1989 (9) TMI 110 - HC - Central Excise

Summary

Issues:
1. Interpretation of exemption notification for excise duty on imported High Density Polyethelene Moulding Powder (H.D.P.E.).
2. Applicability of precedent judgments in similar cases.
3. Validity of conditions imposed under the exemption notification.
4. Challenge based on Article 14 of the Constitution of India regarding discriminatory conditions.

Analysis:

Issue 1: Interpretation of exemption notification
The case involved the interpretation of an exemption notification (No. 302/79-C.E.) for excise duty on imported H.D.P.E. The respondents imported the material and claimed exemption, but the appellants disagreed, leading to a dispute over the duty amount payable.

Issue 2: Applicability of precedent judgments
Initially, the learned Single Judge allowed the petition based on the precedent case of Century Enka Limited. However, the appellants contended that the Century Enka case did not apply to the current situation and cited the Ashok Traders case, where it was held that the importer would not benefit from the exemption notification.

Issue 3: Validity of conditions
The Division Bench in the Ashok Traders case emphasized the conditions for exemption, particularly the requirement for excise duty payment on raw naphtha or chemicals derived therefrom. The argument was made that this condition was discriminatory and violated Article 14 of the Constitution of India. The court rejected this argument, stating that the condition was valid to prevent double taxation on raw materials used in manufacturing H.D.P.E.

Issue 4: Challenge based on Article 14
The respondents challenged the condition requiring the use of duty-paid naphtha for importing H.D.P.E. as discriminatory. However, the court upheld the condition, stating that it was reasonable to ensure fair treatment between imported and locally manufactured H.D.P.E. products.

In conclusion, the court allowed the appeal, set aside the previous order, and dismissed the petition. The respondents were directed to repay the excise duty amount with interest to the appellants. The judgment reaffirmed the validity of the exemption conditions and rejected the argument of discrimination under Article 14.