RALSON (INDIA) LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) These three appeals arise from a common order dated 19-6-2003 passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi (CESTAT) [: 2003 (160) E.L.T. 846 (Tribunal)]. By the said order the three appeals preferred by the Appellants herein were taken up for consideration. Those appeals were filed against the Orders-in-Original passed by the Commissioner of Central Excise, Chandigarh, imposing the tax liability of Rs. 46,97,428/-, Rs. 46,77,469/- and Rs. 54,21,524/- respectively against the three Appellants herein. The Tribunal vide the impugned judgment has sustained the aforesaid duty demand. To recapitulate the facts in brief - the Appellants are engaged in the manufacture of tyre and tube of rubber for bicycles and cycle rikshaws. The dispute pertains to the manufacture of 'compounded rubber' which comes under Heading No. 40.05 of the Central Excise Tariff Schedule and is used captively by the Appellant in the manufacture of tyre and tubes. It is a matter of record that the said 'compounded rubber' was totally exempt from payment of excise duty under a notification that was issued way back on 25-5-1987. There were various other products which were similarly exempted from payment of excise duty by issuing various notifications from time to time. It so happened that the Government rescinded 389 such notifications by issuing Notification No. 64/94-C.E., dated 1-3-1994. By this Notification exemption in respect of 389 products granted earlier was withdrawn. It also included Notification No. 152/1987 C.E., dated 25-5-1987 which pertains to compounded rubber. Thus exemption qua this product was also withdrawn. However, within few days thereof i.e. 28-3-1994, fresh Notification No. 74/94-C.E., dated 28-3-1994 was issued, resuscitating the earlier Notification No. 152/87-C.E., dated 25-5-1987. As a result in respect of compounded rubber excise duty was again exempted. The effect of the aforesaid Notification was that only for a principal period from 1-3-94 to 27-3-94, there was no exemption duty in respect of 'compounded rubber'. In these appeals, we are concerned with this very period from 1-3-94 to 27-3-94.

(2.) Notwithstanding the aforesaid position that there was no exemption from 1-3-94 to 27-3-94, the Appellant did not pay excise duty on the compounded rubber cleared for captive consumption during the aforesaid period. This led the Department to issue show cause notices against the Appellant and passing of the orders for payment of duty, as indicated earlier.

(3.) The record reveals that in reply to show cause notice the Appellants had taken two defences. First defence was that the Notification No. 64/94-C.E., dated 1-3-94 by which the exemption was withdrawn was erroneously issued insofar as compounded rubber is concerned, and after realizing this mistake, the remedial step was taken by the Government by restoring the exemption vide Notification dated 28-3-1994. On that basis it was argued that the Notification No. 74/94-C.E., dated 28-3-1994 was merely clarificatory in nature and should be applied retrospectively. In nutshell, the submission was that the exemption continued throughout and covered even the period from 1-3-94 to 27-3-94 and therefore no duty was payable.