1998 (6) TMI 212 - AT - Central Excise

Summary

Issues:
1. Central Excise duty demand and penalty imposition on zinc ingots manufactured from galvanised zinc ash.
2. Interpretation of tariff classification change for zinc ash from Chapter 79 to Chapter 26.
3. Applicability of exemption under Notification No. 114/88 during the transition period.
4. Eligibility for exemption under Notification No. 175/86 for zinc ingots made from zinc ash.

Issue 1:
The appeal challenged the order demanding Central Excise duty and imposing a penalty on the appellant for manufacturing zinc ingots from galvanised zinc ash, denying the benefit of exemption under Notification No. 104/88. The impugned order reclassified zinc ash under Chapter 26 instead of Chapter 79 of the Central Excise Tariff.

Issue 2:
The appellant argued that the change in tariff classification for zinc ash from Chapter 79 to Chapter 26, as proposed in the Finance Bill of 1988, only became effective after the passing of the Finance Act on 13-5-1988. Citing a previous Tribunal decision, the appellant contended that during the period 1-3-1988 to 12-5-1988, zinc ingots made from zinc ash were entitled to the benefit of exemption under Notification No. 114/88.

Issue 3:
The Departmental Representative contended that the exemption was not available from 1-3-1988 due to the amendment of the tariff, emphasizing that the new tariff heading for zinc ash was deliberately not mentioned in the notification to exclude it from the benefit of exemption. The argument focused on the deliberate decision of the Government to deny exemption during the relevant period.

Issue 4:
The Tribunal analyzed the legal position concerning the period between the presentation of the Finance Bill and its enactment, following the Provisional Collection of Taxes Act, 1931. It held that the eligibility for exemption depended on whether the raw material used for manufacturing zinc ingots was zinc ash, irrespective of the tariff heading changes. The Tribunal ruled in favor of the appellant, allowing the exemption and excluding the value of clearances for determining eligibility under Notification No. 175/86.

This comprehensive analysis of the judgment highlights the key issues, arguments presented by both parties, and the Tribunal's reasoning leading to the decision in favor of the appellant.