1984 (8) TMI 337 - AT - Central Excise

Issues Involved:
1. Rate of duty applicable to the appellants' product.
2. Retrospective applicability of Notification No. 121/69-C.E., dated 29-4-1969, amending Notification No. 133/65-C.E., dated 20-8-1965.

Issue 1: Rate of Duty Applicable to the Appellants' Product

The appellants are engaged in the manufacture of steel billets using an electric furnace from old iron or steel melting scrap. The relevant tariff item at the material time (1-3-1966 to 30-1-1967) for semi-finished steel, including billets, was Rs. 50 per metric tonne plus the excise duty for the time being leviable on steel ingots. The parties agreed that the duty on steel ingots was Rs. 75 per metric tonne. The appellants argued that since their manufacturing process skips the ingot stage, they should not be liable for the duty on ingots and should only pay Rs. 50 per metric tonne. However, the Supreme Court decision in J.K. Steel Ltd. v. Union of India and Ors. held that the word "plus" indicates that both duties (Rs. 50 per metric tonne and the excise duty on steel ingots) have to be levied. Therefore, this argument was rejected.

Issue 2: Retrospective Applicability of Notification No. 121/69-C.E., dated 29-4-1969

The appellants argued that the explanation added to Notification No. 133/65-C.E., dated 20-8-1965, by Notification No. 121/69-C.E., dated 29-4-1969, should be applied retrospectively from 20-8-1965. This explanation deemed that steel products manufactured with the aid of an electric furnace from specified materials were made from steel ingots on which the appropriate duty had been paid. The respondent opposed this, arguing that retrospective application would create anomalies and that the notification, being subordinate legislation, could not be applied retrospectively without specific statutory provision.

The Tribunal referred to several precedents, including The Cannanore Spinning and Weaving Mills Ltd. v. The Collector of Customs and Central Excise, Cochin and Ors., Aryodaya Spg. and Weaving Co. Ltd. v. Union of India and Ors., and others, which held that retrospective effect could not be given to such notifications in the absence of specific statutory provision. Consequently, the Tribunal held that the amendment had a prospective effect from 29-4-1969.

Separate Judgment by A.J.F. D'Souza, Member (T)

D'Souza dissented, arguing that the ambiguity regarding the rate at which cast billets should be taxed justified the retrospective application of the explanation. He pointed out that the product in question was a cast product like an ingot, and since no ingot ever came into existence, the ingot duty should not be applicable. He emphasized that the benefit of any ambiguity should go to the taxpayer and that the explanation added by the notification was necessary to clarify the ambiguity. He also noted that the learned SDR had conceded that the exemption from ingot duty could be granted retrospectively from 1-3-1969. Therefore, he would allow the appeal with consequential relief, except to the extent barred by limitation.

Conclusion

In accordance with the majority decision, the appeal was rejected, and the amendment was held to have a prospective effect from 29-4-1969.

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