2017 (2) TMI 713 - AT - Central Excise

Levy of duty - Kerosene meant for PDS - delay in issuing exemption notification - whether taxable prior to issuance of N/N. 4/2005-C.E on 1.3.2005 - Held that - Law is well settled that a curative notification which seeks to mitigate the hardships is always read in a manner to advance public welfare and construed liberally as well as retrospectively. The Notification dt.1.3.2005 having conveyed the policy of the Government to exempt PDS kerosene from levy of excise duty, as that was the intention conveyed through the above circular, there shall not be confusion to levy excise duty on PDS kerosene because issuance of notification was delayed by nearly 6 months - such notification shall have retrospective effect - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of Circular No.796/29/2004-CX and Notification No.4/2005-CE regarding exemption of excise duty on Kerosene meant for Public Distribution System (PDS).
2. Validity of refund granted to the appellant for duty paid on Kerosene cleared during January and February 2005.
3. Retroactive application of Notification No.4/2005-CE dated 1.3.2005.
4. Application of the decision in W.P.I.L Ltd. Vs Commissioner - 2005 (181) ELT 359 (SC) on the retrospective effect of clarificatory notifications.

Analysis:

1. The appellant argued that Kerosene meant for PDS should not be subject to excise duty, citing Circular No.796/29/2004-CX and Notification No.4/2005-CE. The Circular indicated the intention of the Government to exempt PDS Kerosene from duty. The Tribunal noted the withdrawal of the warehousing system in 2004, but the policy remained consistent, leading to the issuance of the notification in 2005, exempting PDS Kerosene from duty.

2. The appellant was initially subjected to duty for Kerosene cleared in January and February 2005. However, upon the issuance of Notification No.4/2005-CE, the adjudicating authority granted a refund of the duty paid. The Revenue appealed against this refund, leading to the Tribunal's consideration of the matter.

3. The Tribunal emphasized the importance of interpreting curative notifications liberally and retrospectively to advance public welfare. It held that the delayed issuance of Notification No.4/2005-CE did not negate its purpose to exempt PDS Kerosene from duty. The Tribunal found the order of the Commissioner unsustainable and allowed the appeal in favor of the appellant.

4. In citing the decision in W.P.I.L Ltd. Vs Commissioner, the Tribunal highlighted the retrospective effect of clarificatory notifications that clarify previous government policies. The Tribunal found that the notification in this case clarified the policy expressed in the Circular, further supporting its decision to allow the appeal and uphold the refund granted to the appellant.

In a separate appeal, the Tribunal allowed the appeal without expressing an opinion on the valuation issue raised by the Revenue, as the appellant's duty liability did not arise based on the circumstances presented.