2013 (12) TMI 394 - AT - Central Excise

Black Tea removed on the budget day - New Levy to be Imposed - Goods removed after 05 00 p.m. before mid-night of budget day, whether the new levy would be imposed as per Rule 224 (2A) of the erstwhile Rules, 1944 - Whether the undertaking given by the appellant under Rule 224(2A) would cause levy of duty at the enhanced rates by Notification dated 01.03.2000, when the clearances were effected on 29.02.2000, after 11 00 a.m. and before 05 00 p.m. Held that - The differential duty on enhancement of rate of duty on the budget day had been rightly recovered - there is no enhancement of duty by notification - it is a case for imposition of levy by Finance Bill, 1999 - tea was nil rate of duty prior to 27.02.1999 - By Finance Bill, 1999, duty was imposed, which would be forced into law on the midnight - the clearances made by the appellants before midnight, no demand can be raised order set aside Decided in favour of Assessee.

Summary

Issues:
- Whether duty imposition on tea on the budget day applies to goods removed after a specific time.
- Interpretation of Rule 224 of the Central Excise Rules, 1944 in relation to budget day clearances.
- Applicability of the Provisional Collection of Taxes Act, 1931 to determine the effective levy of duty.
- Comparison of relevant case laws to determine the correct application of duty imposition.

Detailed Analysis:
1. The appeals involved a common order where goods, specifically 'Black Tea,' were intercepted on the budget day without proper permission for clearance. The issue revolved around the duty imposition on tea, including tea waste, at Rs.2/- per kg announced on the budget day. The appeals challenged the demand of duty, confiscation of goods, and penalties imposed by the original authority.

2. The appellants argued that the duty levy would only apply after midnight following the budget day as per the Provisional Collection of Taxes Act, 1931. They cited relevant case laws to support their position, emphasizing the immediate effect of the law after the bill's introduction in Parliament.

3. The Revenue representative contended that the duty imposition was effective on the budget day itself, regardless of the time of clearance. They differentiated the present case from previous cases involving special excise duty, asserting that duty exemption prior to the budget day did not exempt goods cleared on the budget day.

4. The Tribunal analyzed the Act of 1931, which clarified the immediate effect of declared provisions after the bill's introduction in Parliament. By interpreting the Act, the Tribunal concluded that duty imposition on tea cleared before midnight on the budget day would not be applicable, aligning with the principle established in previous cases.

5. The Tribunal referred to the J.K. Synthetics case where the clearance of goods on the budget day was subject to the law's immediate effect after midnight. Contrary to the Revenue's argument, the Tribunal found that the duty imposition on tea was not applicable to clearances made before the law came into force at midnight on the budget day.

6. Ultimately, the Tribunal ruled in favor of the appellants, setting aside the impugned orders and allowing the appeals with consequential relief. The decision was based on the understanding that the duty imposition on tea was effective only after midnight on the budget day, thereby exempting the goods cleared before that time from duty demands.

7. The judgment highlighted the importance of the Provisional Collection of Taxes Act, 1931 in determining the timing of duty imposition and emphasized the need for clarity in interpreting relevant laws to ensure fair application of duties on goods cleared on budget days.