and in this context, they had referred to the language of the Central Duties of Excise (Retrospective Exemption) Act and to the objects of the said Act. The lower authorities were not satisfied with the explanation given by the appellants and they rejected their claim.
4. The learned Collector relying on Section 2 of Central Duties of Excise (Retrospective Exemption) Act, 1986, has held as under -
"In view of the above provision, I find that the two notifications mentioned by the appellants, are not issued for the above periods at all. Though the two notifications are issued under Rule 8(1) of Central Excise Rules by these notifications, the Central Government exempts excisable goods of the description specified in Col. 5 of the table (referred to final products) and falling under such chapter heading or sub-heading number in the Schedule to the Central Excise Tariff Act as is specified in corresponding entry in Column 4 of the table, from so much of duty of excise leviable thereon under the Act as is equivalent to the duty of excise leviable thereon under the said Act already paid on the goods of the description specified in the corresponding entry in Column 3 of the Table (such goods being referred to as inputs) and falling under such chapter heading or sub-heading numher of the Schedule as is specified in corresponding entry in Column 2 of the said Table. For instance, China clay has been mentioned in Col. 3 which is classifiable under Chapter Heading 25.05 and used in the final product of paper or paper board which is falling under Chapter Heading No. 48 by the above said notifications, neither effective rates of duties of excise, prior to coming into force of Central Excise Tariff Act, for any of the items china clay or paper or paper board is being maintained subsequent to the coming into force of that Act. In fact, what is prescribed by these two notifications is otherwise known as credit of duty paid on inputs which are used in manufacture of the finished goods that is being allowed in order to avoid the spiralling effect of Central Excise duty on the finished goods. Therefore, the above said two notifications, not being issued for the purpose of or with the object of maintaining effective rates of duties at the level obtaining prior to 28th February 1986 or the 1st day of March, 1986 the two notifications are not covered by Central Duties of Excise (Retrospective Exemption) Act, 1986. That being the only contention in the present appeal, the appeal is rejected for the reasons stated by me above."
5. The appellants have challenged these findings. We have heard Sh. V. Sridharan, learned advocate for the appellants and Shri K.K. Bhatia, learned Jt CDR for the respondents. Shri Sridharan contended that the issue is no longer res-integra and that it has been fully decided in appellants favour on the point on which the Collector has decided in the following cases -
Pun Drinks (New Delhi) Ltd. v. Collector of Central Excise, New Delhi - Order No. 276/90-C dated 21-3-1990 Collector of Central Excise, Patna v. Jamshedpur Beverages - Order No. E/250/90-D dated 20th April 1990 Collector of Central Excise, Chandigarh v. Jammu Bottling Co. Pvt. Ltd. -(Order No. 183/89-D dated 26-6-1989) M/s. Sahney Paris Rhone Ltd., Hyderabad v. Collector of Central Excise, Hyderabad - Order No. 106/89-B dated 4-8-1989 Shri Sridharan submitted that there was one ruling rendered by South Regional Bench in the case of Sundaram Clayton Ltd. Order No. 261/89 dated 29-5-1989 which has taken a contrary decision but in that ruling, the Notifications were Nos. 118/75 and 217/86 and that they are not pari materia to the present notifications. He contended that the view taken by the South Regional Bench decision in the Sundaram Clayton Ltd. was contrary to the view taken by the Special Bench in the rulings relied by him, as well as in the case of Rapicut Carbide v. Collector of Central Excise 1989 (41) E.L.T. 259; Bajaj Auto Ltd. v. Collector of Central Excise 1990 (49) E.L.T. 278 and also by the same Bench of the SRB in the case of Tirupathi Rolled Glass Ltd. v. Collector of Central Excise, Madras. He also relied on the department's circular which has been reported in 1987 (32) E.L.T. T-31. He submitted that there- is no change in the level of exemption and hence, the retrospective Act is applicable. He contended that there is no effect in the final duty as the final duty would remain the same and therefore, the benefit cannot be denied to the appellants and their refund claim has to be allowed.
