1991 (8) TMI 94 - HC - Central Excise

Summary

Issues:
1. Refund of excise duty claimed by the respondent.
2. Application of relevant law regarding excise duty on manufactured goods.
3. Authority of Assistant Collector of Central Excise to recall refund order.

Analysis:

Issue 1: Refund of excise duty claimed by the respondent
The respondent, a manufacturer of Sodium Alginate, claimed a refund of excise duty paid on goods manufactured prior to the imposition of duty under Tariff Item 15A(1). The respondent contended that at the time of manufacturing, no duty was liable to be paid due to an exemption under Notification No. 105 of 1980. The Assistant Collector of Central Excise initially ordered a refund, but later issued a show cause notice directing repayment, stating that the goods became liable for duty at the time of removal. The matter was appealed, and the appellate authority confirmed the order of the Assistant Collector. A writ petition was filed to challenge these orders.

Issue 2: Application of relevant law regarding excise duty on manufactured goods
The judgment referred to previous decisions to determine the liability of goods for excise duty. The court relied on the decision in The Union of India v. The Elphinstone Spinning & Weaving Mills Co. Ltd. and Union of India v. Bombay Tyre International Ltd. to conclude that goods manufactured before the withdrawal of exemption but removed thereafter are not entitled to exemption. The court also considered the Supreme Court decision in Wallace Flour Mills Company Ltd. v. Collector of Central Excise to establish that the taxable event for excise duty is the date of removal of goods from the factory, and the rates prevailing on that date are applicable.

Issue 3: Authority of Assistant Collector of Central Excise to recall refund order
The respondent argued that the Assistant Collector did not have the authority to recall the refund order under Section 11A as if reviewing his own decision. However, the court held that once the legal basis for the refund order was altered, the Assistant Collector had the power to recall it. The court emphasized that the taxable event for excise duty is the manufacture of goods, but the duty payment may be postponed until the removal of goods from the factory, as per Rule 9A of the Excise Rules.

In conclusion, the court allowed the writ appeal, stating that the Assistant Collector was justified in recalling the refund order based on the correct interpretation of the law regarding excise duty liability on manufactured goods.