ORDER
V.T. Raghavachari, Member (J)
1. The appellants, M/s Sri Krishna Tiles & Potteries (Madras) Private Ltd., are manufacturers of articles falling under TI 68 CET, some of which were exempt from duty and some of which were not. The period relevant for the present dispute is 1-4-1979 to 12-9-1979. In terms of Notification No. 89/79 CE dated 1-3-1979 the appellants filed a claim on 26-9-1979 for refund of Rs. 11,886.83 and the same was allowed by the Assistant Collector. The Collector of Central Excise, Madras was of the view that in respect of goods which were not exempt from duty under TI 68 CET the appellants had paid duty properly during the period 1-4-1979 to 12-9-1979, and that the refund thereof was not justified in terms of Explanation V to the notification which was inserted in the Notification under amendment Notification No. 228 of 1979 dated 17-7-1979. Accordingly on 17-7-1980 he issued a show cause notice under Section 35A of the Central Excises and Salt Act. The appellants replied justifying the refund’ already ordered. On adjudication, the Collector of Central Excise, Madras, under his Order dated 15-11-1980, rejected the contention of the appellants and set aside the refund order in respect of an amount of Rs. 8,847.76p. The appellants made an application for rectification which was also rejected by the Collector under his order dated 18-4-1981. Thereupon the appellants preferred a revision petition to the Government of India which, on transfer, is now before us to be dealt with as an appeal.
2. We have heard Sri A.S. Chandrasekharan, advocate, for the appellants and Smt. Dolly Saxena for the Department.
3. There is no dispute that the value of the capital investment made from time to time on plant and machinery installed in the industrial unit of the appellants was less than Rs. 10 lakhs. They were, therefore, entitled to benefit under Notification No. 89/79 with reference to goods manufactured by them falling under TI 68 CET. The general effect of the Notification was to exempt wholly from duty the first clearances upto an aggregate value of not exceeding Rs. 15 lakhs and to remit the duty in excess of four per cent in respect of the clearances for the aggregate value of not exceeding Rs. 15 lakhs immediately following the first clearances of the value of Rs. 15 lakhs. Under para I of the Notification the exemption would not be available if the total value of the said goods cleared for home consumption in the preceding financial year had exceeded Rs. 30 lakhs. The dispute in the present instance revolves around Explanation V to the Notification No. 228/79 dated 17-7-1979. The same read as follows :
“For the purpose of computing the value of clearances under this Notification, the clearances of the said goods, which are exempted from the whole of the duty of excise leviable thereon by any other notification issued under Sub-rule (1) of Rule 8 of the aforesaid Rules and for the time being in force, shall not be taken into account”.
The conclusion of the Collector in his order in review (and which is the contention for the department before us also) is that it is only from the date of insertion of this Explanation that the value of clearances of excisable goods falling under TI 68 (and exempted) are to be excluded in computing the value of clearances in the preceding year which will determine the eligibility of the assessee for exemption in the current year. But the contention for the appellant is that the provisions of Explanation V would have to be applied from 1-4-1979 itself, though it may have been inserted in the Notification on 17-7-1979.
4. The normal Rule is that any notification, or amendment to any notification, would come into effect on the date the Rule is promulgated or amendment is made and that they would thus be prospective and not retrospective, except when such retrospective effect is specifically provided for or could be specifically spelt-out. In the present case, there is no such provision for making the amendment dated 17-7-1979 retrospective. Nor could any such retrospective effect be inferred from any other circumstance available. Therefore, the normal Rule will prevail that the amendment takes effect from the date of amendment (that is) 17-7-1979.
5. There are two purposes for which the value of clearances is relevant in notification No. 89/79. First, the value of clearances in the preceding financial year (which should not exceed Rs. 30 lakhs) which is one of the eligibility criteria laid down in the notification. Second, the clearances during the (current) financial year – split into two parts, the first 15/- lakhs (free of duty) and the second 15/- lakhs (duty at 4%) – which are eligible for the benefit of the duty concession. It is evident that explanation V inserted on 17-7-1979 cannot have had retrospective effect in so far as the second purpose is concerned, (for the purpose of conferring duty exemption) unless expressly so stated. If that be so, there is no reason to suppose that for the first purpose, the said explanation V has to be given retrospective effect, by a process of interpretation. In this view of the matter, the Collector’s action in aggregating the value of dutiable goods cleared during the preceding financial year (1978-79) of the value of Rs. 14,42,860.81 and fully exempted goods of the value of Rs. 17,22,977.56 and, on the basis of the aggregate value of clearances of Rs. 31,65,838.37 during the year 1978-79, denying the benefit of duty relief, in terms of the notification, to goods cleared during 1-4-1979 to 16-7-1979 would appear to be prima facie in order.
