Exempted goods - whether become excisable if duty paid by mistake and refund of duty not claimed?

PJ/Case Laws/2011-12/1569

Case:M/s BONANZA ENGINEERING & CHEMICAL PVT LTD Vs COMMISSIONER OF CENTRAL EXCISE

Citation: 2012-TIOL-25-SC-CX

Issue:- Excise duty paid on exempted goods – whether can be treated as excisable goods for the purpose of computation of aggregate value of clearances under Notification No.175 /86-CE dated 1.3.1986?

Brief fact: - The Appellant is the manufacture of the goods falling under Chapter Heading 32 and 84 of the first Schedule to the Central Excise Tariff Act, 1985. The description of goods under those chapters for the purpose of disposal of this appeal may not be necessary since we are called upon in this appeal to give purposive construction the language employed in the Notification No.175/86 –CE dated 1.3.1986 and the Notification No. 111/88-CE dated 1.3.1988. A bare perusal of Sub-Clause (a) of Clause 1 of the Notification No. 175/86-CE demonstrate that the goods enumerated in the Schedule to the Notification are exempted from the payment of Central Excise Duty for the First clearance of the specified goods upto the aggregate value not exceeding Rs 30 Lacs. Clause (a) (ii) provides that such clearance should not exceed rupees twenty Lacs in any one of the Chapter. The Notification also say that for the purpose of computing the aggregate value of clearance under the said Notification, the value of clearance of any excisable goods which are exempted from the whole of duty by any other Notification shall not be taken into account. By the Notification No. 111/88-CE dated 1.3.1988 the Central government exempts the goods of the description specified in column 3 of the table appended to the notification, from the whole of the excise duty leviable on the said goods. Therefore it is clear that the assessee in the instant case is a manufacture of the goods falling under both Chapter 32 and 84 of the Act. The Assessee has filed its declaration before the Adjudicating authority, inter alia, informing him that the assessee would be claiming exemption from the payment of excise duty for a sum of Rs 20 Lacs under Chapter Heading 32 of the Act and upto Rs. 10 Lacs under Chapter Heading 84 of the Act. The Adjudicating Authority has issued two Show Cause Notice dated 26.11.1992 and 20.01.1993, respectively. The First Show Cause Notice is for the period 20.08.1992 to 31.10.1992 and the second Show Cause pertains to the period 01.11.1992 to 31.12.1992. The duty effect of both the Notification does not exceed beyond RS 2.3 Lacs. In the Show-Cause-Notices, the Assessing Authority had stated that the assessee has exceeded the aggregate value of clearance of Rs 30 Lacs as specified in the Notification dated 1.3.1986 and therefore other clearance made by him would attract the levy of duty. It was also mentioned in the notice that since the assessee had paid the duty on the excess clearance of more than Rs 30 Lacs, the Assessee is liable to pay duty with penalty. In reply to the said show cause notice, the assessee had brought to the notice of the adjudicating authority that it is a manufacture of items which would fall under chapter heading 84 of the Act and, therefore, the Notification dated 1.3.1988 require to be applied and if it is applied the good enumerated in the table appended to the Notification are exempted from the levy of duty. Therefore, the excise duty paid by the assessee under the aforesaid notification cannot be added for the purpose of computing the aggregate value, while granting benefit of the Notification No.175 /86-CE dated 1.3.1986. The stand of the assessee was, initially, accepted by the adjudicating authority (Assistant Commissioner) vide his Order dated 12.3.1993. However, the Collector of Central Excise (Judicial) in his Review Order dated 17.2.1994 found that the Order-in-Original dated 12.3.1993 is legally incorrect and is passed by the authority which is incompetent on account of monetary limits. He further directed the Assistant Collector to file an appeal before the Collector, Central Excise (Appeals) for appropriate remedy. On Review Appeal, the Collector, Central Excise (Appeals) vide its order dated 2.6.1994 had set aside the Order-In-original and remanded the matter to the competent adjudicating authority (Deputy Commissioner) for De-novo proceedings. Thereafter, the adjudicating authority vide Order Dated 7.1.2000 while rejecting the assessee’s claim had confirmed the duty demanded and also imposed the penalty. Aggrieved by the said order, the assessee had carried the matter in appeal before the Tribunal. The Tribunal rejects the claim only on the ground that the assessee has not claimed the refund of the duty paid for the clearances of the goods falling under Chapter heading 84 of the Tariff Act, and therefore, the assessee is not entitled to avail the benefit of the exemption Notification dated 1.3.1986. The sum and substance of the reasoning of the Tribunal appears that merely because the assessee has paid the excess duty on those items which he was not supposed to pay in view of the exemption notification dated 1.3.1988 and merely because the assessee has not claimed the refund of the excess duty paid, that amount paid by him under the Notification dated 1.3.1988 requires to be taken for the purpose of computing the aggregate value of the clearances under the notification No.175 /86-CE.

Reasoning of Judgment: - The Supreme Court held that merely because the assessee, maybe, by mistake pays duty on the goods which are exempted from such payment, does not mean that the goods would become goods liable for duty under the Act. 'Secondly, merely because the assessee has not claimed any refund on the duty paid by him would not come in the way of claiming benefit of the Notification No.175 /86-CE dated 1.3.86. The Supreme Court allow this appeal, set aside the judgments and orders passed by the Tribunal and the adjudicating authority. They direct the adjudicating authority to apply the Notification dated 1.3.86 in the assessee's case without taking into consideration the excess duty paid by the assessee under the Notification dated 1.3.1988.

Decision: -Appeal allowed

Comments

PJ/Case Laws/2011-12/1569

Post a Comment

Query