1989 (11) TMI 46 - HC - Central Excise

Exemption notification (Central Excise) - Orthoxylene - Levy of additional duty of customs thereon

Summary

Issues Involved:
1. Levy of additional duty on imported Orthoxylene.
2. Applicability of Notification No. 276/67 for exemption from additional duty.
3. Interpretation of previous judgments and their relevance.
4. Applicability of Notification No. 89/82 for exemption from additional duty.

Issue-wise Detailed Analysis:

1. Levy of Additional Duty on Imported Orthoxylene:
The Petitioners sought to quash and/or set aside the levy of additional duty on consignments of Orthoxylene imported by them. They claimed exemption from additional duty based on Notification No. 276/67, dated 1st December 1967.

2. Applicability of Notification No. 276/67 for Exemption from Additional Duty:
The Petitioners argued that they were entitled to exemption from additional duty under Notification No. 276/67. The relevant portion of the Notification exempts excisable goods falling under Items 6 to 11A of the First Schedule to the Central Excises and Salt Act, 1944, provided the goods are utilized in specific ways within a refinery or cleared to another factory under certain conditions. The Respondents contended that the exemption was conditional upon the raw material being manufactured in a refinery and utilized in one of the specified ways.

3. Interpretation of Previous Judgments and Their Relevance:
The Petitioners relied on a Division Bench Judgment in the case of Century Enka Limited & Ors. v. Union of India & 2 Ors., which held that additional duty cannot be levied on an imported article if it is exempt from excise duty when manufactured in India. The Petitioners also cited other judgments that followed the Century Enka case. However, the Respondents pointed out a subsequent Division Bench Judgment in Ashok Traders v. Union of India, which clarified that the advantage of an exemption notification is available only if all conditions specified in the notification are fulfilled. The Court agreed with this interpretation, stating that the conditions laid down in the exemption notification must be fully satisfied.

4. Applicability of Notification No. 89/82 for Exemption from Additional Duty:
The Petitioners argued that Notification No. 89/82, dated 25th March 1982, should apply to them. This Notification exempts goods from additional duty in excess of the excise duty leviable on like goods produced outside a free trade zone in India. The Petitioners claimed that since Indian Petro Chemicals Corporation Ltd. (I.P.C.L.) does not pay excise duty on Orthoxylene, they should be exempt from the entire amount of additional duty. The Court examined the Explanatory Note to Notification No. 89/82, which indicated that the Notification was intended to address the situation arising from different rates of excise duty on goods produced inside and outside a free trade zone. The Court concluded that Notification No. 89/82 was not applicable to the Petitioners, as it was designed to maintain the existing position regarding excise duty rates and not to provide a blanket exemption.

Conclusion:
The Court held that the Petitioners were not entitled to the benefit of Notification No. 276/67, as the conditions laid down in the Notification could not be satisfied for imported items. Additionally, Notification No. 89/82 was found to be inapplicable to the Petitioners' case. Consequently, the Petitions were dismissed without any order as to costs, and interim orders were extended for six weeks, subject to the condition that the Bank Guarantees be kept alive during this period.