1981 (4) TMI 100 - HC - Central Excise

Summary

Issues Involved:
1. Validity of the notice of demand dated August 25, 1967.
2. Eligibility for exemption under the amended notification dated July 15, 1967.
3. Compliance with the procedure laid down in Rule 56A of the Central Excise Rules, 1944.
4. Effective date for availing the exemption under Rule 56A.

Detailed Analysis:

1. Validity of the Notice of Demand Dated August 25, 1967:
The petitioner challenged the notice of demand issued by the Inspector of Central Excise on August 25, 1967, which required the petitioner to pay Rs. 63,400.28 as excise duty on parts used in the manufacture of air-conditioners cleared between July 15, 1967, and August 10, 1967. The notice was issued on the grounds that the petitioner had not availed the procedure under Rule 56A during this period and therefore was not eligible for the exemption.

2. Eligibility for Exemption Under the Amended Notification Dated July 15, 1967:
The petitioner was initially granted an exemption under a notification dated June 2, 1962, which was amended by a notification dated July 15, 1967. The amendment required manufacturers to avail the procedure laid down in Rule 56A to claim the exemption. The petitioner applied to avail this procedure on July 21, 1967, but was permitted to do so only from August 31, 1967. The petitioner argued that they had been substantially complying with the provisions of Rule 56A even before the formal permission was granted.

3. Compliance with the Procedure Laid Down in Rule 56A of the Central Excise Rules, 1944:
The petitioner maintained that they had been following a procedure akin to Rule 56A prior to receiving formal permission. This included maintaining statutory records and accounts similar to those required under Rule 56A. The court noted that the petitioner had been maintaining records and accounts that could be used to work out the exemption fairly and properly.

4. Effective Date for Availing the Exemption Under Rule 56A:
The court had to decide whether the petitioner could claim the exemption from the date of their application (July 21, 1967) or only from the date formal permission was granted (August 31, 1967). The court observed that the delay in granting permission was due to the authorities and should not prejudice the petitioner. The court held that the petitioner was entitled to the exemption from the date of their application.

Conclusion:
The court quashed the impugned notice of demand and subsequent orders, directing the respondents to work out the exemption for the period from July 21, 1967, to August 31, 1967, based on the records maintained by the petitioner. The respondents were instructed to refund the excise duty realized from the petitioner for this period. The court made no order as to costs.