Central Excise - Notification No. 201/85-C.E., dated 2-9-1985, as amended - Applicability of effective rates - Clarification regarding - Central Excise - 81/65/87-CX.3 (Pt.)

Central Excise - Notification No. 201/85-C.E., dated 2-9-1985 , as amended - Applicability of effective rates - Clarification regarding F. No. 81/65/87-CX.3 (Pt.) Dated 2-11-1989 Government of India Ministry of Finance (Department of Revenue) New Delhi Subject: Central Excise - Notification No. 201/85-C.E., dated 2-9-1985 , as amended - Applicability of effective rates - Clarification regarding. Attention is invited to Board's circular No. 26/88-CX.3, dated 5-10-1988 issued from F. No. 81/65/87-CX.3 (Pt) wherein it was desired by the Board that, pending the receipt of Attorney General's opinion in the matter, immediate action should be taken by the concerned Collectors of Central Excise to safeguard the interests of revenue by raising demands of excise duty at tariff rates on cigarettes which have been sold at a price other than "declared printed maximum sale price (exclusive of local taxes only)" as per Notification No. 201/85-C.E., dated 2-9-1985, as amended. The opinion of the Attorney General of India in the matter has since been received (copy enclosed), which has been accepted by the Government. Necessary action in the matter as per the opinion of the Attorney General of India may be taken. OPINION 1. I have pursued the statement of case drawn by Shri K.D. Singh, Deputy Legal Adviser. At page 6 he has mentioned that two views are possible in this matter. It is well settled that in taxation matters, if on a fair construction of the taxable provisions two views are possible, the view which is beneficial to the assessee has to be adopted. If the excisable goods are sold at a price higher than the declared price, the price at which it was actually sold will have to be correlated to the schedule in the Notification. This should be the more reasonable view to take. 2. Section 3 of the Act is the charging section. But this is subject to the provisions of any rule that may be made under section 37 of the Act [37 (xvii)] to exempt any goods from the whole or part of the duty imposed by the Act. Rule 8 provides for such exemption. It is to the effect that the Central Government may from time to time by notification in the official Gazette exempt, subject to such conditions as may be specified in the notification any excisable goods from whole or any part of the duty leviable on such goods. Once notification is issued under rule 8, it has a statutory force. The Supreme Court observed in AIR 1957 SC 790 (Kailasanath v. State of UP) : "In pursuance to that, the Uttar Pradesh Government on 3-12-1949 issued a Notification No. ST. 6499/X-902(20)48, that with effect from 1-12-1949, the provisions of section 3 of the Act (relating to the levy of sales tax) shall not apply to the sale of cotton cloth or yarn manufactured in Uttar Pradesh, made on or after 1-12-1949, with a view to export such cloth or yarn outside the territories of India on the condition that the cloth or yarn is actually exported and proof of such actual export is furnished. This notification having been made in accordance with the power conferred by the statute has statutory force, and validity and therefore, the exemption is as if it is contained in the parent Act itself." Therefore it may not be correct to content that because of the wrong declaration of price, Revenue can fall back on tariff rates in the schedule, ignoring the exemption notification. 'Tariff rates' in the schedule has itself to be read with the exemption notification as the notification has statutory force. 3. The proper view to take is that where cigarette packages were sold at a price higher than the declared price, the excisable goods should be charged at the next relevant slab as per the schedule rate in the notification No. 201/85-C.E., dated 2-9-1985. 4. My answer to the queries posed are as follows :- Query (1) When the cigarette packages were sold at a price higher than the declared and printed price, could the benefit of notification 201/85-CE, dated 2-9-1985, be allowed to the assessee and the goods may be charged at next relevant slab as per concessional rate ? Answer : Where the cigarette packages were sold at a price higher than the declared and printed price, the benefit of notification 201/85-CE, dated 2-9-1985 has to be allowed to the assessee and the goods charged to duty at the next relevant slab as per concessional rate specified in the notification. This flows from the fact that the rate has to be determined by reading the exemption notification along with the tariff rate. Query (2) Could the benefit of the aforesaid notification, be entirely denied to the assessee ? Answer : My answer to query (1) above covers this query as well. Query (3) Can the conditions narrated in proviso (b) of para (2) (c) and para (4) of Notification 210/85 be treated as essential for grant of the exemption ? or they can be said to be only explanations, non-fulfilment of which does not deprive the assessee of the exemptions therein. Answer : The question is not deprivation or non-deprivation of the assessee of the exemption. When there is a notification under Rule 8, the notification has statutory force and the rate of duty has to be accordance with the tariff rate, read with the exemption notification; unless the exemption notification provides that for non-compliance of such requirements, the exemption notification shall not operate. In the present case, the exemption notification provides for slabs, and therefore, has to govern the rate to be levied depending upon under what slab the correct price falls. Query (4) Generally. Answer : I have nothing further to add. Sd/- (K. Parasaran) Attorney General of India New Delhi September 23, 1989