6. The learned counsel for the appellant contended before us that notification No. 228/79 dated 17-7-1979 (which inserted explanation V in notification No. 88/79 on 1-3-1979) was, as its preamble showed, an amending notification. It should, therefore, be deemed that the amendment related back to the date of the amended notification – No authority in support of this contention was placed before us by the Counsel. As noted earlier, it is well-settled that notifications take effect only from the date of their issue unless expressly provided otherwise.
7. The Counsel also contended that exempted goods were non-excisable goods and, therefore, the value of clearances of said goods ought not to be included in the value of clearances for the purpose of notification 88/79.
In Vishal Andhra Industries v. Union of India – 1983-E.L.T.-2265 -the Delhi High Court has Ruled out the contention that excisable goods, on their being exempted by a notification under Rule 8, ceased to be excisable goods. To the same effect is the judgment of the Madras High Court in Tamil Nadu (Madras State) Handloom Weavers Co-operative Society Ltd. v. Assistant Collector of Central Excise, 1978-E.L.T.-J57.
In State of Tamil Nadu v. M.K. Kandaswami etc., AIR 1975-S.C.-1871 (para 20), the Supreme Court construing the expression “goods the sale or purchase of which is liable to tax under the Act” (Tamil Nadu General Sales Tax Act, 1959), said that it excluded by necessary implication goods the sale or purchase of which is totally exempted at all points under Section 8 or Section 17(1) of the Act. The goods so exempted – not being “taxable goods” – cannot be brought to charge under Section 7A. This decision is in the context of the Sales Tax law. But we have, on the other hand, the Supreme Court’s judgment – Healthways Dairy Products Co. v. Union of India AIR-1976-SC-2271 wherein the Court observed that if any goods specified in the Central Excise Tariff Schedule are exempted from the levy of excise duty by the Central Government by Rule 8(1) notification, it cannot affect the provision which requires licence to be taken out for the manufacture of the said goods. After considering this observation, the Gujarat High Court in Darshan Hoisery Works v. Union of India-1980-E.L.T.-390 has observed that if Rule 8(1) notification grants exemption, then, though the article is excisable, liability of pay excise duty is removed for the time being. From all these, it follows that, even on exemption, excisable goods continue to be excisable goods.
The Counsel cited the Bombay High Court judgment in Apar Private Ltd. and Ors. v. Union of India and Ors., 1985 (22) E.L.T.-644 – in support of his contention. The Apar case was on the question of leviability of customs duty on goods in respect of which an exemption was in force at the time of their entry into the territorial waters of India which exemption stood withdrawn when a bill of entry was filed for clearance of the goods through the customs. We have carefully gone through the judgment and can find nothing in it to support the proposition that excisable goods, on their being exempted, cease to be excisable goods.
8. The learned counsel then made reference to an application for rectification of mistake presented by the applicants to the Collector subsequent to the passing of the order by the Collector. He pointed-out that this has been rejected under letter dated 18-4-1981 as if it was an appeal against the order of the Collector. He claims that such a rejection was improper. We have perused the said application purporting to be for rectification of an error. The appellants have pointed out therein that out of a sum of Rs. 14,42,866.81 as the value of the other goods (as accepted by the Collector) a sum of Rs. 13,72,338.24 would have related to tiles (falling under item 68) exempt under Explanation to Notification 165/76. We observe that even if this is true that would not have any hearing on the result of the review proceedings. Even if these tiles were exempted goods, the value of clearance thereof could not be excluded till 17-7-1979 in computing the value of the clearances in the preceding year. In this view no relief could have been granted to the appellants in the application for rectification presented by them. We are, therefore, of the view that the order of the Collector would not merit interference even on the basis of the allegation in this rectification application.
9. In the result, the view taken by the Collector that the appellants became eligible for exemption in terms of Notification No. 89/79 on the basis of clearances in the preceding financial year, only from 17-7-1979 and that they were not eligible for refund of the duty paid by them on the goods cleared between 1-4-1979 and 16-7-1979, is correct. The impugned order is upheld and the appeal is rejected.