1995 (10) TMI 148 - AT - Central Excise

Appellate Tribunal rules duty calculation based on goods removal date for refund eligibility

The Appellate Tribunal set aside the Collector (Appeals) order and allowed the appeals, ruling that duty should be calculated based on the date of removal ... Exemption Notification Issues:1. Interpretation of Notification No. 115/86-C.E. regarding partial exemption from duty on excisable vegetable products.2. Calculation of duty based on the date of clearance of goods under Central Excise Rules, 1944.3. Applicability of duty rates at the time of removal of goods from the factory.4. Validity of refund claim when goods were dutiable at the time of manufacture but exempted at the time of clearance.Detailed Analysis:The judgment by the Appellate Tribunal CEGAT, New Delhi involved two appeals with common questions of law and facts. The Collector (Appeals) allowed the Revenue's appeal under Section 35E(2) of the Central Excises and Salt Act, 1944. The Assistant Collector had initially allowed the refund claim by the appellants based on their eligibility for partial exemption from duty on excisable vegetable products under Notification No. 115/86-C.E. The dispute arose because the appellants had manufactured a quantity of vegetable product before the enforcement of the said notification but cleared it after its enforcement. The Assistant Collector held that duty should be calculated based on the date of clearance of goods, making the appellants eligible for refund as they had paid duty at the full rate. However, the Collector (Appeals) disagreed, stating that only products manufactured after the enforcement of the notification would be eligible for concessional duty rates.During the hearing, the Learned Advocate referred to judgments by the Hon'ble Supreme Court and the Tribunal in similar cases. The Tribunal analyzed the precedent set by the Supreme Court in the case of Wallace Flour Mills Company Ltd., emphasizing that duty is related to the date of removal of goods from the factory, even if the taxable event is manufacture. The Tribunal highlighted that if goods were dutiable at the time of manufacture but exempted at the time of clearance, a refund claim cannot be denied based on the duty rates at the time of manufacture. The Tribunal also cited other cases where the same principle was applied, emphasizing the importance of duty rates prevailing at the time of removal of goods.Based on the legal principles established by the Supreme Court and the Tribunal, the Appellate Tribunal set aside the Collector (Appeals) order and allowed the appeals with consequential relief. The Tribunal concluded that the rate of duty applicable at the time of removal of goods from the factory should be considered, and since no duty was leviable at the time of removal in this case, the refund claim by the appellants, who had paid full duty, was valid and could not be denied by the Collector (Appeals).