MAK CONTROLS AND SYSTEMS PRIVATE LTD. Vs. CCE

JUDGEMENT

(1.) AFTER examining the records and hearing both sides, we are of the view that the appeal itself requires to be finally disposed of at this stage. Accordingly, after dispensing with predeposit, we take up the appeal, which is against an order passed by the ld. Commissioner of Central Excise in adjudication of a show -cause notice, wherein the benefit of Notification No. 4/06 -CE dt. 1.3.2006 was denied to the assessee and a consequential demand was raised on them in respect of battle tanks manufactured and supplied to the Heavy Vehicles Factory (Avadi) of the Ministry of Defence, Govt. of India during the period August'06 to February'07. The Notification exempted "parts of main battle tanks intended to be used in the manufacture of such tanks", from payment of duty of excise subject to the condition that, where the parts were intended to be used in the manufacture of battle tanks elsewhere than in the factory of production of the parts, the procedure laid down in the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 shall be followed. In relation to the present appellants, these Rules required the Heavy Vehicles Factory (Avadi) to apply to the jurisdictional Asst. Commissioner/Deputy Commissioner for permission to procure duty -free parts of battle tanks from the appellants for use in the manufacture of battle tanks. The Asst.Commissioner/Deputy Commissioner would grant such permission after collecting the requisite undertaking and bond from the applicant. The application containing such undertaking and particulars of bond and carrying the counter -signature of the Asst./Deputy Commissioner of Central Excise is forwarded to his counterpart having jurisdiction over the appellants' factory, whereupon the latter would permit the appellants to clear parts of battle tanks without payment of duty to the Heavy Vehicles Factory (Avadi). These formalities were completed prior to 1.3.2006, during which period the above Notification was not in force but its predecessor -Notification No. 6/02 -CE dt. 1.3.02 was holding the field. The 2002 -Notification was rescinded, at Budget time, by the Central Government. Notification No. 4/06 -CE dt. 1.3.06 was issued to cover "parts of main battle tanks intended to be used in the manufacture of such tanks", for which 'Nil' rate of duty was prescribed subject to the same condition as was stipulated under Notification No. 6/02 -CE. The adjudicating authority, however, denied the benefit of the new Notification on the ground that the aforesaid condition should have been complied with under, and during the currency of, the new Notification. The ld. consultant, arguing for the assessee, submits that the condition prescribed under the new Notification for the benefit of exemption from payment of duty on parts of battle tanks intended to be used in the manufacture of such tanks was identical to the one prescribed under the erstwhile Notification No. 6/02 -CE for the same benefit and, further, that this condition was duly complied with. It is submitted that it is not the case of the Revenue that the procedure under the aforesaid Rules was not followed in this case. We have heard the ld. SDR also.

(2.) WE are impressed with the case of the appellants. Undisputedly, the prescribed procedure was followed both at the end of the appellants and at that of the buyer. Whether these formalities were completed prior to the coming into force of the Exemption Notification is immaterial inasmuch as Section 38A of the Central Excise Act contains the requisite saving provision. Under this Section of the Act, where a Notification issued under the Act is rescinded or superseded, such rescission or supersession shall not affect any right, privilege, obligation or liability acquired, accrued or incurred under the Notification superseded or rescinded. By following the procedure prescribed under the aforesaid Rules, the appellants had acquired a right to clear parts of battle tanks (intended for use in the manufacture of such tanks) without payment of the duty to the Heavy Vehicles Factory at Avadi. This benefit of exemption from payment of duty was available to them prior to 1.3.06 under Notification No. 6/02. This benefit was continued under Notification No. 4/06 -CE dt. 1.3.06. By virtue of the saving provisions of Section 38A of the Central Excise Act, the appellants are entitled to the benefit of exemption from payment of duty on the goods cleared by them to the Heavy Vehicles Factory at Avadi after 1.3.2006 on the strength of having complied with the prescribed conditions prior to that date.