1996 (11) TMI 167 - AT - Central Excise

Summary

Issues:
Interpretation of proviso (iii) of the notification in relation to the Central Excises Act, 1944.
Conflict between the notification and Section 4(1)(a) of the Act.
Application of exemption under the notification to different classes of buyers.
Correctness of the approval of price lists by the Department.
Liability of the manufacturer to pay differential duty based on the notification.

Analysis:

1. The dispute in the appeal revolves around the interpretation of proviso (iii) of the notification in connection with the Central Excises Act, 1944. The appellant, engaged in manufacturing Patent or Proprietary Medicines, claimed exemption under the notification for duty leviable on medicines. The issue arose when the appellant did not claim exemption for all medicines cleared by them, as required by the proviso, leading to a demand for differential duty by the Department.

2. The main contention raised was the alleged conflict between the notification and Section 4(1)(a) of the Act. The appellant argued that the notification should be understood as permitting exemption to be claimed in respect of particular classes of buyers. However, the Tribunal found no conflict between the provisions and emphasized that the notification did not prescribe an alternative valuation method but granted limited duty relief.

3. The Tribunal clarified that the manufacturer must claim exemption for all medicines cleared under the notification, irrespective of the class of buyers. The appellant's failure to do so led to the approval of price lists by the Department being deemed incorrect. The Tribunal highlighted that the manufacturer had the choice to either claim exemption for all medicines or pay duty at the tariff rate for all cleared medicines.

4. Regarding the liability to pay differential duty, the Tribunal ruled that the appellant should pay the differential duty for supplies made to non-governmental buyers during the relevant period, as the benefit of the notification was not applicable due to incomplete exemption claims. The Department should have required the appellant to pay the differential duty on supplies to non-governmental buyers instead of compelling higher duty on supplies to the Government.

5. In conclusion, the Tribunal set aside the previous orders and remitted the case to the Assistant Commissioner to determine the correct differential duty payable by the appellant for supplies made to non-governmental buyers during the relevant period. The appellant was relieved of the liability to pay differential duty on supplies to the Government, as per the Tribunal's direction.

This detailed analysis of the judgment provides insights into the legal issues surrounding the interpretation of the notification, the conflict with statutory provisions, and the correct application of duty exemptions based on the manufacturer's compliance with the notification requirements.