Judgment:
1. This appeal is against the order of the Collector of Central Excise (Appeals), Tiruchirapalli, dated 18.2.1991.
2. Shri Namasivayam, the learned Consultant for the appellant, submitted that the only short issue for consideration is whether the higher notional credit admittedly available to the appellant even according to the Department in terms of Para 5 of Notification 175/86 dated 1.3.1986 would cover and include the 5% higher notional credit specified in the amendment to Notification 175/86 brought about with effect from 1.4.1988 by Central Excise Notification 136/88. Shri Namasivayam contended that Para 5 of Notification 175/86 permitted higher notional credit to the entire extent of the excise duty otherwise leviable and the amending Notification 136/88 merely specified and restricted the quantum to 5% and in both the notifications the expression used is "excise duty" and there is no exclusion of higher notional credit in respect of "special excise duty" in either of the notification either expressly or by necessary implication. Special excise duty also is excise duty notwithstanding the fact that the origin of the same may be traceable to the Finance Act and not to the Central Excises & Salt Act, 1944 or the Schedule thereunder or to the Central Excise Tariff, 1985. The learned Consultant also placed reliance on the clarification issued by the Government of India that MODVAT credit would be available in respect of Special excise duty leviable under the respective Finance Acts as well.
Shri Namasi-vayam further submitted the Tax Research Unit of the Government of India though initially took the view that higher notional credit would be available in respect of Special excise duty as well, subsequently clarified in the light of the amending Notification 136/88 cited supra that the same is restricted only to the Basic excise duty and would not cover the Special excise duty and assailed the correctness of the same. It was further urged that exemption notifications issued under Rule 8(1) are made applicable even to Special excise duty.
3. Shri Subramaniam, the learned DR, adopted the reasoning of the impugned order and contended that Special excise duty is referrable to the Finance Act and not to the Central Excises & Salt Act, 1944 or the Schedule thereunder and nor to the provisions of the Central Excise Tariff, 1985 and as such would not be covered by the wording of Notification 136/88 in regard to availing of higher notional credit.
4. We have carefully considered the submissions made before us. The short question is whether the basic excise duty and Special excise duty is one and the same and whether the higher notional credit envisaged under Notification 175/86 for excise duty and in amending Notification 136/88 dated 1.4.1988 restricting and limiting the. quantum to 5% would take within its ambit the Special excise duty as well. Section 3 of the Central Excises & Salt Act, 1944 refers to excise duty leviable under the Schedule and even after the replacement of the Schedule by the Central Excise Tariff, 1985 there is absolutely no mention therein also of any Special excise duty. The source and origin of Special excise duty admittedly is from the Finance Act of the respective years. The Finance Act, which is an independent Act, does not contain any exclusive provision to include and read the Special excise duty into the notifications for giving exemptions to Special excise duty under Rule 8(1). "Duty" is defined under the Central Excise Rules, 1944 as duty payable under Section 3 of the Act and Section 3 of the Act reads as under: Duties specified in the Schedule to the Central Excise Tariff Act, 1985 to be levied.--(1) They shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in India and a duty on salt manufactured in, or imported by land into, any part of India as, and at the rates, set forth in the Schedule to the Central Excise Tariff Act, 1985.
We, therefore, feel that Special excise duty cannot in the above context be read into the scheme of exemption so far as Special excise duty is concerned. Therefore, the question of giving notional credit would not also consequently be available in the context of Notification 175/86 as amended by Notification 136/88. In our view clarification dated 14.6.1988 issued by the Tax Research Unit of the Government of India reflects the correct position of law. In this view of the matter we uphold the impugned order and dismiss the appeal.