1992 (4) TMI 119 - AT - Central Excise

Issues Involved:

1. Eligibility for refund under exemption Notification No. 225/86 and No. 258/86.
2. Interpretation of the Central Duties of Excise (Retrospective Exemption) Act, 1986.
3. Applicability of previous judicial rulings and departmental circulars.
4. Conflict between Special Bench and South Regional Bench decisions.

Detailed Analysis:

1. Eligibility for Refund under Exemption Notification No. 225/86 and No. 258/86:

The appellants sought a refund of Rs. 2,91,103.23 P. based on exemption notifications No. 225/86 dated 3-4-1986 and No. 258/86 dated 24-4-1986. They contended that under the Central Duties of Excise (Retrospective Exemption) Bill, 1986, they were eligible for exemption benefits from 1-3-1986. However, the lower authorities rejected their claim, stating that the notifications were not issued for maintaining effective rates of duties prior to 28th February 1986/1st March 1986 and thus were not covered under the Central Duties of Excise (Retrospective Exemption) Act, 1986.

2. Interpretation of the Central Duties of Excise (Retrospective Exemption) Act, 1986:

The learned Collector held that the two notifications (225/86 and 258/86) were not issued for maintaining the effective rates of duties prior to 28th February 1986 or 1st March 1986. Instead, they allowed credit of duty paid on inputs used in the manufacture of finished goods to avoid the spiraling effect of Central Excise duty on finished goods. Therefore, these notifications were not covered by the Central Duties of Excise (Retrospective Exemption) Act, 1986.

3. Applicability of Previous Judicial Rulings and Departmental Circulars:

The appellants argued that the issue was no longer res integra and cited several cases where similar issues were decided in their favor, including:
- Pure Drinks (New Delhi) Ltd. v. Collector of Central Excise, New Delhi
- Collector of Central Excise, Patna v. M/s. Jamshedpur Beverages
- Collector of Central Excise, Chandigarh v. M/s. Jammu Bottling Co. Pvt. Ltd.
- M/s. Sahney Paris Rhone Ltd., Hyderabad Collector of Central Excise, Hyderabad

They also referenced a departmental circular reported in [1987 (32) E.L.T. T-31], arguing that there was no change in the level of exemption and hence, the retrospective Act was applicable.

4. Conflict Between Special Bench and South Regional Bench Decisions:

The appellants highlighted a contrary decision by the South Regional Bench in the case of Sundaram Clayton Ltd., where the notifications were not considered pari materia to the present notifications. The Special Bench, however, had consistently ruled in favor of the appellants' interpretation, as seen in the cases of Rapicut Carbide v. Collector of Central Excise, Bajaj Auto Ltd. v. Collector of Central Excise, and Tirupathi Rolled Glass Ltd. v. Collector of Central Excise, Madras.

Judgment:

The Tribunal examined the submissions and previous rulings. It found that the lower authorities erred in their interpretation of the Central Duties of Excise (Retrospective Exemption) Act, 1986. The Tribunal cited the case of M/s. Sahney Paris Rhone Ltd., where similar contentions were overruled, and the appellants were granted the benefit of the notifications retrospectively. The Tribunal also referenced the case of Jammu Bottling Co. Pvt. Ltd., which supported the appellants' claim for refund under the retrospective exemption.

The Tribunal concluded that the ruling by the South Regional Bench in Sundaram Clayton Ltd. was in direct conflict with the consistent rulings of the Special Bench. Following the principle of judicial decorum and discipline, the Tribunal decided to adhere to the Special Bench's rulings. Consequently, the appeal was allowed with consequential relief to the appellants.

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