1987 (11) TMI 185 - AT - Central Excise

Summary

Issues:
1. Interpretation of Central Excise Notifications regarding duty on acrylic yarn.
2. Validity of Notification No. 146/81 issued under Section 11C of the Central Excises and Salt Act.
3. Refund of duties already paid prior to the issuance of Notification No. 146/81.

Analysis:
The judgment by the Appellate Tribunal CEGAT, New Delhi involved the interpretation of Central Excise Notifications related to the duty on acrylic yarn. The case originated from the Assistant Collector of Central Excise, Jalandhar, confirming a demand against a spinning mill for not paying duty on acrylic yarn cleared during a specific period. The Collector of Central Excise (Appeals) in New Delhi accepted the appellant's plea based on Notification No. 146/81 issued by the Central Government under Section 11C of the Central Excises and Salt Act, setting aside the Assistant Collector's order. The Collector of Central Excise, Chandigarh, appealed this decision.

For a comprehensive understanding, it was crucial to consider the relevant notifications. Notification No. 133/77 exempted woollen and acrylic spun yarn from duty subject to certain conditions. Subsequent notifications, including No. 213/79 and No. 224/79, amended the duty leviable on acrylic yarn. Notably, Notification No. 146/81, issued in July 1981, directed that duty need not be paid on yarns meeting specific criteria, despite the prevalent practice of not charging duty during a certain period.

The main contention in the case was the Collector's argument that the government lacked the authority to refund duties already paid before the issuance of Notification No. 146/81 under Section 11C. However, the Tribunal rejected this argument, emphasizing that the notification allowed for non-payment of duty where it was not levied in accordance with the prevailing practice. Therefore, the logical inference was that duties paid should be refunded to maintain fairness among assessees.

In conclusion, the Tribunal upheld the validity of Notification No. 146/81 and ruled in favor of refunding duties already paid in cases where duty should not have been levied based on the prevailing practice. The judgment clarified the government's power under Section 11C and ensured equitable treatment for all parties involved in the duty payment process.