2002 (4) TMI 161 - AT - Central Excise

Summary

Issues involved:
Interpretation of exemption Notification No. 1/93, dated 28-2-93 in relation to goods liable to additional excise duty (AED).

Detailed Analysis:

1. Background and Appeal: The appeal was filed against the Order-in-Appeal affirming the duty demand but reducing the penalty. The appellants, engaged in manufacturing textile fabrics, contested show cause notices demanding AED for clearing fabrics, arguing that SSI exemption applied to AED as well. Both lower authorities upheld duty demand.

2. Interpretation of Exemption Notification: The main issue was whether Notification No. 1/93, dated 28-2-93, applied to goods liable to AED. Citing the Apex Court judgment in Union of India v. Modi Rubber, it was clarified that exemptions under Rule 8(1) of the Central Excise Rules do not cover special, auxiliary, or additional duties. The notification in question, issued under Section 5A of the Central Excise Act, did not reference AED under the Additional Duties of Excise Act, hence not exempting goods from AED.

3. Legal Precedents: The judgment distinguished the Ujagar Prints case, emphasizing that the exemption for basic excise duty (BED) does not extend to goods liable to AED. The observations of the Gujarat High Court in Maheshwari Mills Ltd. were deemed irrelevant, as they did not directly address the issue at hand. The Tribunal's decision in MRF Ltd. v. CCE, Hyderabad, granting exemption under a different notification, was not applicable due to the Apex Court's ruling in Union of India v. Modi Rubber.

4. Decision and Conclusion: Both lower authorities correctly applied the law, denying exemption benefits for AED to the appellants. Consequently, the Commissioner (Appeals)'s order was upheld, and the appeal was dismissed as lacking merit.

This detailed analysis clarifies the interpretation of the exemption notification in relation to goods liable to additional excise duty, emphasizing legal precedents and the Apex Court's definitive ruling on the matter.