1990 (5) TMI 141 - AT - Central Excise

Issues Involved:

1. Liability to Basic Excise Duty and Special Excise Duty for cement cleared after 5 p.m. on Budget day.
2. Applicability of exemption from Special Excise Duty under Notification 24/82 dated 28th February 1982.
3. Interpretation of Rule 224(2-A) of Central Excise Rules, 1944.
4. Validity of the department's reference to the decision in the case of Vazir Sultan Tobacco Company Limited v. Collector of Central Excise.
5. Impact of the Government of India's Order No. 517 of 1979 on the case.

Issue-wise Detailed Analysis:

1. Liability to Basic Excise Duty and Special Excise Duty for cement cleared after 5 p.m. on Budget day:

The judgment discusses that M/s. Associated Cement Co. Ltd. cleared cement from their factory after 5 p.m. on Budget day, 27th February 1982, under Rule 224(2-A) of the Central Excise Rules, 1944. The assessee paid the enhanced Basic Excise Duty as per the new Budget but claimed a refund for the Special Excise Duty debited for clearances after 5 p.m. The department contended that the exemption from Special Excise Duty was effective only from 28th February 1982, and thus not applicable to clearances made on 27th February 1982.

2. Applicability of exemption from Special Excise Duty under Notification 24/82 dated 28th February 1982:

The department argued that the exemption from Special Excise Duty, as per Notification 24/82, was effective only from 28th February 1982. The assessee claimed the benefit of this exemption for clearances made after 5 p.m. on 27th February 1982. The judgment ultimately concluded that the exemption was not applicable for clearances made on 27th February 1982, as the notification took effect from 28th February 1982.

3. Interpretation of Rule 224(2-A) of Central Excise Rules, 1944:

The judgment examined Rule 224(2-A), which requires a licensee intending to remove goods after 5 p.m. on Budget day to undertake to pay duty at the enhanced rate applicable from the following day. The assessee argued that this undertaking should cover both Basic and Special Excise Duties. The majority opinion held that the Rule does not imply a corresponding obligation to refund any duty if reduced or exempted by the Budget. Therefore, the assessee's claim for a refund of Special Excise Duty was denied.

4. Validity of the department's reference to the decision in the case of Vazir Sultan Tobacco Company Limited v. Collector of Central Excise:

The department cited the Vazir Sultan case to support its contention that Special Excise Duty should be charged at the rate applicable at the time of removal of goods. However, the judgment found that the Vazir Sultan case did not involve the interpretation of Rule 224 and thus was not directly applicable to the present case.

5. Impact of the Government of India's Order No. 517 of 1979 on the case:

The assessee referred to the Government of India's Order No. 517 of 1979, which suggested that the net total change in duty should be considered for recovery. However, the judgment noted that this order could not be followed in light of the Supreme Court and Tribunal decisions distinguishing between Basic and Special Excise Duties.

Separate Judgments Delivered:

Member (Technical) Opinion:

The Member (Technical) opined that the undertaking under Rule 224(2-A) should cover the total liability to duty, including the benefit of exemption from Special Excise Duty. Hence, the assessee should get the exemption benefit while paying the enhanced Basic Excise Duty.

Vice President (Judicial) Opinion:

The Vice President (Judicial) disagreed, stating that the rule does not obligate the Central Government to refund any duty if reduced or exempted by the Budget. Therefore, the manufacturer could not claim a refund of Special Excise Duty for clearances made when such duty was still leviable.

President's Decision:

The President supported the Vice President (Judicial)'s opinion, concluding that the exemption from Special Excise Duty was not applicable to clearances made between 17 Hours and 24 Hours on 27th February 1982. Therefore, the appeal filed by the Department was allowed, and the appeal filed by M/s. Associated Cement Company Ltd. was dismissed.

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