1991 (3) TMI 248 - AT - Central Excise

Issues Involved:
1. Levy of Central Excise Duty on captively consumed yarn.
2. Applicability of amendments to Rules 9 and 49 of the Central Excise Rules.
3. Retrospective effect of amendments under Section 51 of the Finance Act, 1982.
4. Levy of Special Excise Duty and Additional Excise Duty.
5. Limitation period for refund claims.

Detailed Analysis:

1. Levy of Central Excise Duty on Captively Consumed Yarn:

The appellants, manufacturers of cellulosic and non-cellulosic spun yarn, claimed that no duty was payable on yarn captively consumed in the manufacture of fabrics, citing the Delhi High Court judgment in the case of J.K. Cotton Spinning and Weaving Mills Co. Ltd. The High Court had observed that if an excisable commodity emerges during a single continuous process of manufacture and is not removed for consumption or sale, it would not be liable to excise duty.

2. Applicability of Amendments to Rules 9 and 49 of the Central Excise Rules:

The Assistant Collector of Central Excise rejected the refund claims on the grounds that the manufacturing process was not continuous, and there was a physical clearance of yarn from the spinning to the weaving department. The amendments to Rules 9 and 49, effective from 20-2-1982, stipulated that goods consumed or utilized within the factory are deemed to have been removed for the purposes of these rules.

3. Retrospective Effect of Amendments under Section 51 of the Finance Act, 1982:

The amendments to Rules 9 and 49 were given retrospective effect by Section 51 of the Finance Act, 1982. This meant that the amendments were effective from the inception of the Central Excise Rules, 1944. The Supreme Court upheld the validity of these amendments, confirming that excisable goods consumed or utilized within the factory for manufacturing another commodity are liable to pay duty.

4. Levy of Special Excise Duty and Additional Excise Duty:

The appellants argued that the amendments to Rules 9 and 49 should not apply to Special Excise Duty and Additional Excise Duty, as these duties were levied under different Acts, namely the Finance Act and the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978. However, the Tribunal held that Section 3(3) of the Additional Duties of Excise Act and Section 50(4) of the Finance Act incorporated the provisions of the Central Excises and Salt Act and the Central Excise Rules, making these duties applicable to captively consumed goods.

5. Limitation Period for Refund Claims:

Some refund claims were rejected as time-barred, exceeding the six-month statutory limit. The Tribunal upheld the Collector (Appeals) decision, stating that the limitation period prescribed under the Central Excise statutes was mandatory, as confirmed by the Supreme Court in the cases of Miles India Limited and Doaba Cooperative Sugar Mills. The general law of limitation was not applicable to refunds under Central Excise Laws.

Conclusion:

The Tribunal dismissed the appeals, affirming that:
- Central Excise Duty was payable on captively consumed yarn.
- The amendments to Rules 9 and 49, with retrospective effect, were valid and applicable.
- Special Excise Duty and Additional Excise Duty were also chargeable on captively consumed yarn.
- Refund claims beyond the six-month limitation period were time-barred.

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