6. Arguing for the Revenue, Shri Bhatia, Jt. CDR submitted that the ruling rendered by the South Regional Bench in the case of Sundaram Clayton clarifies the point with regard to the retrospective effect of certain notifications and the interpretation given by the Bench is totally applicable to the facts of the case and applying the ratio, the appeal has to be dismissed. He contended that refund will not be available in cases where duty is paid by others and set of is claimed by the manufacturer. Shri Sridharan countering the arguments, submitted that the Special Bench rulings were applicable to the facts of the case and the ruling given by the SRB in the case of Sundaram Clayton Ltd. was in disregard to the ruling rendered by the Special Bench and therefore, it has to be considered as per incuriam and he relied on the ruling rendered in the case of Municipal Corporation of Delhi v.Gumam G. Kaur (AIR 1989 SC 38). He further submitted that the Revenue's argument is not supported by any proviso of the Act as the Act had referred to the .term 'Other Notification'. He contended that the said other Notification No. 201/79-CE has been issued under Rule 8 of the Central Excise Rules and that it is a set off notification and the Notifications No. 225/86-C.E. and No. 258/86-C.E. were also set off notifications. He submitted that the Tribunal had taken a view in the case of C.C.E. v. Kashmir Vanaspati 1987 (29) E.L.T. 208 and that interpretation of notification of set off has to be dealt with by Special Bench and in view of this ratio, the ruling rendered by the SRB in the case of Sundaram Clayton is not binding on this Bench.
7. We have carefully considered the submissions made by both the sides and perused the various rulings relied by both the sides. The appellants have contended that the excise duty on paper and paper board is levied and collected as per provisions of Section (3) of the Act. Prior to 28-2-1986, the rates of excise duty payable on paper and paper board were set forth in the First Schedule of the Act. The Tariff Act was restructured on the basis of Harmonised System of classification and a new Tariff Act was passed in 1985. In order to simplify the Excise duty and to overcome the fault of multiple taxation, the Scheme of Modvat was introduced in the Union Budget for 1986-87 w.e.f. 1-3-1986. However, the Modvat Scheme was not applicable to the paper industry. It appears that the Finance Minister while delivering the Budget speech, had stated that the introduction of Modvat Scheme will result in considerable reduction in the cost of final product and therefore, to retain the collection of Excise duties at the earlier levels, the rate of duties on the final product have been suitably adjusted. After accounting for the set off, the duty rates have been rounded of to the nearest step in the new duty structure. The Finance Minister has further said that while all care has been taken to work out the interests of set off benefits, the scheme being a new one, the CBEC would take corrective steps where-ever anomalies are noted. The appellants have contended that simultaneously various notifications, including Notification No. 201/79-C.E., dated 4-6-1979 by which the manufacturer would get set-off of duty paid on various inputs excisable under old Item 68 of the First Schedule of the Act, were withdrawn w.e.f. 1-3-1986. As per this notification, the paper industry used to get set-off of duty paid on various inputs such as rosin, Sodium Sulphate which were excisable under TI 68 of the First Schedule of the Act. As a result of the withdrawal of the said notification and as the Modvat Scheme was not made applicable to the paper industry, the set-off benefit which the paper industry used to get was also withdrawn. It is stated that this withdrawal was not intended against the long term fiscal policy which envisages three systems of set-off. It is also contended that it is against the spirit of announcement made by the Finance Minister in the Budget proposal of 1986-87. It is stated that Govt. had considered the representations issued under Notifications No. 225/86-C.E., dated 3-4-1986 and No. 256/86 dated 24-4-1986 exempting or extending the benefit of set-off of Central Excise duty paid on inputs specified therein and used in the manufacture of paper and paper board. It is contended that since the Notification No. 201/79-C.E. was rescinded w.e.f. 1-3-1986 and the new notifications have come into existence w.e.f. 3-4-1986 and 24-4-1986 respectively, the appellants were not entitled to the benefit between 1-3-1986 and 2-4-1986 and 24-4-1986 as the case may be. In view of this further representations were made and the Govt. of India allowed the set-off with the said intervening period by introducing a bill No. 99/86 titled The Central Duties of Excise (Retrospective Exemption) Bill, 1987 to provide for giving retrospective effect to certain notifications relating to exemption from duties of excise and authorising refund of excise duties which have been collected or which have become payable but would not have become so collected or payable if the notification had been enforced from 1-3-1986. The said bill was passed and made an Act. In terms of this Act, the appellants are claiming refund in the matter. The lower authorities have rejected their claim and the reasoning given by the learned Collector has been incorporated above.
