1985 (12) TMI 151 - AT - Central Excise

Summary

Issues Involved:
1. Entitlement to duty exemption under Central Excise Notification No. 83/83 for the year 1983-84.
2. Claim for refund of duty paid during 1983-84.
3. Demand for duty for the year 1984-85 based on exceeding the exemption limit.

Issue-wise Detailed Analysis:

1. Entitlement to Duty Exemption under Central Excise Notification No. 83/83 for the Year 1983-84:

The respondents commenced manufacturing on 10-12-1983 and filed a declaration on 24-12-1983 claiming duty exemption under Notification No. 83/83. The Assistant Collector denied the exemption, arguing that the respondents exceeded the Rs. 25 lakhs limit by including a refund amount of Rs. 1,74,978.08. However, the Collector (Appeals) found that the respondents had transferred this amount to their dealers, thus keeping the total clearances under Rs. 25 lakhs. The tribunal upheld the Collector (Appeals)'s decision, stating that the declaration was filed within a reasonable time and there was no evidence of unjust enrichment or flow-back of the refunded amount.

2. Claim for Refund of Duty Paid During 1983-84:

The respondents paid duty under protest and later claimed a refund of Rs. 4,95,509.74. The Assistant Collector rejected this claim, but the Collector (Appeals) allowed it, finding that the respondents had duly transferred the duty amount to their dealers. The tribunal supported this decision, noting the absence of any evidence suggesting that the respondents retained the refund or that the dealers returned the refunded amount to the respondents. Consequently, the respondents were entitled to the refund as their clearances remained under the Rs. 25 lakhs limit.

3. Demand for Duty for the Year 1984-85 Based on Exceeding the Exemption Limit:

For the year 1984-85, the Assistant Collector confirmed a duty demand of Rs. 4,98,635.73, arguing that the respondents exceeded the Rs. 25 lakhs limit in April 1984 itself. The Collector (Appeals) set aside this demand, but the tribunal reversed this decision. The tribunal clarified that the phrase "the financial year" in para 4 of the notification refers to the current financial year for which the exemption is claimed, not the preceding year. Since the respondents' clearances exceeded Rs. 25 lakhs during 1984-85, they were not entitled to the exemption, and the duty demand was correctly made.

Conclusion:

The tribunal upheld the Collector (Appeals)'s order granting the refund for 1983-84 but set aside the order regarding the duty demand for 1984-85. The respondents were entitled to the refund of the duty paid during 1983-84 but were liable to pay the duty demanded for 1984-85 as their clearances exceeded the exemption limit.