2002 (11) TMI 107 - SC - Central Excise

Supreme Court rules on Notification No. 202 of 1988, remands case for proviso validity

The Supreme Court set aside the High Court's judgment, ruling that the respondents were not entitled to the benefit of Notification No. 202 of 1988 due to ... Whether the goods of the respondents are exempted from whole of the excise duty by virtue of Notification No. 202 of 1988? Held that:- In this case, admittedly, credit had been taken. The respondent was thus clearly not entitled to the benefit of Notification No. 202 of 1988. We see no justification in the argument that merely because goods were included in the table, they became exempted goods. The goods became exempted goods only provided all conditions of the Notification are fulfilled. If any condition of the Notification is not fulfilled, goods are not exempted goods. We are, therefore, unable to uphold the impugned judgment and set aside the same. Parties fairly agree that the High Court has not decided the question of virus of the proviso to Notification No. 202 of 1988.We, therefore, restore the Writ Petition to the file of the High Court. The High Court to decide the limited question of virus of the proviso to Notification No. 202 of 1988 on the grounds urged in the petition. Issues:Interpretation of Notification No. 1 of 1993 and Notification No. 202 of 1988 for excise duty exemption.Analysis:The case involved a dispute regarding the entitlement of the respondents to the benefit of Notification No. 1 of 1993, dated 28th February, 1993, which granted exemption for the first clearance of specified goods up to a certain value. The key issue was whether the goods of the respondents were exempted from the whole of the excise duty by virtue of Notification No. 202 of 1988. The relevant portion of Notification No. 202 of 1988 provided exemptions for certain final products of iron and steel made from specified input materials. It was crucial to determine if the respondents fulfilled the conditions specified in the notifications to claim the exemptions.The High Court had to decide whether the goods included in the table of Notification No. 202 should be deemed as exempted goods for the purpose of calculating the assessable value under Notification No. 1 of 1993. The respondents argued that the value of goods specified in the table should not be counted towards the assessable value. However, the Department contended that since the respondents had taken credit under rule 57A and not paid duty, they were not entitled to the exemption of Notification No. 202 of 1988. The High Court's reasoning was found to be unclear, and the Supreme Court emphasized that if any condition laid down in the notification is not fulfilled, the party is not entitled to its benefits.Ultimately, the Supreme Court set aside the High Court's judgment, stating that the respondents were not entitled to the benefit of Notification No. 202 of 1988 due to taking credit without paying duty. The case was restored to the High Court to decide the limited question of the validity of the proviso to Notification No. 202 of 1988. The appeals were disposed of with no order as to costs, concluding the legal proceedings on the matter.