M/S
J.K. Synthetics Limited Vs. Union of India
& Ors [1996] INSC 1652 (20 December 1996)
S.P.
Bharucha, S.C. Sen S.P.Bharucha, J.
ACT:
HEAD NOTE:
The
Central Excise Tariff Act ,1985, came into force on 28th February, 1986. it substituted the Schedule in the Central Excises
& Salt Act, 1944, whereunder, till then, the excise tariff was prescribed.
Prior to 28th February,
1986, exemption
notifications issued under Rule 8 of the Central Excise Rules had been in force
. They ceased to have effect on the coming into force of the Tariff Act on 28th February, 1986. They were replaced by other
exemption notifications, though not precisely in the same terms. The process of
issuance of these exemption notifications took some months.
It was
realised that by reason thereof manufacturers of exempted items would have to
pay duty for the periods between the date on which the new tariff came into
force and the dates on which the exemption notifications were issued.
It
was, therefore, that the Central duties of Excise (Retrospective Exemption )
Act, 1986, was passed. It gave retrospective effect to the exemption
notification. What is relevant for our purpose is section 2, which , so far as
is relevant, reads thus:
"2.
Retrospective Effect for certain notifications. - (1) Every notification issued
by the Government of India in the Ministry of finance (Department of Revenue )
on or after the 3rd day of march, 1986, but before the 8th day of August, 1986,
in exercise of the powers conferred by sub rule (1) of rule 8 of the central
Excise Rules, 1944, for the purpose of
(a)
Maintaining the effective rates of duties of excise in respect of certain goods
at the level obtaining prior to the 28th day of February 1986 notwithstanding
the changes in the rates of duties of excise made by the Central Excise Tariff
Act, 1985 (5 of 1986), the additional Duties of Excise (Textiles and textile
Articles) Amendment Act, 1985 (6 of 1986), or the Additional Duties of Excise
(Goods of Special Importance Amendment Act, 1985 (7 of 1986): or
(b)
maintaining the effective rates of duties of excise in respect of certain goods
at the level obtaining prior to 1st day of March, 1986 notwithstanding the
changes in the rates of duties of excise made by the Finance Bill, 1986, shall
, in so far as such notification relates to such goods, be deemed to have and
to have always had, effect on and from the 1st day of March, 1986.
(2)
The duties of excise which have been collected, but which would not have been
so collected if the said notification had been in force at all material times,
shall be refunded:
Provided
that no such refund shall be allowed where credit of the duties of excise has
been taken under rule 56A or, as the case may be, where the goods on which the
duties on excise have been paid have been exported under a claim for rebate of
such duties." (The date on which the Central duties of Excise
(Retrospective Exemption) Bill was introduced was 8Th August, 1986,) The
exemption notification that concerns us in this appeal was issued on 3rd April, 1986, and it reeds, so far as it is
relevant, thus:
"In
exercise of the powers conferred by sub-rule (i) of rule 8 of the Central
Excise Rules, 1944, the central Government hereby exempts excisable goods of
the description specified in column (5) of the Table hereto annexed (such goods
being hereinafter referred to as "final products") and falling under
such Chapter, heading no or subheading no. of the Schedule to the central
Excise Tariff Act, 1985 (5 of 1986) as is specified in the corresponding entry
in column (4) of the said Table, from so much of the duty of excise leviable
thereon under the Central Excise and salt Act, 1944(1 of 1944), as is
equivalent to the duty of excise leviable thereon under the said Central Excise
and Salt Act, or the additional duty leviable under the customs Tariff Act,
1975 (51 of 1975), as the case may be, already paid on the goods of the
description specified in the corresponding entry in column(3) of the said table
(such goods bring hereinafter referred to as "inputs") and falling
under such Chapter, heading no. or sub- heading no. of the said schedule as is
specified in the corresponding entry in column(2) of the said Table.
T A B
L E ------------------------------------------------------------ Sl.No Chapter,
Description of inputs Chapter Description heading heading of final No. or sub
heading No No. or product sub heading No
------------------------------------------------------------ (1) (2) (3) (4)
(5) ------------------------------------------------------------
6. 29
Mono ethylene glycel 54 polyester or staple fibre and 55 tow including tops,
and polyestor filament year," The said notification was amended on 3rd April, 1986, thus:
"In
the Table annexed to the said notification, after S. No. 6 and the entries
relating thereto, the following shall be inserted, namely:
------------------------------------------------------------
(1) (2) (3) (4) (5)
------------------------------------------------------------ xxx 29 xxx xxx
11. Acrylonitrile
59.03 Acrylic fibre xxx xxx xxx "
------------------------------------------------------------ It was further
amended on 3rd April,
1986, to insert the following
:
------------------------------------------------------------
(1) (2) (3) (4) (5) ------------------------------------------------------------
17 2907.90 Vinyl acetate 55.01 Acrylic monomer fibre
------------------------------------------------------------ The appellants
manufacture the final products aforementioned. They claimed the benefit of the
said exemption notification, as amended, in regard to the inputs
aforementioned. The same was given to them on 29th December, 1989, and they
were allowed credit in the aggregate sum of Rs.61,02,946.48 (This sum took into
account the amount of Rs.34,80,971.95 paid as additional duty). On 3rd January,
1987, a show cause notice was issued to the appellants alleging that the
aforesaid credit had been erroneously given, the said notification not having
effect retrospectively. The demand therein was confirmed on 7th December, 1987.
the
appellants challenged the order confirming the demand in a writ petition in the
Rajasthan High Court. by the judgement and order under appeal the High Court
allowed the writ petition in respect of the excise duty paid on the inputs
aforementioned to the extent that they were used for the manufacture for the
final products aforementioned. so far as the additional duty was concerned, the
High court declined to give similar relief. it is a little difficult to
understand why, but it would appear that the High Court found an absence of
satisfactory pleadings.
There
is no dispute that the said notification has retrospective effect for the
period 3rd March, 1986 to 8th August, 1986, by reason of the central duties of
Excise (Retrospective exemption) Act, 1986.
By the
said notification, as amended from time to time, the central Government
exempted excisable goods described as final products in the Table thereof from
so much of the excise duty leviable thereon as was equivalent to the excise
duty leviable under the excise Act or to the additional duty leviable under the
Customs Tariff Act and had already been paid on the goods described as inputs
in the correspondenting entry of the Table. Excise duty upon the final product
was exempted. it was exempted to the extent of the excise duty or the
additional duty paid on the input, as the case may be On a plain reading of the
said notification, the appellants were entitled to its benefit both in regard
to the excise duty and the additional duty that they had paid on the inputs
aforementioned used to manufacture the final products aforementioned.
That
the same had been paid would appear to be clear from the order by which the
appellants had been given credit therefore that order was not sought to be
recalled on the ground that payment of additional duty had not been made but,
it would appear, on the ground that the said notification did not have
retrospective effect, and this contention of the respondents the High court
rejected.
It is
, therefore, necessary to modify the judgment and order of the high court and
hold that the appellants are entitled to the benefit of the said notification
and, consequentially, to refund of the additional duty that had been paid on
the inputs aforementioned used in the manufacture of the final products
aforementioned, the precise quantum thereof to be determined by excise
authorities.
The
appeal is allowed accordingly. no order as to costs.
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