1991 (8) TMI 110 - HC - Central Excise

Adjudication - Demand - Erroneous refund - Review - Recall of order - Dutiability - Rate of duty

Summary

Issues:
1. Refund of excise duty on Sodium Alginate manufactured by M/s. Belur Enterprises.
2. Interpretation of Notification No. 105 of 1980 and Tariff Item 15A(1) under the Central Excises and Salt Act, 1944.
3. Application of Section 11A of the Act in the context of refund orders issued by the Assistant Collector of Central Excise.
4. Legal principles governing the liability to pay excise duty based on the date of manufacture or removal of goods.
5. Authority of the Assistant Collector of Central Excise to recall an order of refund.

Analysis:

1. The case involved a dispute regarding the refund of excise duty on Sodium Alginate manufactured by M/s. Belur Enterprises. The product was initially exempted from duty under Notification No. 105 of 1980 but later became liable for excise duty under Tariff Item 15A(1) of the Act.

2. The issue revolved around the interpretation of the relevant provisions of the Central Excises and Salt Act, 1944, specifically Notification No. 105 of 1980 and Tariff Item 15A(1). The respondent claimed a refund based on the exemption at the time of manufacture.

3. The Assistant Collector of Central Excise issued refund orders but later sought to recover the refunded amount under Section 11A of the Act, citing an error in the initial refund order. The respondent challenged this action, leading to a series of appeals and the filing of a writ petition.

4. The legal debate centered on the liability to pay excise duty, with reference to the date of manufacture versus the date of removal of goods. The appellant argued that duty is related to the date of removal, as per the scheme of the Excise Act and relevant Rules, emphasizing the importance of the prevailing rates at the time of removal.

5. The decision highlighted the authority of the Assistant Collector of Central Excise to recall an order of refund if issued erroneously. The judgment clarified that the taxable event is the manufacture of excisable goods, but the duty payment can be postponed until the removal of goods for administrative convenience, as outlined in Rule 9A of the Excise Rules.

6. Ultimately, the writ appeal was allowed in favor of the Excise Department, emphasizing the change in legal interpretation and rejecting the respondent's argument regarding the date of manufacture as the sole determinant of duty liability. The judgment upheld the authority of the Assistant Collector to recall the refund order based on erroneous reasons, dismissing the technical objections raised by the respondent.