Retrospective excise exemption for tea chests defeated the duty demand for the intervening period.

Tea chests were covered by a retrospective exemption scheme, so duty could not be sustained for the intervening period between 1-3-1986 and 2-4-1986. The Tribunal noted that exemption had earlier applied to tea chests, was restored by Notification No. 227/86-C.E. dated 3-4-1986, and was given retrospective effect by the Central Duties of Excise (Retrospective Exemption) Act, 1986 for notifications issued under Rule 8(1) of the Central Excise Rules, 1944. On that basis, the duty demand failed, and the Tribunal found it unnecessary to disturb the view taken on manufacture.

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Issues: Whether the assembly of tea chests from unassembled tea chests amounted to manufacture and, in any event, whether the goods were liable to duty for the period 1-3-1986 to 2-4-1986 in view of the retrospective exemption scheme.

Analysis: The Tribunal noted that tea chests had earlier enjoyed exemption and that, after the new tariff came into force on 1-3-1986, exemption was restored by Notification No. 227/86-C.E. dated 3-4-1986. It further held that the Central Duties of Excise (Retrospective Exemption) Act, 1986 gave retrospective effect to such exemption notifications issued under Rule 8(1) of the Central Excise Rules, 1944, with the result that the exemption applied to the relevant intervening period. On that basis, the Tribunal found it unnecessary to disturb the appellate authority's view on manufacture.

Conclusion: The appeal failed because the goods were covered by retrospective exemption during the relevant period, leaving no duty demand sustainable against the assessee.

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