Full Judgment
2. With the consent of both sides, the appeal was also taken up for hearing and, the appeal was also dismissed. The order of dismissal was pronounced in the open Court on 31.3.1989. We now proceed to state the reasons for our order.
3. The facts of the case, briefly stated, are that the respondents are engaged in the manufacture of aerated waters. They were availing set-off of duty paid on the inputs (flavouring essence and concentrates) towards payment of duty on the finished product, namely, aerated waters. This was in terms of Central Excise Notification No.201/79. This notification was withdrawn on 1.3.1986 and, in its place, notification No. 325/86 dated 27.5.1986 was issued, restoring the exemption from duty on the finished product to the extent of the duty already paid on the inputs. On 8.9.1986, the Central Duties of Excise (Retrospective Exemption) Act, 1986, came into force. In pursuance of the provisions of this Act, the respondents filed a claim on 5.3.1987 for refund of Rs. 73,881.73 being the excess duty paid during the period from 1.3.1986 to 27.3.1986. The Assistant Collector dismissed the claim on the ground that Notification No. 325/86 dated 27.5.1986 did not come within the purview of the aforesaid Act and that, therefore the claim was barred by time. In appeal, the Collector of Central Excise (Appeals), by his impugned order, allowed the appeal.
The Collector of Central Excise, Chandigarh, is in appeal before the Tribunal against that order.
4. The appellant-Collector contends that the rate of duty on aerated waters falling under Item 1D(2) of the Tariff Schedule as in force prior to 28.2.1986 and the rate of duty on aerated waters falling under heading 22.02 of the Tariff Schedule which came into force on 28.2.1986 was the same. However, the credit of duty available on 'inputs' was at 12% ad valorem prior to 28.2.1986 as compared to 20% ad valorem with effect from 28.2.1986. Thus, the effective incidence of duty on aerated waters, after giving the applicable set-off of duty under Notification No. 201/79 dated 4.6.1979, was higher as compared to the corresponding incidence of duty after extending the benefit of notification No.325/86 dated 27.5.1986. It is, therefore, urged that the level of duty on aerated waters in force prior to 1.3.1986 was not maintained on and from 1.3.1986. This being the main stipulation set out in the Central Duties of Excise (Retrospective Exemption) Act, 1986, the provisions of the Act are not applicable and Notification No. 325/86 would alsOnot apply to the present case. In this view, the claim for refund having been made after the expiry of the stipulated period of six months, is barred by limitation. Shri Gopal Prasad, however, opposed this contention on the ground that the notification in question squarely feel within the purview of the aforesaid Act.
5. We have considered the submissions of both sides. The Central Duties of Excise (Retrospective Exemption) Act, 1986 was, as is clear from its preamble, enacted with a view to provide for giving retrospective effect to certain notifications relating to exemption from duties of excise. According to Section 2 of the Act, every notification issued by the Government on or after 3.3.1986 but before 8.8.1986, in exercise of the powers conferred by Central Excise Rule 8(1) shall be deemed to have, and to have always had, effect on and from 1.3.1986. It further provides that the notifications should have been issued for the purpose of: (a) maintaining the effective rates of duties of excise in respect of certain goods at the level obtaining prior to the 28lh day of February, 1986, notwithstanding the changes in the rates of duties of excise made by the Central Excise Tariff Act, 1985 (5 of 1986), the Additional Duties of Excise (Textiles and Textile Articles) Amendment Act 1985 (6 of 1986), or the Additional Duties of Excise (Goods of Special Importance) Amendment Act, 1985 (7 of 1986) or (b) maintaining the effective rates of duties of excise in respect of certain goods at the level obtaining prior to 1st day of March, 1986, notwithstanding the changes in the rates of duties of excise made by the Finance Bill, 1986.
The provisions of the Act would have applicability only in relation to such goods.
In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts aerated waters, falling under heading No. 22.02 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), from so much of the duty of excise leviable thereon under the Central Excises and Salt Act 1944 (1 of 1944), as is equivalent to the duly of excise leviable thereon, which is specified in the said Schedule, already paid on the flavouring essences or concentrates falling under sub-heading No. 3302.10 of the said Schedule used in the manufacture of the said aerated waters.
This notification evidently had the effect of exempting aerated waters to the extent of the duty suffered by the specified inputs used in their manufacture. As the Collector has stated, the rate of duty on aerated waters did not undergo any change with the introduction of the Finance Bill, 1986. Whereas prior to the introduction of the Finance Bill on 28.2.1986, the incidence of duty on aerated waters stood reduced to the extent of the duty suffered by the specified inputs, on and from 1.3.1986, the input duty relief was not available till the issue of Notification No. 325/86 dated 27.5.1986. It is only on the issue of this notification that the incidence of duty on aerated waters stood reduced to the extent of the duty suffered by the specified inputs. There was a vacuum from 1.3.1986 to 26.5.1986 when the level of duty was notjnaintained as it was prior to 28.2.1986. In this view of the matter, we are of the opinion that Notification No. 325/86 is covered by Central Duties of Excise (Retrospective Exemption) Act, 1986.
7. The aforesaid Act further provides that the duties of excise which have been collected, but which would not have been so collected if the said notification had been in force at all material times, shall be refunded. It is further provided that a claim for such refund shall be made before the expiry of six months from the commencement of the Act.
The Act came into force on 8.9.1986 and the six month period would have expired on 7.3.1987. The refund claim in the present case was filed on 5.3.1987. As such, it was within time.
8. In the above view of the matter, we uphold the impugned order and dismiss the present appeal.