2009 (12) TMI 244 - HC - Central Excise

Demand- Intermediate goods for export production- (i) Whether on the facts and circumstances of the case the Appellate Tribunal is right in law in holding that the letter from the Assistant Collector dated 7-10-1991 withdrawing the facility of non-payment of excise duty on Nylon yarn with immediate effect, was only of prospective effect not of retrospective effect? (ii) Whether on the facts and circumstances of the case the Appellate Tribunal is right in law in cancelling the duty demand on Nylon yarn and Nylon Tyre Cord Fabric on the ground that both the parties followed the procedure laid down under Rule 191-BB read with Notification No. 33/90-C.E. (N.T.)? Held that- In fact there is no such power said to have vested with the authorities for effecting such withdrawal in a retrospective manner. In any event, as rightly held by the Tribunal, a simple reading of letter dated 6-1-1992 stating that the permission granted on 7-10-1991 was withdrawn with immediate effect can only mean that such withdrawal was to operate prospectively i.e. subsequent to the issuance of the said letter dated 6-1-1992. We also concur with the said conclusion of the Tribunal as any other conclusion would run contrary to the very specific intention conveyed in the letter dated 6-1-1992. Looked at from any angle, we do not find any flaw in the order of the Tribunal and therefore, the same does not call for interference on the substantial questions of law raised at the instance of the appellant. We therefore, answer the questions against the appellant. Appeal fails and the same is dismissed in limine. No costs.

Summary

Issues:
Challenge to the order of the Tribunal dated 18-6-2007 regarding the procurement of Nylon Yarn by M/s. Apollo Tyres and subsequent duty demands on tyre cord fabrics.

Analysis:
The case involves a challenge by the Commissioner of Central Excise, Chennai, against the order of the Tribunal dated 18-6-2007. M/s. Apollo Tyres, engaged in tyre manufacturing and exports, applied for permission to procure Nylon Yarn under Rule 191-BB from the first respondent. The Assistant Collector granted permission on 7-10-1991, allowing the processing of 250 metric tonnes of yarn into fabrics without duty payment. However, this permission was withdrawn on 6-1-1992, leading to a show-cause notice and duty demands. The Commissioner appealed the duty demands, which were partially upheld by the Commissioner of Customs & Central Excise (Appeals). Subsequent appeals and remands resulted in the present order dated 31-5-2004, imposing duty on both nylon yarn and tyre cord fabrics. The appellant raised two substantial questions of law regarding the withdrawal of permission and the adherence to rules under Notification No. 33/90-C.E. (N.T.).

The High Court analyzed the facts and legal provisions, including Notification No. 33/90-C.E., Rule 191-BB, and the orders issued. The Court noted that the withdrawal of permission by the Assistant Collector on 6-1-1992 did not retroactively affect actions taken based on the initial permission dated 7-10-1991. The Court emphasized that the withdrawal was prospective and did not invalidate prior actions. The Tribunal's decision to cancel the duty demand on nylon yarn and tyre cord fabric was upheld, as both parties had followed the prescribed procedure. The Court found no breach of conditions in the initial permission letter or the related notification. The Tribunal's order was deemed appropriate, and the questions of law raised by the appellant were answered negatively.

In conclusion, the Court dismissed the appeal, stating that the withdrawal of permission did not retroactively impact actions taken under the initial authorization. The Court agreed with the Tribunal's interpretation of the withdrawal letter's prospective effect. The appellant's contentions were rejected, and the Tribunal's decision was upheld as legally sound. The appeal was dismissed, and no costs were awarded.