1997 (3) TMI 295 - AT - Central Excise

Summary

Issues:
1. Applicability of excise duty exemptions under different notifications.
2. Eligibility of the appellants for exemption under Notification No. 175/86-C.E.
3. Impact of retrospective effect given to Notification No. 213/86-C.E.
4. Determination of duty liability for the period in question.

Analysis:
The appellants were manufacturing excisable goods and availing small scale exemption under Notification No. 77/85-C.E. before the new Central Excise Tariff came into effect on 28-2-1986. Following the introduction of the new tariff, they started paying duty at the rate of 5% from 17-3-1986 onwards under Notification No. 175/86-C.E. However, another exemption Notification No. 213/86-C.E. issued on 25-3-1986 made them ineligible for the exemption due to exceeding the exemption limit during the financial year 1985-86. A show cause notice was issued, and duty demand was confirmed under Notification No. 213/86-C.E.

The appellants sought a decision on merits, and the respondents referred to the exemption notification, supporting the Collector of Central Excise (Appeals)'s decision. The Tribunal examined the matter and noted that under Notification No. 175/86-C.E., there were specific exemption limits based on the value of clearances, with a minimum rate of 5% Adv. payable. The appellants' duty rate was 15% Adv., requiring them to pay duty at 5% Adv. under this notification. In contrast to the previous exemption, the extent of exemption under Notification No. 175/86-C.E. continued up to Rs. 75 lakhs worth of clearances.

Notification No. 213/86-C.E. restored the exemption extent applicable under the earlier notification and had retrospective effect from 1-3-1986. The Tribunal observed that for the appellants, Notification No. 175/86-C.E. was more beneficial as they had already exceeded the exemption limit under the previous notification. Citing a Delhi High Court decision, the Tribunal clarified that while retrospective effect could be given to notifications, no additional duty could be demanded for a period before the notification date. Therefore, the appellants' duty liability for the period from 1-3-1986 to 24-3-1986 had to be determined under Notification No. 175/86-C.E., and for the subsequent period, under Notification No. 213/86-C.E.

Consequently, the Tribunal modified the Collector of Central Excise (Appeals)'s order, allowing the appeal in part. It was established that no extra demand could be made against the appellants for the period before 25-3-1986 if they were eligible for exemption under Notification No. 175/86-C.E., while their duty liability for the period from 25-3-1986 to 31-3-1986 had to be determined under Notification No. 213/86-C.E.