KHODAY ENGG. LTD Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) IN this Appeal filed by M/s. Khoday Engg. Ltd. the issue involved is whether an order issued under Section 5A(2) of the Central Excise Act is applicable to the goods manufactured and cleared before issue of the order.

(2.) SHRI Prasanth Kumar, Id. Counsel submitted that they had entered into a contract with Bangalore Water Supply and Sewerage Board for providing, laying and commissioning of Reservoir. For this purpose they had fabricated pipes from the raw materials supplied by M/s. BWSSB. The Central Government vide Order No. 6/91, dated 22 -2 -1991 issued under Section 5A(2) of Central Excise Act exempted all excisable goods falling under Chapter 68 or 73 fabricated at the fabrication shop of M/s. Khoday Engineering Works which are required by and supplied to Bangalore Water Supply and Sewerage Board in connection with the execution of the Cauvery Water Supply Scheme from the whole of duty of excise. He submitted that the Commissioner has confirmed the demand of duty holding that the order under Section 5A(2) of the Act is effective prospectively and not for the goods which were manufactured and cleared before the issue of the said order. Ld. Counsel submitted that in their own case on similar facts the Tribunal vide Order No. 1421/1996, dated 23 -8 -1996 has held that the order is applicable to the Pipes manufactured and cleared by them prior to the date of the said order.

(3.) SHRI R.D. Negi, Id. SDR reiterated the findings of the Collector and drew specific attention to the findings contained in para 11 of the impugned order according to which Collector has observed that it came to his notice that on a representation made by BWSSB, Ministry of Finance had informed them that the Central Government was not in a position to accept any modification or extension of the exemption order dated 22 -2 -1991. From this he concluded that the impugned order had only prospective effect and the demand of duty was, therefore, rightly confirmed. After considering submissions made by both the sides we find that the Tribunal, in the Final Order No. 1421/1996, dated 23 -8 -1986 (sic) had already decided the matter in favour of the Appellants by observing as under: 5. As we have indicated, Sub -section (2) deals with a special case which require a special order to be passed. The controversy before us relates to excisable goods manufactured for the purpose of project which is required to subserve the public interest. The Govt. has passed a special order directing grant of excise exemption to all excisable goods falling under Chapter 68 or 73 fabricated at the appellants factory and another factory and required by and supplied to the Board in connection with the particular project. The language of the notification would make it clear that the Govt. were satisfied that grant of exemption was necessary in public interest and the case was an exceptional one. The Govt. also took care to grant exemption to all excisable goods falling under two chapters manufactured for two concerns at two factories and supplied to the Board for the purpose of project. Going by the nature of the notification, it is fairly clear that the intendment of the Govt. was to exempt all such goods as are covered by the notification, irrespective of the date of manufacture; we say so, because the notification relates to all goods required by and supplied to the Board in connection with the project. There is nothing in the language of the notification to indicate that the intention of the Govt. was only to exempt such goods as are manufactured or cleared subsequent to the date of the order, though meant for the specified purpose and a specified project. The question of retrospectivity is not relevant, as the exemption is geared to a purpose which serves public interest. Whether the goods are manufactured and cleared before or after the date of the order, the manufacture and clearance would be for the purpose of the project and as required by and supplied to the Board. 6. We are supported in this conclusion by the provisions of Section 25 of the Customs Act, 1962, which is pan materia with the provisions under consideration. Sub -sections (1) and (2) of Section 25 of the Customs Act are similar to the provisions of Sub -sections (1) and (2) of Section 5A of CESA. Our attention has been invited to a number of decisions under Section 25(2) of the Customs Act. See Food Corporation of India v. CC, Bombay, reported in 1985 (21) E.L.T. 128, CC and CCE v. Cotton Corporation of India and Ors. reported in 1986 (25) E.L.T. 327. In both these decisions, reliance has been placed on the observation of the High Court of Delhi in the case of Dr. Hari Vishnu Pophale and Ors. v. U.O.I. and Ors. (ILR/1981) 1 DEL 514) to the effect that the question of retrospectivity is not relevant in the context of Section 25(2) of the Customs Act, as the power is in relation to all goods. This principle would equally apply in the context of the power of exemption under Section 5A(2) of CESA. In both these decisions, the Tribunal has held that the benefit of the said order would be available to all the imports, irrespective of the date of import.