1998(06)LCX0215
IN THE CEGAT, COURT NO. II, NEW DELHI
S/Shri K. Sankararaman, Member (T) and S.S. Kang, Member (J)
KAILASH PAINTS & CHEMICALS
Versus
C.C.E., CHANDIGARH
Final Order No. E/951/98-B1, dated 9-6-1998 in Appeal No. E/1673/90-B1
CASE CITED
Ess Ess Metals & Alloys v. Collector — 1993(03)LCX0035 Eq 1993 (068) ELT 0423 (Tribunal) [Para 2]
Advocated By : Shri Ajay Jain, Advocate, for the Appellant.
Shri S. Nunthuk, SDR, for the Respondents.
[Order per : K. Sankararaman, Member (T)]. - The appeal is directed against the order-in-original, dated 11-12-1989 passed by the Additional Collector of Central Excise, Chandigarh demanding Central Excise duty of Rs. 37,190.88 and imposing penalty of Rs. 5,000/- on the appellant. The demand of duty was in respect of zinc ingots manufactured by the appellant from galvanised zinc ash by denying the benefit of exemption under Notification No. 104/88, dated 1-3-1988 which was applicable to such zinc ingots made from zinc materials falling under Chapter 79 of the Central Excise Tariff. The impugned order was passed on the basis that on and from 1-3-1988 zinc ash and such items fell outside the purview of Chapter 79 of the Central Excise Tariff and came to be reclassified under Chapter 26 ibid.
2. On behalf of the appellant, Shri Ajay Jain, learned Counsel submitted that the change of tariff classification for items like zinc ash from Chapter 79 to Chapter 26 proposed in the Finance Bill of 1988 became effective only after passing of the Finance Act of 1988 which was on 13-5-1988. During the intervening period classification of such zinc ash continued to be only under Chapter 79. A similar issue had come up for decision before the Tribunal in Appeal No. E/1896/90-B1 & E/1897/90-B1 in M/s. Ess Ess Metals and Alloys and M/s. Fertichem v. Collector of C. Excise, Chandigarh [1993(03)LCX0035 Eq 1993 (068) ELT 0423 (Tribunal)] disposed of vide Final Order Nos. E/54 & 55/93-B1, dated 18-3-1993 as amended by Misc. Order Nos. E/56-57/91-B1, dated 10-4-1994. The Bench took note of the Provisional Collection of Taxes Act, 1931, according to which only those proposals in the Finance Bill will come into effect immediately which have the effect of enhancing the rate of duty but those provisions amending the statute or Tariff Items will be effective only from the date of passing of the Finance Act. On that reasoning, the Bench held that during the period 1-3-1988 to 12-5-1988 zinc ingots made from zinc ash continued to have the benefit of exemption under Notification No. 114/88. The same ratio will apply the present case also pleaded the learned Counsel. He added that in view of the full exemption available to such zinc ingots for the aforesaid intervening period, appellant was entitled to get the benefit of Notification No. 175/86 by excluding the value of such exempted goods in the total value of clearances. He raised another plea that the benefit of exemption should also be extended to zinc products made from zinc ash and such material which were in stock on 12-5-1998 but which had suffered duty under the old classification viz. Chapter 79.
3. Sh. S. Nunthuk, learned Departmental Representative pleaded in reply that the relevant notification specifically mentioned the raw material from which zinc ingots are manufactured as falling under Chapter 79, the exemption was therefore not available from 1-3-1988 in view of the amendment of the tariff. He reiterated the reasoning adopted in the impugned order and stated that if the intention of the Govt. was to cover zinc ash, they would have referred to its new tariff item. The non-mention of the new tariff heading was a deliberate act because Government did not want to give the benefit of the exemption during the subject period. Proceeding further Shri Nunthuk submitted that subsequent to 12-5-1988 when the amended tariff came into effect, appellant would not be entitled to get the benefit of exemption as the zinc ash and such other raw material from which appellant was manufacturing zinc ingots fell under the new Heading but the exemption was available only if the inputs fell under Tariff Heading 79. Subsequently Government issued notification under which the classification of raw material was shown under Chapter 26. This would mean that for the earlier period for which such a provision was not available exemption was not admissible to the manufacturers. This was a deliberate decision of the Government. He pleaded that the impugned order may be upheld and the appeal dismissed.
4. The arguments have been considered. The legal position with regard to the intervening period between the presentation of the Finance Bill and its enactment is governed by the Provisional Collection of Taxes Act, 1931, the provisions of which were applied by the Tribunal in the decision cited by the learned Counsel. We respectfully follow the same as far as the assessment during the period 1-3-1988 to 12-5-1988 till the coming into the Finance Act, 1988 was concerned. As regards the assessments in the subsequent period when appellant was having duty paid zinc ash and other material on which duty had been paid under Chapter 79, if duty had been paid prior to 1-3-1988 under Chapter 79, the fact that such inputs were taken into use after 12-5-1988 would not deprive the benefit of exemption on the ground that the Tariff Heading for zinc ash had since been changed. What is relevant for the purpose of deciding the eligibility of this exemption notification would be whether the raw material in question was zinc ash, zinc dross etc. The tariff heading viz. Chapter 79 or Chapter 26 would depend upon the period of assessment. The Notification provided for the description of the final product and of the raw material from which it is manufactured. Their respective Tariff Headings were also shown. At the time of assessment of the product, its classification and its description has to be in conformity with the entries in the Notification. As to the Tariff Heading of the raw material, classification was dependent upon the period of assessment thereof. If raw materials had been classified and duty thereon had been paid under Chapter 79 then the subsequent change of classification under the Tariff would not affect the applicability of the exemption. The claim of the appellant is in order.
5. Arising from the decision regarding the grant of the exemption to zinc ingots made from materials like zinc ash or dross during the period in question as above, the next question is of computing the value of clearances for deciding the eligibility for Notification No. 175/86. That notification contained a provision that goods exempted fully from duty under notifications other than those with reference to the total value or quantity of clearances will be excluded in calculating the value of clearances above the benefit of exemption inforce during the respective period will continue to be available to zinc ingots made from the appropriate specified materials notwithstanding the change in the tariff heading. The value of clearance of such zinc ingots cleared free of duty was to be excluded in arriving the total value of clearances for deciding at the appellant’s eligibility for Notification No. 175/86. The impugned order is set aside and the appeal is allowed.
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Equivalent 1999 (105) ELT 491 (Tribunal)