2007 (1) TMI 319 - AT - Central Excise

Summary

Issues:
1. Applicability of enhanced rate of duty on goods manufactured due to rescinding of Notification No. 5/99-CE by Notification No. 12/2000 CE.

Analysis:

1. The issue in this appeal was whether the enhanced rate of duty on goods manufactured by the assessee, resulting from the rescinding of Notification No. 5/99-CE by Notification No. 12/2000 CE, applied to clearances made under Rule 224(2A) of the Central Excise Rules, 1944 on the budget day of 29-2-2000 between specific hours.

2. The appellant had been granted permission by the Commissioner of Central Excise to remove goods on the budget day with the condition of paying an enhanced rate of duty after 1200 hours on 29-2-2000. The appellant filed a refund claim under Rule 224(2) and 224(2A) for duty debited under protest. Both lower authorities rejected the claim.

3. The appellant's advocate argued that the concessional rate was applicable until midnight of 29-2-2000 as Notification No. 5/99-CE was rescinded by Notification No. 12/2000 CE from 1-3-2000. They contended that the duty at an enhanced rate under Rule 224(2A) exceeded the rule-making powers under Section 37 of the Central Excise Act, deeming it ultra vires.

4. The Departmental Representative cited the Larger Bench decision in Vikrant Tyres case, stating that the appellant's undertaking for clearance on the budget day fell under Rule 224. They emphasized that the appellant cleared goods as per prescribed conditions.

5. The appellant's rejoinder highlighted that there was no duty enhancement, rather withdrawal of concessional rates, making the Larger Bench decision inapplicable. They argued that their interpretation of Rule 224(2A) exceeding Section 37 scope was not addressed in the Larger Bench decision.

6. The judge found that the appellant was allowed to clear goods on the budget day with the condition of paying enhanced duty post 1200 hours on 29-2-2000. The issue was deemed covered by the Vikrant Tyres case, where the doctrine of estoppel prevented the appellant from disputing the duty payment.

7. Rule 224 of the Central Excise Rules provides a special provision for clearance on pre-budget/budget day, and the appellant fulfilled the prescribed conditions. The judge concluded that Rule 224 did not exceed the Act's scope and was valid for the situation.

8. The judge rejected the appellant's argument that the enhanced duty should be governed by the Provisional Collection of Taxes Act, citing the Vikrant Tyres case's detailed finding. The order of the lower appellate authority was upheld, and the appeal was rejected.