8. The contentions raised by the learned Collector was similar as raised in the case of Sahney Paris Rhone Ltd. (supra). The Bench over-ruled the said contention of the Collector in the following words -
"We have heard both the sides, perused the Appeal Memo, Notification and the citations relied upon by the learned Consultant for the appellants. As can be seen from the facts of this case, the appellants were enjoying the exemption for goods captively consumed by them under Notification No. 118/85 till the said notification was rescinded by Notification No. 186/86 dated 1-3-1986 by which the said exemption was withdrawn. However, by Notification No. 217/86 dated 2-4-1986, the exemption was again introduced by passing the retrospective Amendment Act. The effect of the Notification No. 217/86 was extended from 1-3-1986. It seems that the appellants were not required to pay any duty for the interim period 1-3-1986 to 31-3-1986. The Collector has based his findings on the basis of the purpose of the legislative set out in Clause 2 of the Act. The purpose says maintaining the effective rates of duty of excise in respect of certain goods at the level obtaining prior to the 28th day of February, 1986. The learned Collector has clearly erred in understanding Clause 2 of the said Act. The purpose of the retrospective effect is very clear inasmuch as to extend the benefit of the notifications which are annexed in the said Act retrospectively. A clear reading of Notification No. 217/86 and the said Act and also the ratio laid down in Appeal No. E/449/89-D M/s. Jammu Bottling Co. Pvt. Ltd., it is very clear that the appellants are entitled for Notification No. 217/86 and that they are entitled for exemption for the period 1-3-1986 to 31-3-1986.
In view of this matter, the view of the learned Collector is not sustainable in law and the same is liable to be set aside. Therefore, the order is liable to be set aside. In the result, the appellants succeed and the appeal is allowed."
9. The Tribunal has in the case of Jammu Bottling Co. (supra) has held in paras 5 to 7 as follows -
"We have considered the submissions of both the sides. The Central Duties of Excise (Retrospective Exemption) Act, 1986 was, as is clear from its preamble, enacted with a view to provide for giving retrospective effect to certain notifications relating to exemption from duties of excise. According to Section 2 of the Act, every notification issued by the Government on or after 3-3-1986 but before 8-8-1986, in exercise of the powers conferred by Central Excise Rule 8(1) shall be deemed to have, and to have always had, effect on and from 1-3-1986. It further provides that the notifications should have been issued for the purpose of -
(a) maintaining the effective rates of duties of excise in respect of certain goods at the level obtaining prior to the 28th day of February, 1986, notwithstanding the changes in the rates of duties of excise made by the Central Excise Tariff Act, 1985 (5 of 1986), the Additional Duties of Excise (Textiles and Textile Articles) Amendment Act, 1985 (6 of 1986), or the Additional Duties of Excise (Goods of Special Importance) Amendment Act, 1985 (7 of 1986) or
(b) maintaining the effective rates of duties of excise in respect of certain goods at the level obtaining prior to 1st day of March, 1986, notwithstanding the changes in the rates of duties of excise made by the Finance Bill, 1986.
The provisions of the Act would have applicability only in relation to such goods.
Notification No. 325/86-C.E., dated 27-5-1986 is reproduced below -
In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Govt. hereby exempts aerated waters, falling under Heading No. 22.02 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), from so much of the duty of excise leviable thereon under the Central Excises and Salt Act, 1944 (1 of 1944) as is equivalent to the duty of excise leviable thereon, which is specified in the said Schedule, already paid on the flavouring essence or concentrates falling under sub-heading 3302.10 of the said Schedule used in the manufacture of the said aerated waters'.
This notification evidently had the effect of exempting aerated waters to the extent of the duty suffered by the specified inputs used in their manufacture. As the Collector has stated, the rate of duty on aerated waters did not undergo any change on the introduction of the Finance Bill, 1986. Whereas prior to the introduction of the Bill on 28-2-1986, the incidence of duty on aerated waters stood reduced to the extent of the duty suffered by the specified inputs, on and from 1-3-1986, this input duty relief was not available till the issue of Notification No. 325/86 dated 27-5-1986. It is only on the issue of this notification that the incidence of duty on aerated waters stood reduced to the extent of the duty suffered by the specified inputs. There was a vacuum from 1-3-1986 to 26-5-1986 when the level of duty was not maintained as it was prior to 28-2-1986. In this view of the matter, we are of the opinion that Notification No. 325/86 is covered by Central Duties of Excise (Retrospective Exemption) Act, 1986.
The aforesaid Act further provides that the duties of excise which have been collected, but which would not have been so collected if the said notification had been in force at all material times, should be refunded. It is further provided that a claim for such refund shall be made before the expiry of six months from the commencement of the Act. The Act came into force on 8-9-1986 and the six month period would have expired on 7-5-1987. The refund claim in the present case was filed on 5-3-1987. As such, it was within time."
