2005 (10) TMI 537 - AT - Central Excise

Summary

Issues:
1. Interpretation of Exim Policy 1997-2002 regarding payment of Central Excise Duty by 100% EOU.
2. Applicability of retrospective amendment to Section 3(1) of the Finance Act, 2000.
3. Impact of Notification No. 38/99-C.E. on duty payment obligations for EOUs.
4. Validity of demand for duty by Revenue on goods cleared by the Assessee.
5. Reference to Larger Bench decision in Fabworth (I) Ltd. case regarding retrospective effect of Notification 38/99-C.E.

Analysis:

1. The case involved the interpretation of para 9.9(a) of the Exim Policy 1997-2002 concerning the payment of Central Excise Duty by a 100% EOU on goods cleared into DTA. The Assessee had cleared reject Wool Fabrics and Polywool fabrics into DTA without paying certain duties. The Revenue issued two Show Cause Notices demanding duty equivalent to 50% of the duties not paid for specific periods.

2. The Commissioner dropped the demand for the period up to 15-9-99, citing that although Section 3(1) was retrospectively amended by the Finance Act, 2000, Notification No. 2/95-C.E. prescribing the effective rate of duty was not similarly amended. This led to the conclusion that the retrospective amendment did not impact the duty obligations until 15-9-99. The amendment through Notification 38/99-C.E. on 16-9-1999 was considered prospective.

3. The Tribunal referred to a Larger Bench decision in the case of Fabworth (I) Ltd., which held that the amendment introduced by Notification 38/99-C.E. on 16-9-1999 could not have retrospective effect. Consequently, the Tribunal found no merits in the Revenue's appeal and dismissed it accordingly.

4. The judgment emphasized the importance of understanding the implications of retrospective amendments to statutory provisions and notifications, especially concerning duty payment obligations for EOUs. The decision highlighted the need for a thorough analysis of relevant legal provisions and precedents to determine the correct application of the law in specific cases.

5. The final order of the Tribunal reflected the dismissal of the Revenue's appeal based on the interpretation of the Exim Policy, retrospective amendments, and the applicability of Notification 38/99-C.E. The reference to the Larger Bench decision added weight to the Tribunal's reasoning and provided a clear basis for the judgment delivered by the Members.