Retrospective excise exemption rejected where the amending notification operated only from its publication date

Enhanced small-scale exemption under the central excise notification was held to take effect only from the date of its publication, because excise duty is attracted on removal of goods and the amending notification did not expressly provide retrospective operation. The reasoning used for sales tax notifications was found inapplicable to excise, as exemption cannot be claimed for clearances made before the notification came into force unless retrospective effect is stated clearly. The assessee was therefore not entitled to the expanded exemption for removals made before 27-4-1989.

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Issues: Whether Notification No. 119/89-C.E. dated 27-4-1989, which enhanced the small-scale exemption limit under Notification No. 175/86-C.E. dated 1-3-1986, operated retrospectively from 1-4-1989 or only from the date of its publication.

Analysis: The exemption under the central excise scheme was linked to clearances and duty liability arose at the time of removal of the manufactured goods. The amending notification did not state that it was to operate from the beginning of the financial year or from any earlier date. The reasoning applicable to sales tax notifications was held not to control the excise position because excise duty is attracted on removal, and the benefit of an exemption cannot be claimed for clearances made before the notification came into force unless the notification expressly so provides.

Conclusion: The amending notification was held to operate only from 27-4-1989 and not retrospectively from 1-4-1989, so the assessee was not entitled to the exemption for clearances made before that date.

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