1990 (11) TMI 267 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 132/77-C.E. regarding exemption of yarn from Central Excise Duty.
2. Validity of duty imposition on yarn used in the manufacture of fabrics during a specific period.
3. Retrospective effect of amendments to Central Excise Rules.
4. Applicability of duty rate based on the date of removal of excisable goods.

Analysis:
1. The case revolved around the interpretation of Notification No. 132/77-C.E., which exempted yarn used by composite textile mills in manufacturing cotton fabrics from Central Excise Duty. The respondents claimed a refund for duty paid on yarn used during a specific period when the exemption was in force. The Assistant Collector rejected the claim citing Proviso II to Notification No. 226/77-C.E. The Collector of Central Excise (Appeals) overturned this decision based on Tribunal orders and High Court judgments, leading to the Revenue's appeal before the Tribunal.

2. The Tribunal referred to judgments by Gujarat and Bombay High Courts, holding that duty on yarn used in fabric manufacture prior to a specific date was not payable under the relevant notification. The High Courts found the retrospective imposition of duty ultra vires and emphasized that duty on yarn should be levied at the spindle stage. The Tribunal upheld the Collector's decision, citing precedents and legal principles, and dismissed the Revenue's appeal, ordering a refund to the respondents.

3. The Tribunal discussed the retrospective amendments to Central Excise Rules through the Finance Act, 1982, specifically Section 51, which validated the amendments. Citing Supreme Court rulings in similar cases, the Tribunal affirmed the validity of retrospective amendments and their impact on the duty rate applicable at the time of removal of excisable goods. The Tribunal applied these principles to the case at hand, emphasizing that duty was not payable on the yarn in dispute due to the exemption in force during the relevant period.

4. The Tribunal analyzed the removal of yarn in a composite mill for captive consumption in fabric manufacture, highlighting the applicability of Rules 9 and 49 of the Central Excise Rules. Referring to Supreme Court decisions, the Tribunal determined that the duty rate applicable was that prevailing on the dates of yarn removal, considering the exemption under Notification No. 132/77-C.E. before the specified date. Consequently, the Tribunal upheld the Collector's decision, dismissing the Revenue's appeal and ordering a refund of duty to the respondents based on the legal principles and precedents discussed in the judgment.