1985 (10) TMI 211 - AT - Central Excise

Summary

Issues Involved:
1. Jurisdiction of the Appellate Tribunal to hear the appeal.
2. Liability to pay interest under Rule 49A on yarn used for manufacturing fabrics exported without payment of duty under Rule 13.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Appellate Tribunal:

The primary question to decide was whether the Appellate Tribunal had the jurisdiction to hear the appeal. The proviso to Section 35B(1) of the Central Excises & Salt Act, 1944, excludes certain categories of cases from the Tribunal's jurisdiction, assigning them to the Government under Section 35EE. The respondent's representative argued that the appeal did not relate to a claim for rebate of duty on goods exported outside India, but rather to the issue of whether goods could be exported without payment of interest under Rule 49A. The Tribunal concluded that the jurisdiction was not barred under the said provisions of law, stating that the goods in the present case were fabrics and not yarn for the purpose of Section 35B(1). Thus, the Tribunal had the authority to decide the appeal.

2. Liability to Pay Interest under Rule 49A:

The core issue was whether interest was payable on yarn used for manufacturing fabrics that were exported without payment of duty under Rule 13. The appellant argued that while Rule 13 allowed for the export of goods without payment of duty, it did not cover the non-payment of interest. The appellant contended that the definition of "Duty" under Rule 2(v) did not include interest, and that Rules 12 and 13 concerned duty only, not interest. Therefore, the interest under Rule 49A was still payable.

On the other hand, the respondent argued that the Government's policy was to encourage exports without any additional burden, including interest. The respondent cited historical practices and specific notifications to support the contention that when the duty on yarn was nil, the interest, being a percentage of the duty, would also be nil. The respondent also distinguished between duty leviable and duty payable, arguing that while duty was leviable on yarn under Rule 49A, the payment was stayed by the export of fabrics under Rule 13.

The Tribunal examined these arguments and concluded that since the duty on yarn was nil, the interest was also nil. The Tribunal found that Rule 49A, when construed in this manner, did not authorize the Department to charge interest where fabrics were exported without payment of duty under Rule 13. The Tribunal thus rejected the appeal filed by the Collector of Central Excise, Bombay I, and upheld the order of the Collector (Appeals).

In summary, the Tribunal held that it had jurisdiction to hear the appeal and that no interest was payable under Rule 49A on yarn used for manufacturing fabrics exported without payment of duty under Rule 13. The appeal by the Collector of Central Excise, Bombay I, was dismissed.