2006 (8) TMI 224 - AT - Central Excise

Summary

Issues involved: Interpretation of Clause (c) of Section 109 of the Finance Act, 2000 regarding recovery of excise duties, consideration of exemption Notification 2/95 in relation to fresh levies retrospectively imposed, validation of duties under Customs Act, 1962, and Customs Tariff Act, 1975, and the impact of Notification 38/99 on duty calculations.

Analysis:

1. The main issue in this case revolved around the interpretation of Clause (c) of Section 109 of the Finance Act, 2000, concerning the recovery of excise duties. The Tribunal considered the argument that recovery is required for duties not collected as if the amendment by the Finance Act had been informed at all material times. Reference was made to the case of Fabworth (India) Ltd. v. CCE Nagpur, where it was decided that Notification 2/95 grants exemption to levies exceeding 50% of basic Custom duty. The Tribunal, after hearing both sides, concluded that the Larger Bench did not consider the retrospective fresh levies imposed in 2000 and the provisions of Section 109, authorizing recovery of duties freshly levied. The matter was referred back for further consideration.

2. The Tribunal analyzed the retrospective amendment of Section 3 of the Customs Act by the Finance Act, 2000, and its implications. It was observed that the levy of duty under the Central Excise Act, 1944, for EOUs necessitates the consideration of duty under the Customs Act, 1962, and the Customs Tariff Act, 1975. The Tribunal emphasized that the exemption under Notification 2/95 exempts duties in excess of 50% of Customs duties under Section 12 of the Customs Act, 1962. The Tribunal held that the retrospective introduction of levies under other Acts does not override the exemption under Notification 2/95, as it covers all duties, whether existing or imposed retrospectively.

3. The Tribunal further examined the interpretation of duties under the Customs Tariff Act, 1975, and the impact of Notification 38/99 on duty calculations. It was noted that duties leviable under the Customs Tariff Act, 1975, are distinct from those under Section 12 of the Customs Act, 1962. The Tribunal referred to relevant case law and instructions to determine the calculation of duties. Notification 38/99 altered the exemption criteria, specifying that duties in excess of 50% under any law in force should be considered. The Tribunal affirmed the decision of the Larger Bench in Fabworth (India) Ltd. v. CCE, Nagpur, stating that it did not require reconsideration.

4. In conclusion, the Tribunal answered the reference by affirming that the decision of the Larger Bench in Fabworth (India) Ltd. v. CCE, Nagpur did not necessitate reconsideration. The matter was to be placed before the referring Bench for further proceedings.