1996 (4) TMI 198 - AT - Central Excise

Issues:
1. Appeal against the order of the Commissioner of Central Excise (Appeals) regarding the refund of handlooms cess collected under the Khadi and other Handloom Industries Development Act, 1953.
2. Application of provisions of Central Excises & Salt Act in the levy and collection of cess under the Khadi & other Handloom Industries Development Act, 1953.

Analysis:
The appeal before the Appellate Tribunal CEGAT, Mumbai was filed by the Revenue against the order of the Commissioner of Central Excise (Appeals) in favor of the respondents regarding the refund of handlooms cess collected under the Khadi and other Handloom Industries Development Act, 1953. The main contention raised was the possibility of unjust enrichment to the respondents if the refund was sanctioned, citing the judgment of the Bombay High Court in the case of M/s. Roplas (India) Ltd. [1988 (38) E.L.T. 27 (Bom.)]. The Assistant Commissioner rejected the refund, but the Commissioner (Appeals) allowed the appeal, leading to the Revenue's grievance and subsequent appeal.

The ld. SDR argued that according to sub-section (2) of Section 3 of the Khadi and other Handloom Industries Development Act, Cess is considered a duty of excise and should be collected similarly to excise duty under the Central Excises & Salt Act. Referring to the amended provisions of Section 11B, the SDR contended that the Assistant Commissioner should have applied these provisions based on the Supreme Court decision in the case of Union of India v. ITC Ltd. [1993 (67) E.L.T. 3 (S.C.)]. Consequently, the Commissioner (Appeals) was justified in allowing the appeal of the respondents.

Upon hearing both parties, the Tribunal considered whether the provisions of the Central Excises & Salt Act could be applied to the levy and collection of cess under the Khadi & other Handloom Industries Development Act, 1953. The Tribunal observed that while machinery provisions for applying the provisions of the Central Excises & Salt Act existed in other Acts like the Additional Duties of excise (Goods of Special Importance) Act, 1957 and Additional Duties of Excise (Textiles & Textile Articles) Act, 1978, no such provisions were present in the Khadi and Other Handloom Industries Development Act, 1953. The Tribunal highlighted that Section 5 of the Khadi Act made separate provisions for carrying out its purposes, including exemptions, without incorporating machinery provisions for refund and exemption as in the Central Excises & Salt Act. Citing the Delhi High Court's decision in the case of M/s. Pioneer Silk Mills [1995 (80) E.L.T. 507 (Del.)], the Tribunal concluded that in the absence of machinery provisions in the Khadi Act for applying refund and exemption provisions from the CESA, 1944, the Revenue could not invoke the amended provisions of Section 11B as per the Supreme Court's judgment in the case of ITC Ltd. Therefore, the Tribunal upheld the order of the Commissioner (Appeals) and rejected the appeal from the Revenue.

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