Cce, Pondicherry Vs. M/S. Sigma Pack - Court Judgment

Per: P.K. Das,

The relevant facts of the case as per the record in brief are that the respondents are engaged in the manufacturing of cartons, boxes etc., classifiable under sub-heading No.4819.12 of the schedule to the Central Excise Tariff Act, 1985. The goods were charged NIL rate of duty till 28.2.2001. By Finance Act, 2001 effective from 1.3.2001, rate of duty was fixed @ 16% ad valorem and benefit of SSI exemption Notification No. 8/2000 as amended upto aggregate value of clearance of Rs. one crore was extended. The Notification No. 15/01-CE dated 16.3.01, was issued amending the Notification No. 8/2000, in so far as the exemption was restricted to Rs. 10 lakhs during the month of March, 2001. The respondents exceeded clearance of goods of Rs. 10 lakhs prior to 16.3.01. So, in view of Notification No. 15/01-CE, they started paying duty @ 16% ad valorem from 16.3.01. Show Cause Notice was issued proposing demand of duty of Rs. 4,24,485/- for the period 6.3.01 to 15.3.01, as they have availed the full exemption upto Rs. 10 lakhs for the clearances made by them. The original authority confirmed the demand of duty of Rs. 4,24,485/- and imposed a penalty of Rs.1,06,000/-. The Commissioner (Appeals) set aside the adjudication order. Hence, Revenue filed this appeal.

2. The Ld. DR reiterates the grounds of the appeal. He submits that the amended Notification No. 15/01-CE dated 16.3.01 is a transitional provisions for the period 1.3.01 to 31.3.01 of eligibility of exemption of Rs. 10 lakhs and therefore the said Notification would be given retrospective effect.

3. The Ld. Advocate on behalf of the respondents fairly submits that this Tribunal on the identical issue in the case of Dolphin Impressions Pvt. Ltd. Vs. CCE, Nashik 2004 (172) ELT 123 (Tri.-Mum.), held against the assessee. He submits that the said decision was passed without considering the provisions of Notification No. 8/2000 as applicable during the relevant period and the decision of the Larger Bench of the Tribunal in the case of CCE, Vadodara Vs. Rotomould (I) Pvt. Ltd. - 2000 (119) ELT 235 (Tri.-LB). His main contention is that the Notification No. 15/01 dated 16.3.01 cannot be given effect retrospectively.

4. After hearing both sides and on perusal of the records, we find that the duty was imposed on the goods in question at the rate of 16% ad valorem with effect from 1.3.01 by Finance Bill, 2001. Simultaneously, the respondents were eligible to avail the benefit of SSI exemption Notification No. 8/2000 as amended upto aggregate value of clearance of Rs. 1 Crore. Notification No. 15/01-CE dated 16.3.01, amended Notification No. 8/2000 and imposed the restriction of the exemption limit of clearance value of Rs. 10 lakhs during the month of March, 2001. The question is as to whether the Notification No. 15/01 would be given effect retrospectively. There is no dispute that prior to 16.3.01, as per the Notification No. 8/2000, the respondent was eligible to avail benefit of exemption of Rs. One Crore. There is nothing mentioned in the Notification No. 15/01 that it would be given effect retrospectively. So the notification No. 15/01 cannot be given retrospective effect. We find that the Larger Bench of the Tribunal in the case of Rotomould (supra), while deciding the exemption notification No. 175/86 dated 1.3.86, wherein the limit of Rs. 150 lakhs was enhanced to Rs. 200 lakhs as per Notification No.119/89 came into force on 27.4.89, held that it would be applicable from the date of notification. The relevant portion of the said decision is reproduced below:-

“5. Learned Counsel representing the assessee submitted that the restrictions contained in clause 3 of original notification dated 1.3.1986 was enhanced to Rs. 200 lacs. That turnover limit was in relation to aggregate value of clearances effected during the preceding financial year. Preceding financial year can only be the year ending 31.3.1989. When the aggregate value of clearances of the preceding financial year is enhanced to Rs. 200 lacs, the consequent benefit arising there from must relate to the clearances effected in the succeeding financial year 1989-90. This argument is quite attractive, but we find no way to concede the same. As per General Clauses Act, financial year is the period starting from the firt of April of the particular year. So the preceding financial year mentioned in the notification can relate only to the financial y;ear 1988-89. If the value of clearances upto 31.3.1989 was less than Rs. 200 lacs, the assessee can get the benefit of the subsequent notification, namely, 119/89. That benefit will ensure to him only from the date of notification, namely, 27.4.1989. In his view we hold that the law stated by the Bench of three Members in collector of Central Excise, Pune Vs. Sanjay Founders Pvt. Ltd. - 1999 (34) RLT 727 is the correct law.”

5. In view of the above discussion, it is our considered view that the amended Notification No. 15/01-CE dated 16.3.01 would be given effect retrospectively. It appears that the above legal provision and the case laws were not placed before the Tribunal in the case of Dolphin Impressions Pvt. Ltd. (supra). So, we find that the order of the Commissioner (Appeal) is legal and proper. Hence, the appeal filed by the revenue is dismissed. The cross objection is disposed off.