TaxTMI 
TaxTMI 
2017 (6) TMI 1105
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....ppellant/Assessee, being aggrieved, as indicated above, has come up in appeal to this Court. 2.1. We are informed that the Revenue has not preferred an appeal in respect of the period, for which, MODVAT credit has been allowed, i.e., the period spanning between 01.03.1997 to 03.05.1997. 3. The aforementioned appeal was admitted on 09.04.2015, when, the following substantial question of law was framed for consideration by this Court: "Whether the demand for recovery of MODVAT credit with interest as per Notification No.14 of 1997 CE(NT) dated 03.05.1997 read with Section 87 of the Finance Act, 1997 and Rule 57-I of the Central Excise Rules and Section 11A of the Central Excise Act for the period 23.07.1996 to 28.02.1997 is justified ?" 4. In order to adjudicate the appeal, the following broad facts are required to be noticed : 4.1. The Appellant/Assessee is a manufacturer of Glass Bottles, which fall under sub-heading No.7007.90 of the Schedule appended to the Central Excise Tariff Act, 1985 (in short 'CETA'). 4.2. Notably, for the purpose of manufacturing Glass Bottles, the Appellant/Assessee used several inputs, including Furnace Oil. Furnace oil, w....
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....for the period commencing from 12.08.1997 and ending on the date of payment. Furthermore, via the very SCN, a proposal was also made for imposing penalty. 5.1. Consequently, the Appellant/Assessee filed a reply dated 26.03.1998 to the said SCN. In the reply, the stand taken was that, for the period falling between 03.05.1997 and 19.06.1997, it had already "expunged" MODVAT credit to the extent of Rs. 2,54,701/-, in consonance with Notification No.14/97 CE (NT), dated 03.05.1997. 5.2. In so far as the demand for interest was concerned, it was stated that it was premature, as under Section 87(2)(c) of the Finance Act, interest would be payable, only, if, the amount demanded was not paid within ninety (90) days of the enactment of the Bill. 5.3. As regards, penalty, reliance was placed on explanation to Section 87 of the Finance Act. The stand, which, the Appellant /Assessee appears to have taken with respect to penalty was that the alleged infraction was not an offence prior to the enactment of the Finance Act. 6. The record shows that the Adjudicating Authority was not impressed with the stand taken by the Appellant/Assessee, and thus, proceeded to pass the Order-in-Orig....
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....ned at the relevant point in time. Likewise, according to the learned counsel for the Appellant/Assessee, the provision of Section 87 of the Finance Act, would have no impact, as the amendment made via the said provision was brought about in respect of the Notification dated 03.05.1997, which, as indicated above, was issued under Rule 57A of the 1944 Rules. (ii).Secondly, it was submitted that the Tribunal had failed to note that the SCN dated 01.11.1997, could relate back, at best, in point of time, by a period of six months, and therefore, demand, if any, can be sustained, only for the period falling between 01.06.1997 and 01.11.1997. In other words, according to the learned counsel, having regard to the provisions of Section 11A of the CE Act, the demand for the period spanning between 23.07.1996 and 01.05.1997, was time barred. Learned counsel contended that Section 87 of the Finance Act, could not be construed in a manner that it overrides the provisions of Section 11A of the CE Act in the absence of an express indication in that behalf in the statute. In support of this submission, learned counsel relied upon the judgement of the Supreme Court in J.K. Spinning and We....
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....ion qua the period in issue, as the issue involved is governed by the provisions of Section 87 of the Finance Act. 10.4. Lastly, as regards, the submission of Mr.Saravanan that Section 87 would only validate those actions for recovery which had already been initiated, it was submitted that the said submission was misconceived, for the reason that, the provision not only made the restriction, imposed by notification, dated 03.05.1997, retrospective, by deeming fiction, but also validated, in addition, actions already taken for recovery of excess credit taken by the Assessees. REASONS : 11. We have heard the learned counsel for the parties and perused the record. 11.1. According to us, it is quite clear, on a perusal of the record that the Appellant/Assessee had claimed MODVAT credit on Furnace oil at the rate of 15% ad valorem, based on the Notification dated 01.03.1994. A bare perusal of this notification would show that it was issued under Rule 57A of the 1944 Rules. Therefore, the assertion made on behalf of the Appellant/Assessee that neither the later notification dated 03.05.1997, whereby, the credit was restricted to 10% ad valorem, nor the provisions of Section 8....
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.... so obtained was subjected to an integrated process in a composite mill for weaving the said yarn into fabric. The Department sought to levy duty, in respect of yarn, which was obtained at the intermediate stage as well, and thereafter, subjected to integrated process for manufacture of various kinds of fabric. This was resisted by JK. The Department, towards this end, relied upon a Circular dated 24.09.1980, to interpret Rules 9 and 49 of the 1944 Rules (as they obtained at the relevant point in time), in a manner, which empowered the Excise authorities to levy duty even on yarn generated at the intermediate stage. Since, the said Circular was so interpreted by the Excise authorities, albeit, to the detriment of JK, a writ petition was instituted by it in Delhi High Court. 11.9. During the pendency of the writ petition, the Central Government issued a Notification No.20/82-CE, dated 20.02.1982, whereby, Rules 9 and 49 were amended. Furthermore, via Section 51 of the Finance Act, 1982, it was provided that the amendments made to Rules 9 and 49, "shall be deemed to have and to have always had the effect on and from the date on which the rules came into force". The said rules came....
