1986 (5) TMI 165 - AT - Central Excise

Summary

Issues:
1. Dispute over refund of duty paid by appellants for goods not exempt from duty under TI 68 CET.
2. Interpretation of Notification No. 89/79 CE and Explanation V to determine eligibility for duty exemption.
3. Application of Explanation V retrospectively from the date of insertion in the notification.
4. Whether exempted goods are to be included in the value of clearances for duty exemption eligibility.
5. Rejection of rectification application by the Collector and its impact on the appeal outcome.

Analysis:

1. The case involved a dispute regarding the refund of duty paid by M/s. Sri Krishna Tiles & Potteries (Madras) Private Ltd. for goods not exempt from duty under TI 68 CET during the period from 1-4-1979 to 12-9-1979. The Collector of Central Excise, Madras issued a show cause notice challenging the refund, leading to an appeal before the Appellate Tribunal.

2. The Tribunal analyzed Notification No. 89/79 CE, which provided duty exemption for certain clearances based on the value of goods manufactured. The dispute centered around the interpretation of Explanation V to the notification, which excluded clearances of exempted goods from the total value for duty exemption eligibility. The Collector contended that this exclusion was effective only from the date of insertion of the explanation, while the appellants argued for retrospective application from 1-4-1979.

3. The Tribunal ruled that the normal rule is that notifications are prospective unless expressly made retrospective. As Explanation V did not have retrospective effect specified, it was held to be effective from the date of insertion. Therefore, the Collector's decision to deny duty relief for goods cleared between 1-4-1979 and 16-7-1979 based on total clearances was deemed appropriate.

4. The appellants argued that exempted goods should not be included in the value of clearances for duty exemption eligibility. However, legal precedents cited by the Counsel established that even on exemption, excisable goods remain excisable goods, supporting the Collector's aggregation of total clearances for determining duty relief eligibility.

5. Additionally, the Tribunal addressed the rejection of the rectification application by the Collector, noting that even if certain tiles were exempted goods, their value could not be excluded until 17-7-1979 for calculating clearances in the preceding year. Therefore, the rejection of the rectification application did not impact the outcome of the appeal, leading to the upholding of the Collector's decision and the rejection of the appeal.

In conclusion, the Tribunal upheld the Collector's decision that the appellants were not eligible for duty exemption based on clearances in the preceding financial year until 17-7-1979, resulting in the rejection of the appeal for refund of duty paid on goods cleared between 1-4-1979 and 16-7-1979.