1985 (5) TMI 223 - AT - Central Excise

Summary

Issues:
Calculation of Special Excise Duty and penalty imposition based on Notification Nos. 24 of 1975, 25 of 1975, and 201 of 1979; Interpretation of Section 5 of the Finance Bill, 1980; Validity of the approach taken by the department in calculating Basic Excise Duty; Consideration of penalty imposition by the Appellate Collector.

Analysis:
The judgment by the Appellate Tribunal CEGAT New Delhi involved the calculation of Special Excise Duty and penalty imposition on M/s. Tata Oil Mills Co. Ltd based on Notification Nos. 24 of 1975, 25 of 1975, and 201 of 1979. The appellants received a notice calling for payment of Special Excise Duty for clearances of soaps during a specific period. The dispute arose from the department's calculation of Basic Excise Duty and subsequent Special Excise Duty, which the appellants contested. The department's approach was to calculate the Basic Excise Duty first and then consider any further concessions at the time of clearance under Notification No. 201 of 1979. However, the appellants argued that the Basic Excise Duty should be determined after considering benefits under all three notifications, resulting in a nil Basic Excise Duty and subsequently nil Special Excise Duty during the relevant period.

The Tribunal analyzed Section 5 of the Finance Bill, 1980, which mandated the computation of Basic Excise Duty with reference to the duty levied under the Central Excises and Salt Act along with any applicable notification. The Tribunal found the department's distinction between the notifications improper and held that all duties should be payable at the time of clearance without differentiation based on when exemptions could be claimed. The Tribunal disagreed with the department's approach and emphasized that the Basic Excise Duty should be calculated after considering benefits under all relevant notifications, as contended by the appellants.

Regarding penalty imposition, the Tribunal noted that the Appellate Collector did not address this issue in the order. However, based on the findings related to the calculation of Basic Excise Duty and Special Excise Duty, the Tribunal concluded that the penalty imposition could not be sustained. Therefore, the Tribunal allowed the appeal, set aside the orders of the lower authorities, and provided consequential relief, if any, to the appellants.