1993 (7) TMI 101 - CGOVT - Central Excise

Summary

Issues:
1. Review proposal initiated against an order-in-appeal regarding Central Excise duty payment on exempted goods.
2. Interpretation of Rule 57C and Rule 12 of Central Excise Rules.
3. Validity of Trade Notices allowing payment of duty on exempted goods.
4. Application of doctrine of promissory estoppel against the Excise Department.
5. Legal implications of depositing duty not authorized by law.
6. Eligibility for rebate under Rule 12 in case of duty paid on exempted goods.
7. Disallowance of credit under Rule 57C for goods wholly exempted or chargeable at NIL rate.
8. Prohibition on claiming rebate indirectly when directly prohibited under Rule 57C.

Analysis:

1. The review proposal was initiated against an order-in-appeal regarding the payment of Central Excise duty on goods exempted under Notification No. 147/84. The Collector of Central Excise contended that the duty paid through R.G. 23A Part-II was legally incorrect, and no rebate under Rule 12 was available. The Collector (Appeals) had set aside the original order based on a Trade Notice allowing payment of duty even on fully exempted goods.

2. The Government emphasized that duty paid contrary to an exemption notification is not authorized by law and cannot be considered as duty. Therefore, no rebate can be granted on such payments. The Constitution mandates that no tax shall be levied except by authority of law, and since the goods were exempted, the duty deposited was not in the nature of excise duty.

3. The appellants were found ineligible for credit under Rule 57C, which prohibits credit if goods are wholly exempted or chargeable at NIL rate. The Government held that allowing the claim for rebate would circumvent the clear provisions of Rule 57C, which forbid the use of Modvat credit in such cases.

4. The application of the doctrine of promissory estoppel was raised by the respondents, citing a Supreme Court decision. However, the Government held that the duty paid on exempted goods, even with Modvat credit, cannot be considered as excise duty and, therefore, no rebate is payable.

5. The judgment also addressed a similar case involving Hindustan Alloys Manufacturing Company Ltd., where the revision application was rejected based on the same legal principles. The department's approval of the classification list did not alter the fact that no excise duty can be collected on completely exempted goods.

6. In conclusion, the Government set aside the order-in-appeal and restored the original order, emphasizing that payments made on exempted goods were not duties of excise, and no rebate was payable in such cases. The legal position regarding the payment of duty on fully exempted goods was upheld, and the applications for review were rejected based on the interpretation of relevant rules and notifications.