2008 (6) TMI 218 - HC - Central Excise

SSI Exemption - Date of effect - whether the benefit of notification granted to respondents by the Tribunal retrospectively from the beginning of the financial year is illegal and arbitrary? Held that - The Tribunal, instead of considering the scope of notifications with reference to the statutory provisions, under which those are issued, considered the scope of the statutory provisions with reference to the notifications issued. The Tribunal ought to have taken into account the powers of the Government, even to rescind Annexure-B Notification or to change the pattern of exemption available under Annexure-A as amended by Annexure-B Notification. The very purpose of Clause (5)(a) to Section 5A is to cloth the Government with the power to grant benefit of any notification retrospectively wherever it is required or desirable. It is for the Government to consider whether a notification should be given retrospectivity, and if so, up to what period and unless it is so provided, the Tribunal or even the High Courts have no power to grant retrospectivity for a notification in the interpretation process. We, therefore, allow the appeals by quashing the orders of the Tribunal and restoring the original orders confirmed in first appeals.

Summary

Issues:
1. Benefit of Annexure-B notification retrospectively.
2. Exclusion of job work turnover for concession/exemption.
3. Prospectivity of Annexure-B notification.

Issue 1: Benefit of Annexure-B notification retrospectively

The appeals were filed against the order of the Tribunal granting respondents the benefit of Annexure-B notification retrospectively from 1-4-2003. The Tribunal held that the respondents were entitled to concession/exemption under Notification No. 9/03 due to the amendment introduced by Annexure-B notification on 11-8-2003. The Commissioner of Central Excise argued that the benefit should apply only prospectively. The High Court analyzed that Annexure-B notification did not provide for retrospectivity and came into force on the date of its issue, i.e., 11-8-2003. The Court emphasized that the Tribunal erred in disregarding the statutory provisions and clarified that the respondents were liable to pay duty at the normal rate for clearances made before 11-8-2003. The Court concluded that the benefit of the amended notification would be available to respondents only from the date of its enforcement, rejecting the Tribunal's decision to apply it retrospectively.

Issue 2: Exclusion of job work turnover for concession/exemption

The dispute arose from the aggregate value of clearances of all excisable goods for home consumption, which included goods cleared on a job work basis. The respondents' total clearances exceeded the limit for concession/exemption under Notification No. 9/03. However, the amendment introduced by Annexure-B notification excluded the value of goods cleared on job work basis for calculating the turnover. This exclusion made the respondents eligible for concession/exemption. The Court highlighted that the exclusion provided by Annexure-B notification was crucial in determining the eligibility of the respondents for the benefit under Notification No. 9/03. The Court upheld the exclusion and its impact on the respondents' entitlement to concession/exemption.

Issue 3: Prospectivity of Annexure-B notification

The High Court delved into the prospectivity of Annexure-B notification, emphasizing that notifications issued under Section 5A(1) of the Central Excise Act come into force on the date of their issue unless specified otherwise. As Annexure-B notification did not mention retrospectivity, it took effect from 11-8-2003. The Court criticized the Tribunal for overlooking the significance of prospectivity and for misinterpreting the statutory provisions. It clarified that the power to grant retrospective effect to a notification lies with the Government, not the Tribunal or the High Courts. The Court concluded that the Tribunal's decision to apply the notification retrospectively was erroneous and allowed the appeals by quashing the Tribunal's orders.

This detailed analysis of the judgment addresses the issues of the benefit of Annexure-B notification retrospectively, exclusion of job work turnover for concession/exemption, and the prospectivity of Annexure-B notification, providing a comprehensive understanding of the legal reasoning and conclusions reached by the High Court.