1997 (6) TMI 131 - AT - Central Excise

Cigarettes - Valuation of cigarettes under Notification No. 201/85-C.E. - Exemption Notification

Summary

Issues:
- Appeal against rejection of refund claims by Assistant Collector and Collector (Appeals).
- Interpretation of Notification No. 201/85 regarding duty rates on cigarettes.
- Calculation of duty rates based on adjusted sale prices per 1000 cigarettes.
- Application of slab rates specified in the Notification.
- Consideration of High Court judgment on the absurdity in the Notification.
- Clarity and unambiguous language of the Notification.
- Discretion of manufacturers to opt for tariff rate of duty or Notification benefits.

Analysis:
The judgment deals with the appeal challenging the rejection of three refund claims by the Assistant Collector and the Collector (Appeals). The appellant, absent during the hearing, claimed to have paid excess duty based on the interpretation of Notification No. 201/85 concerning duty rates on cigarettes. The Notification defined terms like "sale price" and "adjusted sale price" and provided slab rates for different adjusted sale prices per 1000 cigarettes. The appellant argued that the rates in the Notification should be proportionate to the adjusted sale price within a slab, leading to lower duty payments for certain prices.

The court referred to a previous High Court judgment highlighting the absurdity in the Notification's application but noted that the Notification's legislative nature prevented it from being struck down. The court emphasized the clear and unambiguous language of the Notification, stating that manufacturers had the discretion to either follow the Notification for reduced duty rates or pay the higher tariff rate. The court clarified that the duty rates specified in the Notification were fixed per 1000 cigarettes within a slab and not subject to variation based on exact adjusted sale prices.

Ultimately, the court dismissed the appeals, finding no grounds for interference, and also rejected the cross-objection. The judgment reaffirmed that once a manufacturer chooses to avail the benefits of the Notification, they must pay the duty indicated therein, which would be lower than the duty payable under the tariff rate. The decision underscored the importance of manufacturers carefully considering the implications before opting for the Notification benefits.