2001 (11) TMI 790 - AT - Central Excise

Duty liability - Rate of duty - Exemption - Precedents - Judicial pronouncements - Judicial discipline Exemption, withdrawal of

Summary

Issues Involved:
1. Eligibility for refund claim based on the date of manufacture versus the date of clearance.
2. Applicability of the Wallace Flour Mills Co. Ltd. judgment.
3. Consideration of the Apex Court's judgment in CCE Hyderabad v. Vazir Sultan Tobacco Co. Ltd.
4. Scrutiny of unjust enrichment provisions.

Issue-wise Detailed Analysis:

1. Eligibility for Refund Claim Based on the Date of Manufacture Versus the Date of Clearance:
The assessee challenged the rejection of their refund claim by the Commissioner (Appeals) on the grounds that the goods were manufactured and stored while the exemption notification was in effect, even though the exemption was withdrawn by the time of clearance. The assessee argued that the date of manufacture, not the date of clearance, should determine the eligibility for the refund. They cited the Apex Court's judgment in CCE Hyderabad v. Vazir Sultan Tobacco Co. Ltd., which upheld that the dutiability of goods is determined at the time of manufacture, not at the time of removal.

2. Applicability of the Wallace Flour Mills Co. Ltd. Judgment:
The Commissioner (Appeals) relied on the Wallace Flour Mills Co. Ltd. judgment, which held that the payment of duty is related to the date of removal of goods. The Tribunal, however, noted that the Wallace Flour Mills case was not contrary to the Vazir Sultan Tobacco Co. Ltd. case, which clarified that the levy of duty occurs at the time of manufacture, with collection postponed to the date of removal for administrative convenience.

3. Consideration of the Apex Court's Judgment in CCE Hyderabad v. Vazir Sultan Tobacco Co. Ltd.:
The Tribunal emphasized the importance of the Vazir Sultan Tobacco Co. Ltd. judgment, which clarified that goods manufactured during an exempted period are not liable for duty even if the exemption is withdrawn at the time of removal. This judgment was considered more relevant than the Wallace Flour Mills case, as it directly addressed the issue of dutiability based on the date of manufacture.

4. Scrutiny of Unjust Enrichment Provisions:
The Tribunal allowed the appeal, subject to the scrutiny of the provisions of unjust enrichment as per the Apex Court's judgment in Mafatlal Industries Ltd. This means that while the refund claim was accepted, it would still need to be verified that the assessee had not passed on the duty burden to the buyers, ensuring they were not unjustly enriched by the refund.

Separate Judgments Delivered by the Judges:
- One member (J) allowed the appeal, agreeing with the assessee's contention that the date of manufacture should determine the dutiability.
- Another member (T) dismissed the appeal, upholding the Commissioner (Appeals)' reliance on the Wallace Flour Mills judgment, which related duty payment to the date of removal.
- The third member (J) concurred with the first member, emphasizing the applicability of the Vazir Sultan Tobacco Co. Ltd. judgment and the precedence of the later Supreme Court decision in C.J. Industries.

Majority Order:
In terms of the majority order, the appeal was allowed, subject to the scrutiny of the provisions of unjust enrichment in accordance with the Apex Court's judgment in Mafatlal Industries Ltd.'s case.