1984 (11) TMI 342 - AT - Central Excise

Issues Involved:
1. Valuation for levy of Central Excise duty on vegetable product.
2. Interpretation of "duty of excise leviable thereon" before and after 1-10-1975.
3. Applicability of the Explanation inserted by Section 47 of the Finance Act, 1982.
4. Reopening of completed assessments.
5. Inclusion of refunded duty in the assessable value.

Issue-wise Detailed Analysis:

1. Valuation for Levy of Central Excise Duty on Vegetable Product:
The appeals related to the valuation for the levy of Central Excise duty on vegetable products eligible for partial exemption under Notification No. 23/75-C.E., dated 1-3-1975, and its predecessor Notification No. 230/72, dated 15-12-1972. The exemption was based on the proportion of indigenous cotton seed oil used in the manufacture of the vegetable product, with different rates of exemption specified in the Table annexed to the Notification.

2. Interpretation of "Duty of Excise Leviable Thereon" Before and After 1-10-1975:
For the period prior to 1-10-1975, the appellants relied on the Delhi High Court judgment in Modi Rubber Ltd., which held that the duty to be deducted should be the duty without taking into account the relief given in terms of the exemption notification. For the period from 1-10-1975 onwards, the Explanation inserted by Section 47 of the Finance Act, 1982, defined "value" in relation to any excisable goods and made it clear that the effective amount of duty of excise payable on the goods under assessment should alone be taken into account.

3. Applicability of the Explanation Inserted by Section 47 of the Finance Act, 1982:
The Explanation inserted by Section 47 of the Finance Act, 1982, was made retrospective from 1-10-1975 to 27-2-1982. It clarified that the duty of excise payable on any excisable goods should be the sum total of the effective duty under the Central Excises and Salt Act and the aggregate of the effective duties under other Central Acts. The Tribunal held that for the period from 1-10-1975 onwards, the expression "duty of excise leviable thereon" should be taken as referring to the effective duty of excise.

4. Reopening of Completed Assessments:
The Department argued that assessments could be reopened if there was material to show that there was a short levy for any of the reasons set out in Rule 10 of the Central Excise Rules. The Tribunal found it difficult to accept the argument that the old Section 4 should be read as if it contained the Explanation added by Section 47 of the Finance Act, 1982, for the period prior to 1-10-1975. The Tribunal concluded that the reopening of assessments should be based on specific statutory provisions and not on assumptions or presumptions.

5. Inclusion of Refunded Duty in the Assessable Value:
The Tribunal observed that the effective duty of excise should be computed by taking into account any exemption available to the goods. The Tribunal rejected the argument that the assessable value should be recalculated by including the benefit of the exemption. The Tribunal held that the duty refunded could not be considered as part of the price and that the assessable value should be the price shorn of the element of duty.

Conclusion:
The Tribunal upheld the orders of the lower authorities and rejected the appeals for the period from 1-10-1975 onwards, holding that the effective duty of excise should be considered for the valuation. For the period prior to 1-10-1975, the Tribunal followed the Bombay High Court judgment in Tata Oil Mills, which supported the view of the Central Excise authorities. The Tribunal concluded that the expression "duty of excise leviable thereon" should refer to the duty after giving full effect to the exemption notification for both periods. The dissenting opinion by Member (Judicial) M. Gouri Shankar Murthy argued that the assessable value should not include the refunded duty and that the reopening of assessments was not justified. However, the majority view prevailed, and the appeals were rejected.

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