Tariff rate for August 1997 goods applied despite later exemption amendment; duty sustained, but penalty was not justified.

For goods manufactured in August 1997, the tariff rate applied because Notification No. 57/97-C.E. amended Notification No. 50/97-C.E. only with effect from 01.09.1997, so the concessional rate was not available for that month. Notification No. 4/2000-C.E. (N.T.), issued under section 11C of the Central Excise Act, 1944, regularised the levy for the period of confusion and supported uniform treatment of the demand. The duty demand at Rs. 300 per PMT was therefore sustained, while the circumstances were not sufficient to justify penalty, so penalty was set aside.

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Issues: Whether goods manufactured during August 1997 were liable to duty at the tariff rate or at the concessional rate under the exemption notifications, and whether penalty was sustainable.

Analysis: Notification No. 50/97-C.E. dated 01.08.1997 was amended by Notification No. 57/97-C.E. dated 30.08.1997, and the modified rate was made effective only from 01.09.1997. For goods manufactured in August 1997, the tariff rate therefore applied. Notification No. 4/2000-C.E. (N.T.) dated 31.01.2000 was issued under Section 11C of the Central Excise Act, 1944 to regularise the levy and ensure uniformity for the period when there had been confusion about the applicable duty. The duty demand at Rs. 300 per PMT was therefore correctly sustained, but the circumstances did not justify penalty.

Conclusion: The duty demand was upheld in favour of the Revenue, while the penalty was set aside in favour of the assessee.

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