10. The Bench again examined the view rendered in the case of Jammu Bottling Co. Pvt. Ltd. (supra) again in the case of Jamshedpur Bevearges and did not find any reason to differ from the same in appeal filed by the Revenue on the same contentions as had been raised in the case of Sundaram Clayton and argued before us by the learned Jt. CDR. The Bench took the view as in paras 7 to 9 as follows -
"We have carefully perused the order in the case of Collector of Central Excise, Chandigarh v. Jammu Bottling Co. Pvt. Ltd. (supra). It is true that the Bench in that case has not specifically answered the point but as far as the question whether notification in question should be treated to have been covered under Retrospective Exemption Act was concerned the Bench has given specific finding. So in our view, that would clearly cover the present case also.
In these circumstances, we see no reason to depart from the ratio of the decision in M/s. Jammu Bottling Co. Pvt. Ltd. (supra).
Apart from this the argument advanced by the learned DR is that if the notification is given retrospective effect then the Revenue would stand to lose in as far as upto 28-2-1986 duty on concentrates was at the rate of 12% and the as-sessee was availing of set-off at that rate, while from 28-2-1986 the rate of duty was 20% and the assessee would be claiming set-off also at that rate. So revenue would stand to lose because price of the final product remained constant at 30 paise per bottle. This argument is interesting but fallacious. Because formerly the assessee was paying 12% and claiming set-off at the rate of 12% while from 28-2-1986 he would be paying at the rate of 20% and would be claiming at that rate. So the argument of learned DR that the object of the Retrospective Exemption Act was to maintain level of the rate of duty at the same level would be frustrated if the notification in question was treated as having retrospective effect, and being covered by the said Act has no force."
11. The Tribunal also have negatived this plea of the Revenue again in the case of Pure Drinks Ltd. (supra) and had applied the ratio in the case of Jammu Bottling. The learned Jt. CDR has relied on the rulings rendered by the Sundaram Clayton Ltd., wherein the Bench has held as follows -
"Therefore the question is whether it can be said that the rescinding of Notification No. 118/75 in respect of the goods captively consumed, the level of duties changed by the Finance Bill and the same was restored by the issue of Notification No. 217/86. We observe that in the Notification No. 217/86 the word used is certain specified goods, while in the Act, the changes talked about are in respect of certain goods. Therefore, the question is whether the said certain-goods have to be interpreted in respect of the goods falling under the tariff heading as a whole or can be taken to be the category of goods which were conditionally exempted under notification earlier and which notification was rescinded by the Finance Bill. We observe that for various fiscal and monetary considerations affecting the industry and for Revenue consideration, certain conditional notifications are issued by the Govt. from time to time and these conditional notifications are neither withdrawn or modified in the changed context of the circumstances. Therefore, if the Government in its wisdom had accorded certain concession for certain category of goods used for a particular purpose the same cannot be considered to be at par with the cases where across the board increase of duties were made for the goods falling under certain tariff heading. The logic put forth by the learned counsel for the appellants is that inasmuch as the Notification 217/86 restored the concession earlier available under Notification 118/75 the interpretation should be that the Govt. intended to continue the concession but for the changes in the Finance Bill, is misconceived. Another reason is that the Notification 217/86 as pointed out by the Revenue is not pan materia with Notification 118/75. It is not the plea of the learned advocate that all those goods which were captively consumed and falling under Item 68 of the CET by issue of Notification 217/86 were given concession as available under the erstwhile Notification 118/75. Our reading of the said act referred to above also is that the position rectified by the enactment was to restore the rates of duties to the levels as existing before 1-3-1986 by issue of Notifications till 8-8-1986 to those prevailing before 1-3-1986 from 1-3-1986 onwards till 8-8-1986, wherever the goods falling under a particular tariff heading as a whole were made chargeable at higher rates under the new tariff or in terms of the new notification issued after the introduction of the Finance Bill. The appellants' case does not fall in that category and in view of this we hold that there is no force in the appellants plea and accordingly the appeal is rejected."
12. We observe that this ratio of the S.R.B. is in direct conflict with the ratio laid down by the Special Bench in the rulings extracted above. We are not inclined to follow the ruling of the South Regional Bench as the Special Bench rulings have been consistent and the same are being applied from time to time in all the matters arising in the Special Benches. It has to be observed that the South Regional Bench has not taken into consideration all the above rulings as the same have not been brought to their notice. Therefore, the S.R.B. has given this ruling per incuriam. The law laid down by the Supreme Court on per incuriam as rendered in the case of A.R. Antulay v. R.C. Naik [AIR 1988 (SC) 1531] is applicable to disregard the view taken by the S.R.B. Keeping in with the judicial decorum and discipline, we are bound to follow the rulings rendered by the Special Benches time and again and therefore, applying the rulings rendered (supra), we allow the appeal with consequential relief.