1996 (12) TMI 58 - SC - Central Excise

Entitlement to exemption notification issued on 3rd April, 1986 - Held that;- Necessary to modify the judgment and order of the High Court and hold that the appellants are entitled to the benefit of the said notification and, consequentially, to refund of the additional duty that had been paid on the inputs aforementioned used in the manufacture of the final products aforementioned, the precise quantum thereof to be determined by the Excise authorities. In favour of assessee

Summary

Issues:
1. Interpretation of the Central Duties of Excise (Retrospective Exemption) Act, 1986.
2. Validity of exemption notifications issued under Rule 8 of the Central Excise Rules.
3. Entitlement to refund of excise duty and additional duty paid on inputs.

Analysis:
1. The judgment concerns the interpretation of the Central Duties of Excise (Retrospective Exemption) Act, 1986, which gave retrospective effect to exemption notifications issued between March 3, 1986, and August 8, 1986. The Act aimed to rectify the issue of manufacturers having to pay duty during the transition period when new exemption notifications were being issued. The Act provided for refunds of duties collected during that period if the notifications had been in force. The court found that the Act applied to the case at hand, allowing for the retrospective effect of the exemption notifications.

2. The case involved exemption notifications issued under Rule 8 of the Central Excise Rules, replacing previous notifications upon the enactment of the Central Excise Tariff Act, 1985. The specific exemption notification in question exempted certain excisable goods from duty equivalent to that paid on the inputs used for their manufacture. The appellants claimed the benefit of this notification, which was later challenged by a show cause notice alleging erroneous credit. The High Court initially granted relief for excise duty paid on inputs but denied relief for additional duty, citing insufficient pleadings. However, the Supreme Court found that the appellants were entitled to the benefits of the notification for both excise duty and additional duty paid on inputs.

3. Ultimately, the Supreme Court allowed the appeal, holding that the appellants were entitled to the benefits of the exemption notification, including a refund of the additional duty paid on inputs used in manufacturing final products. The court directed the Excise authorities to determine the precise quantum of the refund. The judgment emphasized the clear entitlement of the appellants to the benefits of the notification, rectifying the previous denial of relief for additional duty paid.