1984 (2) TMI 346 - AT - Central Excise

Summary

Issues Involved:
1. Claim for refund of special excise duty.
2. Validity of the levy of special excise duty under the Provisional Collection of Taxes Act.
3. Interpretation of "duty of excise" in various legislative contexts.

Detailed Analysis:

1. Claim for Refund of Special Excise Duty:
The appellants sought a refund of Rs. 19,504.92 paid as special excise duty on coated cotton fabrics during the period from 12-3-1980 to 31-3-1980, claiming exemption under Notification No. 12/80, dated 12-3-1980. The Assistant Collector rejected this claim, and the Appellate Collector upheld the rejection. The matter was escalated to the Tribunal.

2. Validity of the Levy of Special Excise Duty:
The appellants introduced a new ground for their claim, arguing that the levy of special excise duty under the Provisional Collection of Taxes Act appended to the Finance Bill, 1980, was not authorized. The Tribunal allowed this new ground as it was based purely on a question of law. The appellants contended that Section 3 of the Provisional Collection of Taxes Act, 1931, which allows the Central Government to insert a declaration in a Bill for the imposition or increase of a duty of customs or excise, referred only to duties under the Central Excises and Salt Act, 1944, and not to other excise duties.

3. Interpretation of "Duty of Excise":
The appellants relied on the Central Excise Laws (Amendment and Validation) Act, 1982, and two Delhi High Court judgments to argue that special excise duty was different from basic excise duty and thus not covered by the general expression "duty of excise" in the Provisional Collection of Taxes Act. The Tribunal examined the relevant provisions and judgments:

- Finance Bill, 1980: Clause 5(1) provided for the levy of a special duty of excise equal to 5% of the amount chargeable under the Central Excises and Salt Act.
- Provisional Collection of Taxes Act, 1931: Sections 3 and 4(1) allowed for immediate effect of certain provisions in a Bill related to duties of customs or excise.

The Tribunal concluded that the combined effect of these provisions was to make the special duty of excise immediately leviable. Rejecting the appellants' interpretation, the Tribunal noted that such an interpretation would imply invalidating the declaration or clause 5 of the Bill, which was beyond its jurisdiction.

Examination of Delhi High Court Judgments:
- Associated Cement Company Ltd. v. Director of Inspection, Customs and Central Excise: The court held that "duty of excise" referred specifically to the duty under the Central Excises and Salt Act, 1944, in the context of tax credit.
- Orient Paper Mills Ltd. v. Deputy Director of Inspection, Customs and Central Excise: The court reaffirmed the same interpretation.
- Modi Rubber Ltd. v. Union of India: The court held that "duty of excise" covered all types of excise duties, not just the basic duty under the Central Excises and Salt Act.

The Tribunal found that the specific definitions in the Income Tax Act did not apply to other enactments. The ordinary understanding of "duty of excise" included all types of excise duties, as supported by the Modi Rubber case.

Conclusion:
The Tribunal held that the expression "duty of excise" in the Provisional Collection of Taxes Act applied to all duties of excise, including special excise duty. The declaration under the Act thus applied to the special duty of excise. Consequently, the appellants' argument was rejected, and the appeal was dismissed.