2007 (4) TMI 502 - AT - Central Excise

Exemption - Captive consumption - N/N. 67/95, dated 16-3-95 - Interpretation of statutes - Imposition of Penalty - Held that - Admittedly, the scope of exclusion having been extended w.e.f. 1-6-01, it cannot be said that the said exclusion was in the notification even prior to the date of its issuance - It is well settled that a notification granting relief has to be held effective from the date of the issuance of the same and such relief provided by notification cannot be made applicable for the period prior to the issuance of the same. The benefit of amendment to N/N. 67/95 was not available to the appellant in the month of May 01 and duty of ₹ 17,97,495 has been rightly confirmed against them - penalty set aside. Appeal allowed in part.

Issues Involved:
1. Interpretation of Notification No. 67/95 regarding exemption for captively consumed inputs.
2. Applicability of amendment to Notification No. 67/95 retrospectively.
3. Legal interpretation of fiscal statutes and notifications for granting relief.
4. Imposition of penalty based on the disputed legal interpretation.

Detailed Analysis:

Issue 1: Interpretation of Notification No. 67/95
The appellant, engaged in cement manufacturing, used cement clinker captively for cement production. Notification No. 67/95 exempted cement clinker if the final product cement attracted duty. However, when cement was cleared at Nil rate under subsequent notifications, the exemption for cement clinker was no longer applicable. This led to a duty demand of Rs. 17,97,495 and a penalty imposed by authorities, later reduced by the Commissioner.

Issue 2: Applicability of Amendment Retrospectively
The appellant argued that an amendment to Notification No. 67/95 (Notification No. 31/01) should apply retrospectively from May 2001, benefiting them. Authorities rejected this, stating that unless a notification explicitly indicates retrospective application, it is effective from its issuance date. The amendment allowing duty exemption for captively consumed inputs even if the final product was exempted was not applicable for the past period.

Issue 3: Legal Interpretation of Fiscal Statutes
The Tribunal analyzed the provisions of Notification No. 67/95, which exempted goods used within a factory for production, subject to specific conditions. The appellant was not covered by exceptions in the proviso during the relevant period. An exclusion was added to the proviso from June 1, 2001, but it was not retrospective, as the relief granted by notifications is effective from their issuance date.

Issue 4: Imposition of Penalty
The Tribunal held that the appellant's interpretation did not merit acceptance. While confirming the duty demand, the penalty was set aside as the dispute was based on legal interpretation without any mala fide intention from the appellant. The Tribunal's decision was based on the plain language of the notifications and the absence of legislative intent for retrospective application.

In conclusion, the Tribunal upheld the duty demand but overturned the penalty, emphasizing that the relief provided by notifications is effective from their issuance date and cannot be applied retrospectively unless explicitly stated. The judgment clarified the legal interpretation of fiscal statutes and notifications in granting relief and highlighted the importance of legislative intent in determining the applicability of such provisions.

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