1988 (3) TMI 270 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 90/70-C.E. and subsequent amendments.
2. Classification of tea growing areas under different zones for excise duty.
3. Applicability of excise duty rates to tea produced in specific zones.
4. Claim for refund of excess excise duty paid due to misclassification.

Analysis:
The case involved a dispute regarding the classification of tea growing areas for excise duty purposes under various notifications issued by the Central Government. Initially, Notification No. 90/70-C.E. categorized tea growing areas into different zones with varying duty rates. The district of Dibrugarh was initially part of Zone V, attracting the highest duty rate of Rs. 1.30 per kilogram. However, subsequent administrative changes led to the formation of Dibrugarh as a separate district from Lakhimpur, raising questions about the correct classification of tea estates in Dibrugarh.

Following the issuance of Notification No. 184/81 on 5-11-1981, which did not specifically mention tea estates in Dibrugarh, the appellants argued that Dibrugarh fell under Zone VII with a lower duty rate of Rs. 0.40 per kilogram, contrary to the department's classification under Zone V. The subsequent amendment through Notification No. 9/82 on 28-1-1982 explicitly included the district of Dibrugarh under Zone V, leading to a dispute regarding the period between the two notifications.

The appellants contended that they had mistakenly paid excess excise duty during the interim period at the rate applicable to Zone V instead of Zone VII. Despite their claim for a refund, the Assistant Collector and the Collector (Appeals) upheld the department's view that Dibrugarh was intended to be part of Zone V all along, justifying the higher duty rate.

In the appeal before the Appellate Tribunal, the appellants relied on a decision of the Gauhati High Court in a similar case, where it was held that duty on tea from Dibrugarh should be assessed at the lower rate during the disputed period. Citing the precedent set by the High Court, the Tribunal allowed the appeal, directing the Assistant Collector to calculate the refund amount based on the duty rate applicable to the zone where the tea leaves were grown, as per the proviso in Notification No. 184/81.

Therefore, the Tribunal's decision was based on the interpretation of the notifications, the correct classification of tea growing areas, and the application of duty rates, ultimately granting the appellants the refund they sought based on the High Court's ruling.