2003 (9) TMI 117 - AT - Central Excise

Summary

Issues Involved:
1. Interpretation of Rule 224(2A) of the Central Excise Rules.
2. Applicability of enhanced duty rates on goods cleared before the effective date of the new rates.
3. Validity and enforcement of undertakings given by assessees under Rule 224(2A).

Issue-wise Detailed Analysis:

1. Interpretation of Rule 224(2A) of the Central Excise Rules:
The primary issue referred to the Larger Bench was whether an undertaking given by an appellant under Rule 224(2A) would cause a levy of duty at enhanced rates by a Notification dated 1-3-2000, when the clearances were effected on 29-2-2000 after 11.00 AM and before 5.00 PM. The necessity for this reference arose due to conflicting judgments on the interpretation of Rule 224(2A). The Tribunal examined the provisions of Rule 224(2A) and Rule 9A, noting that Rule 224(2A) was enacted to address exceptional situations where goods are removed on the eve of the presentation of the budget. The Tribunal concluded that Rule 224(2A) takes precedence over Rule 9A, as it specifically deals with the removal of goods on budget days and requires an undertaking to pay enhanced duty if applicable.

2. Applicability of Enhanced Duty Rates on Goods Cleared Before the Effective Date of the New Rates:
The appellants argued that the duty should be charged based on the rate prevalent at the time of clearance of goods, not the enhanced rate effective from the subsequent date. They relied on the judgment of the Apex Court in Collector of Central Excise, Patna v. Tata Iron & Steel Co. Ltd., which stated that special excise duty is an annual levy ceasing on 28th February and a new levy commencing on 1st March. However, the Tribunal found that this judgment was not applicable due to the amendment of Section 3 of the Central Excise Act in 1999, which changed the basis of levying special excise duty. The Tribunal emphasized that the relevant date for determining duty is the date of removal of goods, but in cases covered by Rule 224(2A), the undertaking to pay enhanced duty takes precedence.

3. Validity and Enforcement of Undertakings Given by Assessees Under Rule 224(2A):
The Tribunal held that the undertaking given by the appellants under Rule 224(2A) to pay the enhanced duty was valid and enforceable. The appellants had sought and obtained permission to remove goods on the eve of the budget presentation, subject to the undertaking to pay any enhanced duty. The Tribunal ruled that the appellants were estopped from disputing their liability to pay the enhanced duty, as they had availed the benefit of removing goods under the special concession provided by Rule 224(2A). The Tribunal cited previous cases such as Manglam Cement Ltd. v. Collector of Central Excise and CCE v. Universal Cables Ltd., which supported the view that assessees are bound by their undertakings under Rule 224(2A).

Conclusion:
The Tribunal decided the reference in favor of the Revenue, holding that the differential duty on account of enhancement in duty in the budget was rightly recovered from the appellants. The appeal of the appellants was dismissed, and they were not entitled to claim a refund of the duty paid. The Tribunal's decision was based on the interpretation of Rule 224(2A), the validity of the undertaking given by the appellants, and the applicability of enhanced duty rates as per the undertaking.