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2009 (4) TMI 752 - AT - Central ExciseDemand - Revenue neutrality - whether exemption Notification No. 1/93, dated 28-2-1993 applied to the goods liable to AED for payment of AED or not? - Held that - As the additional duty of excise leviable under Additional Duties of Excise (Goods of Special Importance) Act, 1957 was not covered under the said Notification, non payment of additional excise duty by the appellants is incorrect. Also Notification No. 67/95-C.E., dated 16-3-1995, has no reference to the provisions of Additional Duties of excise (Goods of Special Importance) Act, 1957 and accordingly, the additional excise duty is not exempt in terms of the said Notification - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Applicability of Notification No. 67/95-C.E. for exemption from Additional Excise Duty (AED). 2. Revenue neutrality of the demand. 3. Imposability of interest under Section 3(3) of the AED (GSI) Act, 1957. Issue-wise Detailed Analysis: 1. Applicability of Notification No. 67/95-C.E. for exemption from Additional Excise Duty (AED): The appellants contended that Notification No. 67/95-C.E., dated 16-3-1995, which exempts goods manufactured and captively consumed within the factory from excise duty, should also cover AED. They relied on the Tribunal's decision in MRF Ltd. to support their claim. However, the Tribunal found that Notification No. 67/95-C.E. exempts only the duties specified in the Schedule to the Central Excise Tariff Act, 1985, which does not include AED as it is levied under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. The Tribunal cited the Supreme Court's decision in Union of India v. Modi Rubber, which clarified that exemption from excise duty does not automatically extend to AED unless explicitly mentioned. Therefore, the Tribunal upheld that the non-payment of AED by the appellants was incorrect as Notification No. 67/95-C.E. does not grant exemption from AED. 2. Revenue neutrality of the demand: The appellants argued that the AED paid on intermediate goods (bleached cotton fabrics) would be available as credit for the payment of AED on the final product (coated fabrics), making the entire exercise revenue neutral. The Tribunal acknowledged that the appellants had paid AED on the final product, which exceeded the AED demanded on the intermediate goods. The Tribunal referred to several Supreme Court decisions, including CCE v. Textile Corporation of Marathawada, which held that no demand could be raised when the situation is revenue neutral. The Tribunal found that the appellants had already paid the AED on the final product and would have utilized the credit if AED was paid on the intermediate goods, making the demand revenue neutral and unsustainable. 3. Imposability of interest under Section 3(3) of the AED (GSI) Act, 1957: The appellants contended that Section 3(3) of the AED (GSI) Act, 1957, does not have provisions relating to interest, and hence interest is not imposable. They relied on the Tribunal's decision in Tonira Pharma's case, which held that in the absence of specific provisions, it is not possible to demand interest. The Tribunal agreed with this contention and found that interest was not imposable on the confirmed liability of AED. Conclusion: The Tribunal concluded that Notification No. 67/95-C.E. does not exempt AED, but the demand was revenue neutral as the appellants had already paid AED on the final product. Additionally, interest was not imposable due to the absence of specific provisions in the AED (GSI) Act, 1957. Consequently, the appeal filed by the appellants was allowed.
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