1991 (4) TMI 138 - HC - Central Excise

Central Excise duties - Stages of levy and collection - Duty of excise - Estoppel - Interpretation of statute

Issues Involved:
1. Levy and collection of additional excise duty on goods manufactured before the enactment of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978.
2. Interpretation of 'retrospective' application of the Act.
3. Legislative background and relationship between the Act of 1944 and the Act of 1978.
4. Validity of the Deputy Collector's interpretation and departmental practices.
5. Interpretation of the term 'duty' under Rule 2(v) of the Central Excise Rules, 1944.
6. Application of Rule 9A and Rule 49 of the Central Excise Rules, 1944.
7. Case law and precedents cited.

Detailed Analysis:

1. Levy and Collection of Additional Excise Duty:
The petitioner contended that additional excise duty under the Act of 1978 cannot be levied on goods manufactured before the Act came into force on October 4, 1978. The court examined Section 3 of the Act of 1978, which provides for the levy and collection of additional excise duty at the time goods are assessed to duty. The court concluded that the additional duty is to be levied and collected at the stage of assessment of excise duty, which occurs at the time of removal of goods from the factory. Therefore, goods manufactured before the Act came into force but not cleared would attract additional excise duty.

2. Interpretation of 'Retrospective':
The petitioner argued that applying the Act of 1978 to goods manufactured before its enactment would be retrospective. The court clarified the meaning of 'retrospective' using established legal principles, stating that a statute is not considered retrospective merely because it applies to goods manufactured before the Act if the goods were not assessed to duty before the Act came into force. The court held that the Act of 1978 is not retrospective as it does not impair any vested rights or create new obligations for past transactions.

3. Legislative Background:
The court discussed the legislative background, noting that the Act of 1944 and the Act of 1978 are supplemental to each other. Section 3(3) of the Act of 1978 incorporates provisions of the Act of 1944 and the rules framed thereunder, including those related to refunds and exemptions. The court emphasized that the additional duty under the Act of 1978 is in addition to the duty chargeable under the Act of 1944 and is to be levied at the stage of assessment of excise duty.

4. Validity of Deputy Collector's Interpretation:
The court rejected the petitioner's reliance on a letter from the Deputy Collector of Central Excise, Baroda, which stated that goods fully manufactured before October 4, 1978, would not attract additional duty. The court held that the Deputy Collector's interpretation does not change the legal position, as he had no authority to grant exemptions or alter the law.

5. Interpretation of 'Duty' under Rule 2(v):
The petitioner argued that 'duty' under Rule 2(v) of the Central Excise Rules, 1944, refers only to duty payable under Section 3 of the Act of 1944 and not to additional duty under the Act of 1978. The court rejected this argument, stating that the additional duty under the Act of 1978 is in addition to the duty under the Act of 1944 and is to be assessed and collected in the same manner.

6. Application of Rule 9A and Rule 49:
The court addressed the petitioner's contention that interpreting the Act of 1978 using Rule 9A and Rule 49 of the Central Excise Rules, 1944, would be inverse logic. The court clarified that Sections 3 and 4 of the Act of 1944, read together, constitute the charging section, and the rules make the scheme workable. The court concluded that the provisions of Rule 9A and Rule 49 apply to the additional duty under the Act of 1978, and the duty is to be levied at the stage of removal of goods.

7. Case Law and Precedents:
The court referred to various case laws to support its conclusions. In the case of Wallace Flour Mills Company Ltd. v. Collector of Central Excise, it was held that excise duty is on manufacture, but its realization can be postponed to the date of removal. Similarly, in Mihir Textiles Ltd. v. Union of India, it was held that the rate of duty applicable at the time of removal is relevant. The court also discussed other cases cited by the petitioner and intervenors, concluding that they did not alter the interpretation of the Act of 1978.

Conclusion:
The court rejected the petition, holding that the additional excise duty under the Act of 1978 applies to goods manufactured before the Act came into force but not cleared. The Act is not retrospective, and the provisions of the Act of 1944 and the Central Excise Rules, 1944, apply to the levy and collection of additional duty. The interpretations and practices of the Deputy Collector and the department do not change the legal position.

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