Retrospective excise exemption preserved the earlier effective duty rate despite tariff reclassification and a later notification.

Section 2(a) of the Central Duties of Excise (Retrospective Exemption) Act, 1986 preserved the pre-1-3-1986 effective rate of duty for notifications issued under Rule 8(1), notwithstanding the later tariff classification change and Notification No. 213/86. Because the goods had been attracting duty at 12% before the change, the retrospective protection applied even though clearances exceeded the notified limit. The assessee was therefore entitled to retain the earlier effective rate and could not be charged duty at 15% instead of 12%.

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Issues: Whether the assessee was entitled to the benefit of section 2(a) of the Central Duties of Excise (Retrospective Exemption) Act, 1986 so as to retain the earlier effective rate of duty notwithstanding the change in tariff classification and the application of Notification No. 213/86.

Analysis: The goods had earlier suffered duty at 12% under the erstwhile tariff and were later classified under the new tariff. Although Notification No. 213/86 applied after the change and the clearances exceeded the notified limit, section 2 of the 1986 Act gave retrospective effect to notifications issued under Rule 8(1) of the Central Excise Rules from 1-3-1986 for maintaining the effective rate of duty at the level obtaining prior to 1-3-1986. The provision expressly protected the pre-existing effective rate notwithstanding the tariff and rate changes, and the assessee had been paying duty at 12% at the relevant time.

Conclusion: The assessee was entitled to the retrospective exemption benefit and could not be required to pay duty at 15% instead of 12%.

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