2018 (3) TMI 173 - AT - Central Excise

Benefit of N/N. 64/95-CE, dated 16.03.1995, as amended - goads cleared to the programme SAMYUKTA for the period 1.06.2006 to 21.8.2006 - Penalty u/r 25 of CER, 2002 - Held that - The parent N/N. 64/95-CE, dt. 16.03.1995 inter-alia exemption central excise duty on all goods suplied to the programme SAMYUKTA under the Ministry of Defence, with the caveat that the exemption shah not have affect on or after the first day of December, 1999. The N/N. 1/2006-CE extended the validity of the parent N/N. 64/95-CE, upto Ist day of June, 2006. However, the next notification extending the validity period was 40/2006-CE, dt. 21.08.2006 which extended the validity period upto Ist day of December, 2007. December has taken the view that since the amending N/N. 1/2006-CE cause extension of validity period only upto 01.06.2006, and since there was no further notification was issued for extending the validity beyond 01.06.2006, till N/N. 40/2006-CE was issued on 21.08.2006, duty free clearance under parent N/N/. 64/95CE would not be available for the interim period. A similar issue had come up before Hon ble Supreme Court in W.P.I.L Limited Vs. CCE, Meerut 2005 (2) TMI 137 - SUPREME COURT OF INDIA . The facts were that pumps as well as part thereof which were used far manufacture of power pumps exempted from levy of excise duty since 1978. However, while issuing a consolidated notification No.46/94, incorporating earlier notification dt. 01-03-1994, part of power driven pumps which all along have been exempted, were omitted. The benefit of N/N. 67/95-CE in respect of impugned goods cleared by the appellant will be available even chewing the period of dispute - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Eligibility for exemption under notification No.64/95-CE for goods cleared to the programme SAMYUKTA.
2. Non-imposition of penalty under rule 25 of Central Excise Rules, 2002.
3. Interpretation of notifications extending the validity period of exemption.

Issue 1: Eligibility for exemption under notification No.64/95-CE for goods cleared to the programme SAMYUKTA:
The case involved appeals concerning the eligibility for exemption under notification No.64/95-CE for goods cleared to the SAMYUKTA program. The dispute revolved around the duty liability for specific systems cleared without payment of duty under the said notification. The appellant argued that the exemption should have continued without a break, highlighting administrative delays in issuing notifications extending the exemption period. The department sought to confirm duty liability, emphasizing the need for penalty imposition. The tribunal analyzed the series of notifications extending the validity of the exemption, noting the gaps between notification periods. It was observed that the intention to extend the exemption for the SAMYUKTA program should not have ceased for a short period. The tribunal referred to a similar issue addressed by the Supreme Court, emphasizing the retrospective effect of clarificatory notifications to maintain consistency in exemption policies.

Issue 2: Non-imposition of penalty under rule 25 of Central Excise Rules, 2002:
The department was aggrieved by the non-imposition of a penalty by the adjudicating authority under rule 25 of the Central Excise Rules, 2002. The appellant argued against the imposition of a penalty, citing reasons similar to those presented for the duty liability issue. The tribunal considered the arguments from both sides and ultimately decided to reject the department's appeal seeking penalty imposition. The decision was based on the application of the Supreme Court's judgment in a similar case, emphasizing the consistent policy of granting exemptions and the retrospective effect of clarificatory notifications.

Issue 3: Interpretation of notifications extending the validity period of exemption:
The tribunal delved into a detailed analysis of the notifications extending the validity period of the exemption under notification No.64/95-CE for goods supplied to the SAMYUKTA program. By examining the sequence of notifications and the gaps between them, the tribunal concluded that the intention to extend the exemption should be considered continuous, even during periods without specific notifications. Drawing parallels to a Supreme Court case, the tribunal applied the principle of clarificatory notifications having a retrospective effect to uphold the appellant's eligibility for the exemption during the disputed period. The decision highlighted the importance of maintaining consistency in exemption policies and interpreting notifications in favor of the taxpayer.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT HYDERABAD underscores the complexities of interpreting exemption notifications and the significance of legal precedents in determining duty liability and penalty imposition in excise duty cases.