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....aforesaid period of six months or five years, as the case may be." 31. Under Section 11-A(1) the Excise Authorities cannot recover duties not levied or not paid or short-levied or short-paid or erroneously refunded beyond the period of six months, the proviso to Section 11-A not being applicable in the present case. Thus although Section 51 of the Finance Act, 1982 has given retrospective effect to the amendments of Rules 9 and 49, yet it must be subject to the provision of Section 11-A of the Act. We are unable to accept the contention of the learned Attorney-General that as Section 51 has made the amendments retrospective in operation since 28-2-1944, it should be held that it overrides the provision of Section 11-A. If the intention of the legislature was to nullify the effect of Section 11-A, in that case, the legislature would have specifically provided for the same. Section 51 does not contain any non obstante clause, nor does it refer to the provision of Section 11-A. In the circumstances, it is difficult to hold that Section 51 overrides the provision of Section 11-A. ...." 13. Mr.Srinivas, has however, argued that the judgement of the Supreme Court in JK case, ....
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....ise on specified petroleum products in relation to a certain period and validation - (1) The notification of the Government of India in the Ministry of Finance (Department of Revenue) No.G.S.R.240(E), dated the 3rd day of May, 1997, which was issued in exercise of the powers conferred by rule 57A of the Central Excise Rules, 1944, to restrict credit of duties paid on specified petroleum products used as inputs in the manufacture of final products shall- (a) be deemed to have, and to have always had, effect on and from the 23rd day of July, 1996; and (b) be deemed to prevail, and to have always prevailed, over all notifications issued on or after the 23rd day of July, 1996, but before the 3rd day of May, 1997, under rule 57A of the said rules in relationg to specified petroleum products. Explanation - For the purposes of this section, "specified petroleum products" means naphtha, furnace oil, low sulphur heavy stock light diesel oil, bitumen and paraffin wax falling under Chapter 27 of the Schedule to the Central Excise Tariff Act, 1985. (2) xxxxx (a) xxxxx (b) xxxxx (c) recovery shall be made of the credit of duties, wh....
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....as follows : 15.2. The Central Government had issued exemption Notification No.32/99-C.E., dated 08.07.1999, under Section 5A of the CE Act. The Assessees before the Court were industries, which were involved in manufacture of cigarettes. The Assesses were, in fact, carrying out job work for large tobacco companies, and for this purpose, they had set up units, based on agreements entered into with such companies for production of cigarettes under their brand names. 15.3. It appears that prior to the aforementioned notification, in December 1997, the Government of India had announced a separate industrial policy for the North Eastern Region of the country. The policy targeted "synergetic" development of industries in the region, by giving them various incentives, which included exemption from excise duty. For this purpose, a number of notifications were issued by the concerned Ministries in the Government of India. 15.4. In so far as the petitioners before the Supreme Court were concerned, they had set up units in "specified growth centres" and, thus, proceeded to claim benefit under the notification, i.e., Notification No.32/99-C.E., dated 08.07.1999. The procedure establi....
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....cations dated 8-7-1999 were not the normal refunds made under the Act but were of a special kind for which the complete machinery was provided under the notifications. The submission is that since the exemption notifications themselves had been withdrawn by Section 154, the amounts refunded thereunder were recoverable independently of Section 11-A under Section 154(4). 37. There are two aspects to this dispute. The first is the question of limitation and the second the question of notice. As far as the first aspect is concerned, refund of duty under the Act has been provided for by Section 11-B. The section specifies the manner and circumstances under which refunds of duty may be made. It is neither of the parties' case that the refund made to the petitioners of the excise duty paid by them was under this section. 38. xxxxx 39. xxxxx 40. Although Section 11-A does not refer to Section 11-B, it speaks of duties erroneously refunded . It cannot therefore refer to the refunds made to the petitioners under the notifications as there was no error in the provisional refunds made under the notifications to the appellants. What was sought to be recov....
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....ours) 16. Furthermore, a similar plea was sought to be raised by an Assessee in the case of: Dharampal Satyapal Ltd. V. Dy. Commr of C.Ex., Gauhati, 2015 (320) ELT 3 (SC), where, the Supreme Court reiterated the view taken in R.C. Tobacco Private Limited case. For the sake of convenience, the observations made by the Supreme Court in paragraph 40 of the judgment are set out hereafter : "40. With this we advert to the last submission of Mr Sorabjee that the judgment in R.C. Tobacco, (supra) (which is a two-Judge Bench decision) is in conflict with the three-Judge Bench judgment in J.K. Cotton (supra). This argument is not even open to the appellant for the simple reason that the judgment in J.K. Cotton (supra), was specifically taken note of and discussed in R.C. Tobacco (supra). Para 13 of the judgment in R.C. Tobacco (supra) would reflect that the appellant therein had specifically relied upon the judgment in J.K. Cotton (supra), in support of the submission that retrospectivity was harsh and excessive since there is, in fact, a retrospective imposition of excise duty. It was also argued that justification of such retrospective imposition of tax must be overwhelming an....
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....ch express provision or clear implication, the legislature clearly could not be taken to intend that the amending provision authorises the Income Tax Officer to commence proceedings which before the new Act came into force, had, by the expiry of the period provided become barred. In the present case Section 154(4) specifically and expressly allows amounts to be recovered within a period of thirty days from the day Finance Bill, 2003 received the assent of the President. It cannot but be held therefore that the period of six months provided under Section 11-A would not apply. 40A. In the aforesaid scenario, when the Court was conscious of the principle laid down in J. K. Cotton (supra) and explained the same in a particular manner while deciding the appeal in R.C. Tobacco (supra), it cannot be argued that the judgement in R.C. Tobacco (supra) runs contrary to J.K. Cotton (supra)." (Emphasis is ours) 16.1. Having regard to the aforesaid position, one cannot, but hold that Section 11A of CE Act, would have no application, while, construing the impact of Section 87 of the Finance Act. 16.2. Therefore, the submissions advanced by Mr.Saravanan that the re....