1984 (9) TMI 275 - HC - Central Excise

Court upholds legality of retrospective tax amendment, dismisses challenge to Excise Department's valuation method.

The court dismissed the petition challenging the retrospective amendment to Section 4(4)(d)(ii) by the Finance Act of 1982, upholding the legality of the ... - Issues Involved:1. Exemption from Excise Duty under Notification No. 128 of 1977.2. Requirement to pass on the benefit of exemption to customers.3. Determination of assessable value under Section 4 of the Central Excises and Salt Act, 1944.4. Legality of retrospective amendment to Section 4(4)(d)(ii) by the Finance Act of 1982.Summary:1. Exemption from Excise Duty under Notification No. 128 of 1977:The petitioners, a small paper manufacturing unit, were exempted from 75% of the excise duty under Notification No. 128 of 1977. The notification provided an exemption for paper mills without a bamboo pulp making plant, based on their annual installed capacity.2. Requirement to pass on the benefit of exemption to customers:The petitioners did not pass on the benefit of the exemption to their customers, arguing that the exemption was a subsidy meant for small paper mills. The Appellate Collector ruled in favor of the petitioners, stating there was no legal requirement to pass on the exemption benefit to customers.3. Determination of assessable value under Section 4 of the Central Excises and Salt Act, 1944:The Excise Department issued show cause notices for short levy of duty, contending that the assessable value should include the benefit retained by the petitioners. The Assistant Collector confirmed this view, leading to the petitioners challenging the orders. The court examined the scheme of the Central Excises and Salt Act, 1944, particularly Section 4, which determines the value of goods for excise duty purposes. The court concluded that the 'duty of excise payable' refers to the actual duty payable by the assessee, including any exemptions.4. Legality of retrospective amendment to Section 4(4)(d)(ii) by the Finance Act of 1982:The petitioners challenged the retrospective amendment to Section 4(4)(d)(ii), which clarified that the 'effective duty of excise' includes exemptions. The court upheld the amendment, citing a binding precedent that retrospective amendments to taxing statutes are not unreasonable restrictions under Article 19(1)(g) of the Constitution. The court also noted that the amendment did not override other provisions of the Central Excises and Salt Act, such as the time limits for recovery under Section 11A.Conclusion:The petition was dismissed with costs, and the rule was discharged, affirming the Excise Department's method of computing the assessable value and the legality of the retrospective amendment.