2010 (8) TMI 706 - HC - Central Excise

Exemption under Notification No. 9/2002 - assessee is liable to pay duty at concessional rate of 9.6% as against the normal duty at 16% to the extent of first Rs. 1 crore of turnover. After availing the said benefit and paying the duty at 9.6%, it appears, the assessee has paid on some consignment, duty at 16% which is within Rs. 1 crore turnover Held that - When the assessee opted for concessional rate of duty under the Notification which was applicable to him and the duty paid at concessional rate, merely because in respect of some consignment normal duty was paid and on being demanded, he has paid the differential duty and interest, that would not take away his right to claim exemption, if he is so entitled. Mere payment of normal duty on some consignments, or on demand, payment of differential duty and interest thereon, would not amount to assessee opting out of Notification to which he has opted at the commencement, no merit in this appeal, Appeal is dismissed accordingly

Summary

Issues:
- Interpretation of Notification No. 9/2002-C.E., dated 1-3-2002 as amended.
- Entitlement for refund of differential duty paid.
- Application of Doctrine of Estoppel in claiming refund.
- Compliance with excise exemption terms under the Central Excise Tariff Act, 1985.

Interpretation of Notification No. 9/2002-C.E., dated 1-3-2002:
The case involved the assessment of whether the assessee, a manufacturer of Silicone Emulsions and Silicone Fluids, complied with the terms of Notification No. 9/2002-C.E., dated 1-3-2002 as amended. The Notification required the assessee to pay duty at a concessional rate of 9.6% for the initial clearance up to Rs. 1 crore and at the normal rate of 16% for the remaining turnover. The dispute arose when the assessee paid the normal duty rate for the initial clearance of Rs. 1 crore, leading to a demand for differential duty payment by the authorities. The Tribunal held that paying normal duty on some consignments did not amount to opting out of the Notification and allowed the refund claim, emphasizing that the assessee was entitled to the benefit of the Notification.

Entitlement for refund of differential duty paid:
The primary contention raised was whether the assessee, by paying the differential duty at the normal rate and interest, forfeited the right to claim a refund of the excess amount. The appellant argued that the Tribunal erred in granting the relief, citing a previous judgment where an assessee withdrawing from an exemption was held liable to pay normal duty for the entire financial year. However, the Court differentiated the present case, emphasizing that the assessee did not withdraw from the Notification but paid normal duty on some consignments within the financial year. The Court concluded that the assessee's payment of normal duty did not confer any benefit and did not amount to opting out of the Notification, thus upholding the Tribunal's decision to allow the refund claim.

Application of Doctrine of Estoppel in claiming refund:
The appellant contended that the Doctrine of Estoppel should apply, barring the assessee from claiming a refund due to paying normal duty on certain consignments. However, the Court rejected this argument, highlighting that the assessee's payment of normal duty did not result in any undue benefit and did not signify opting out of the Notification. The Court emphasized that the assessee's right to claim exemption remained intact, as the differential duty payment was made in response to the authorities' notice and did not indicate a deliberate withdrawal from the Notification.

Compliance with excise exemption terms under the Central Excise Tariff Act, 1985:
The judgment underscored the importance of assessing compliance with excise exemption terms under the Central Excise Tariff Act, 1985. It clarified that the assessee's payment of normal duty on some consignments, followed by the payment of differential duty and interest upon notice from the authorities, did not signify a violation of the exemption terms. The Court emphasized that the assessee's actions did not demonstrate an intention to withdraw from the Notification but rather a response to rectify the discrepancy identified by the audit. Consequently, the Court dismissed the appeal, concluding that no substantial question of law arose for consideration in the matter.