UNION OF INDIA Vs. BELUR ENTERPRISES

JUDGEMENT

(1.) This writ appeal raises an interesting question which will be apparent from the following narration. The respondent M/s. Belur Enterprises is a manufacturer of Sodium Alginate. With effect from 28-2-1982, this product was brought to excise duty under Tariff Item 68 of Schedule I to the Central Excises and Salt Act, 1944 (hereinafter referred to as 'the Act'). The respondent manufactured 4151 Kgs. of Sodium Alginate. At the time of manufacturing, no duty of excise was liable to be paid since it was exempted from duty by Notification No. 105 of 1980. This was prior to the budget of that year. Thereafter it was changed to Tariff Item 15A(1) and as a result it became liable for excise duty. At the relevant period, viz., when the stocks were cleared, from 7-7-1982 to 10-11-1982, it was subjected to duty under Tariff Item 15A(1) and the respondent has to pay excise duty to the tune of Rs. 1,23,048-81P. Thereafter two applications were filed by him on 22-6-1983 and 23-6-1983 claiming refund of the said amount on the ground that on the date of manufacture, there was no liability to pay excise duty in view of Notification No. 105/1980. The appellants directed refund only to the tune of Rs. 92,761/- on the application dated 23-6-1983. The other application was rejected. However, by exercise of power under Section 11A of the Act, a show cause notice was issued on 16-12-1983 by the Assistant Collector of Central Excise who himself ordered refund, stating that having regard to the fact that the goods were removed from the factory and on the date of removal, goods in question fell under Tariff Item 15A(1) refund was ordered erroneously and therefore, the amount so refunded must be paid back. On reply by the respondent, the matter was considered on 7-11-1984 by the Assistant Collector of Central Excise who overruled the objections and directed repayment of that amount. An appeal was preferred by the respondent against the same. The appellate authority by its order dated 15-2-1984, confirmed the order of the Original Authority. Thereupon, W.P. 5312 of 1985 came to be filed for quashing these orders.

(2.) The matter came up before our learned brother Justice Rajendra Babu. He was of the view that "the goods manufactured prior to the withdrawal of exemption but removed thereafter, would not be entitled to such exemption." In arriving at this conclusion, he relied upon the decision in The Union of India & Others v. The Elphinstone Spinning & Weaving Mills Co. Ltd. (1978 (2) ELT 680) and also the decision of the Supreme Court in Union of India & Others v. Bombay Tyre International Ltd. AIR1984 SC 420 , (1983 )2 CompLJ4 (SC ), 1984 (2 )ECC102 (SC ), 1983 ECR653D (NULL ), 1983 (12 )ELT869 (SC ), 1983 (1 )SCALE521 , (1983 )4 SCC210 . In the result he quashed the impugned orders. Hence the Excise Department has preferred this appeal.

(3.) Sri Ashok Haranahalli, learned Central Government Standing Counsel for the appellant, would submit that whatever might have been the prior position of law, having regard to the pronouncement by the Supreme Court in Wallace Flour Mills Company Ltd. v. Collector of Central Excise 1990 (25 )ECC169 (SC ), 1989 (44 )ELT598 (SC ), [1990 ]186 ITR440 (SC ), JT1989 (4 )SC 184 , 1989 (2 )SCALE804 , (1989 )4 SCC592 , [1989 ]SuppSCR311 , [1989 ]Supp1 SCR311 , 1990 (1 )UJ93 (SC ) the matter is no longer res integra, which categorically lays down that the scheme of Excise Act read with relevant rules particularly Excise Rule 9A reveals that the taxable event is the manufacture and the payment of duty is related to the date of removal of such article from the factory. What is relevant is the date of removal and the rates prevailed on the date of removal alone would be applicable. On the basis of the ruling, the appellant is entitled to succeed.