Indian Kanoon - Search engine for Indian Law

Though Mr. Lakshmikumaran, learned counsel appearing for the appellants, has advanced his submission on the merits of the case as well, we are of the opinion that it is not necessary to deal with the merits of the case, inasmuch as these appeals are liable to succeed on the first defence, as noted above, raised by the appellants.

We may point out here that the issue has not come up before this Court for the first time. In the case of W.P.I.L. Ltd. vs. Commissioner of Central Excise, Meerut, U.P. (2005 185 ELT 359 (S.C.) this Court was concerned with almost identical fact situation, albeit in relation to the product known as ’Part of Power Driven Pumps’. The power driven pumps also were similarly exempted which exemption was available to the manufacturers since 1978. In the Notification No.64/94-CE dated 1.3.94 whereby exemption qua 389 earlier notifications was rescinded, the Notification in respect of the part of power driven pumps was also included as rescinded. Thereafter, the same item was again exempted by Notification No.95/94-CE issued on April 25, 1994. In this manner, insofar as parts of power driven pumps are concerned, there was no exemption in respect thereof for the period from 1.3.94 to 24.4.1994.

The assessee in the aforesaid case took the same plea by arguing that since the decision of the exemption vide Notification dated 1.3.94 was an inadvertent error and the Government realizing this mistake had reintroduced the exemption it will be treated as only corrective and clarificatory in nature. This contention was accepted by this Court in the aforesaid judgment holding that even during the period from 1.3.94 to 24.4.94, the manufacturers of part of power driven pumps shall continue to get the exemption. The relevant part of the said judgment which squarely applies to the present case as well is reproduced below in Paras 16-17:

"16. In view of the consistent policy of the Government of exempting parts of power driven pumps utilized by the factory within the factory premises, it could not be said that while issuing Notification No.46/94 of March 1, 1994, the exemption in respect of said item which was operative was either withdrawn or revoked. The action was taken only with a view to rescinding several notifications and by issuing a composite notification. The policy remained as it was and in view of demand being made by the Department, a representation was made by the industries and on being satisfied, the Central Government issued a clarificatory Notification No.95/94 on April 25, 1994. It was not a new notification granting exemption for the first time in respect of parts of power driven pumps to be used in the factory for manufacture of pumps but clarified the position and made the position explicit which was implicit.