Retrospective amendment cannot expand DTA duty liability where the exemption notification remained unamended for the relevant period.

Liability for a hundred per cent export-oriented undertaking's clearances into the Domestic Tariff Area depended on the exemption notification in force during the relevant period. The then-applicable notification restricted duty to 50% of the customs duty leviable on DTA clearances, and a later retrospective amendment to the charging provision in Section 3(1) of the Central Excise Act, 1944 did not by itself enlarge the scope of the unamended notification. Because the demand related to a period before the notification was prospectively amended, the assessees were not liable for the additional duty claimed and the finding of short payment was unsustainable.

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Issues: Whether a hundred per cent export-oriented undertaking clearing goods into the Domestic Tariff Area was liable, for the relevant period, to pay additional duty of customs and other additional excise duties in excess of 50% of the basic customs duty, in the light of the unamended exemption notifications and the retrospective amendment to the proviso to Section 3(1) of the Central Excise Act, 1944.

Analysis: The liability turned on the interaction between the proviso to Section 3(1) of the Central Excise Act, 1944 and the exemption notifications governing clearances by export-oriented undertakings. The earlier legal position reflected in the notification restricted the duty payable on DTA clearances to 50% of the customs duty leviable under Section 12 of the Customs Act, 1962. Although the proviso to Section 3(1) was later amended retrospectively so as to widen the duty base, the corresponding exemption notification was amended only prospectively. The demand in the present case related to a period before the prospective amendment to the notification took effect, and the retrospective amendment to the charging provision did not retrospectively enlarge the notification's scope.

Conclusion: The assessees were not liable for the additional demand for the relevant period, and the finding of short payment was unsustainable.

Final Conclusion: The impugned orders were set aside and the appeals were allowed.

Ratio Decidendi: Where a charging provision is retrospectively amended but the exemption notification governing the relevant period remains unamended until a later prospective date, the assessee's liability must be tested by the notification as it stood during the period of clearance.

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