Appeal allowed as Collector lacked jurisdiction to overrule previous order. Correct method applied. Invalid order overturned.

The appeal was allowed as the Collector (Appeals) lacked jurisdiction to overrule the previous Appellate Collector's order. The method of calculating the exemption under Notification No. 108/74, approved by the Appellate Collector, was deemed correct. The impugned order of the Collector (Appeals) was found invalid and without jurisdiction. The method aligned with Section 4 of the Central Excises and Salt Act, 1944, and required no modification.

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Issues Involved:
1. Jurisdiction of the Collector (Appeals) to pass fresh orders.
2. Method of calculating exemption under Notification No. 108/74.
3. Finality of the Appellate Collector's previous order.
4. Application of Section 4 of the Central Excises and Salt Act, 1944.

Detailed Analysis:

1. Jurisdiction of the Collector (Appeals) to Pass Fresh Orders:
The appellants argued that the Collector (Appeals) lacked the jurisdiction to pass a fresh order on an aspect already decided by the previous Appellate Collector. The previous order, No. 2226 to 2228/76 dated 25-10-1976, had become final and binding as no appeal was filed against it. The Assistant Collector, in readjudicating the matter relating to FPEC exemption, acted beyond jurisdiction. The Collector (Appeals) should have refrained from passing any order on the price list relating to an issue already decided by a competent authority of equal rank. This argument was supported by case law, including Himachal Steel Kandrori v. Collector of Central Excise and Union of India v. Kamlakshi Finance Corporation Ltd.

2. Method of Calculating Exemption under Notification No. 108/74:
The appellants contended that the method adopted by the Assistant Collector, as approved by the Appellate Collector, was correct. According to the Notification No. 108/74, the duty on the FPEC should be deducted from the duty calculated on the assessable value. The Collector (Appeals) erred in relying on the Explanation below Section 4(4)(d)(ii) as inserted by the Finance Act, 1982, which was not applicable to the period in question. The correct method, as per the Government of India's Order in Review No. 248 of 1978 and supported by the Delhi High Court decision in I.T.C. Ltd. v. Union of India, involved first determining the assessable value and appropriate duty payable, then reducing this duty by the amount equivalent to the duty on FPEC.

3. Finality of the Appellate Collector's Previous Order:
The Appellate Collector's order dated 25-10-1976 was final and binding, as no appeal was filed against it. The Assistant Collector's readjudication should not have included the method of calculating the exemption under Notification No. 108/74, as this was not within the terms of remand. The Collector (Appeals) in the impugned order incorrectly overruled the earlier order of the Appellate Collector and laid down his own method of calculation, which was beyond his jurisdiction. The Tribunal's decision in Himachal Steel Kandrori v. Collector of Central Excise supported this view, emphasizing that an appellate authority's order, if not appealed against, becomes final and cannot be reconsidered in readjudication.

4. Application of Section 4 of the Central Excises and Salt Act, 1944:
The method of calculation adopted by the Appellate Collector was consistent with Section 4 of the Central Excises and Salt Act, 1944, prior to its amendment. The Notification No. 108/74 required that the duty on the FPEC be deducted from the duty on the assessable value. This interpretation was supported by the Government of India's Order in Review No. 248 of 1979 and the Delhi High Court decision in I.T.C. Ltd. v. Union of India. The Supreme Court's decision in Bata Shoe Co. v. Collector of Central Excise further reinforced that the assessable value must be determined under Section 4 before applying any exemption notification.

Conclusion:
The appeal was allowed on the grounds that the Collector (Appeals) lacked jurisdiction to overrule the previous Appellate Collector's order, and the method of calculating the exemption under Notification No. 108/74 adopted by the Appellate Collector was correct. The impugned order of the Collector (Appeals) was found to be invalid in law and without jurisdiction. The method approved by the Appellate Collector was consistent with the provisions of Section 4 of the Central Excises and Salt Act, 1944, and needed no modification.

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