ORDER
K. Sankararaman, Member (T)
1. This is a Reference Application filed by M/s. Myul Chemicals (Pvt.) Ltd., Bangalore, arising from the Order No. 29/88, dated 15-6-1988 passed by this Tribunal upholding the decision of the authorities below that they were liable to pay a differential duty of 10% on their clearances of excisable goods made during the period 1-3-1986 to 24-3-1986. They had effected this clearance paying a duty of 15% while the Department had taken the stand that the aforesaid rate of 15% duty in terms of Notification 175/86 would not apply to them and instead only the rate of duty of 25% as being availed of by them in terms of the previous Notification 85/85, dated 1-3-1985 as was in force up to 28-2-1986.
2. Aggrieved with the Tribunal’s order upholding the decision of the lower authorities and rejecting their appeal, the applicants herein had filed a Writ Petition in the Hon’ble Karnataka High Court, which was rejected. Against that judgment rejecting their Writ Petition on the ground that they should have filed an appeal to the Supreme Court or should have filed a Reference Application to the Tribunal itself, they had filed Writ Application 2461/92, which was disposed of by the Hon’ble Court vide their order dated 30-8-1993, which is reproduced below :
“Having heard learned counsel for the parties, we have reached a conclusion that no exception can be taken to the view of the learned Single Judge that this is a matter in which the appellant should be relegated to the remedy of seeking a reference on the question of law, arising from the Tribunal’s order as per Section 35(a) of the Central Excises and Salt Act, 1944. As the time for filing such application is already over we deem it fit in the interest of justice to direct that if the appellant applies for reference under Section 35(G) of the Act within two weeks from today the Tribunal will decide the application on merits after hearing the concerned parties without raising any question of limitation.”
“Subject to these directions, the writ appeal is disposed of.”
3. As directed by the aforesaid order of the Hon’ble Court, the applicants had filed a Reference Application under Section 35(G)(i) of the Central Excises and Salt Act, 1944 on 10-9-1993. The application has been taken on record and is being disposed of on merits.
4. Shri R. Narayana, the learned Counsel for the applicants submits that the Tribunal fell in error in passing the order under reference as it is not open to the Government to deny the exemption which was already availed of by them under an exemption notification which was validly subsisting at the material time by having recourse to a subsequent notification which also had only a limited purpose of putting on hold the said Notification 175/86, dated 1-3-1986 for a limited period of 25-3-1986 to 31-3-1986. He explained that the Notification No. 212/86, dated 25-3-1986 under which Notification 175/86 was made inoperative for the aforesaid period cannot be applied to their disadvantage when they had availed of the benefits available there under during the period 1-3-1986 to 24-3-1986. There was nothing in the latter notification of 25-3-1986 to delete Notification 175/86 during the period prior to 25-3-1986. Apart from the legal position as contended by him as above, Shri Narayana also referred to a subsequent Tribunal’s decision in Mysore Cork Industries v. Collector of Central Excise, reported 1991 (56) E.L.T. 160, wherein the same South Regional Bench had, vide their Order No. 215/91, dated 12-4-1991, taken a view which will entirely support their stand. The learned Counsel submitted that in view of this subsequent order holding a contrary view, a question of law has in fact arisen, which requires to be referred to the Hon’ble High Court for their ruling.
5. Opposing the plea raised by the learned Counsel, Shri S. Murugandi, the learned DR stated that the purpose of amending the notification in question as well as the Central Duties of Excise (Retrospective Exemption) Act, 1986 was to extend to the manufacturers the benefit that they had been availing of prior to 1-3-1986 which they had lost by the rescinding of such notifications with effect from 1-3-1986 which coincided with the issue of Notification 175/86. Explaining further, he pleaded that during the financial year 1985-86 covering the period 1-4-1985 to 31-3-1986, such manufacturers had been availing of the exemption from duty in terms of Notifications like 77/85 and 85/85, dated 1-3-1985. In some of the cases, they were eligible for the benefit of availing exemption for clearances upto the value of Rs. 30.00 lakhs. When these notifications were rescinded and instead Notification 175/86 came to be introduced with effect from 1-3-1986, the benefit of duty-free clearances was restricted to Rs. 15.00 lakhs. Hence, the manufacturers who would have been eligible to duty-free clearances upto Rs. 30.00 lakhs were obviously affected and it was with a view to benefit such manufacturers that these notifications which had been rescinded with effect from 1-3-1986 came to be restored vide notification issued on 25-3-1986. The benefit sought by the applicant herein would be to have the benefit not only under Notifications 77/85 or 85/85 as the case may be, prior to 25-3-1985 on the one hand but also the benefit of Notification 175/86 with effect from 1-3-1986 on the other. He fairly conceded that although Notification 212/86, dated 25-3-1986 did not provide for deletion of Notification 175/86 from 1-3-1986 itself, but only of stay of operation of the same during the period 25-3-1986 to 1-4-1986, the purpose behind the issue of such notifications was only to ensure that the rescinded notifications issued before 1-3-1986 should continue after 1-3-1986 also till 1-4-1986 and not that they should have the double benefit of Notification 175/86 in addition to the benefit available under the earlier rescinded notifications. In view of this position he contended that the Tribunal’s order under reference is based upon correct appreciation of the legal position and as such no question of law has arisen requiring a reference to the Hon’ble Court.
6. We have considered the submissions of both the sides. In a Reference Application it is not the question whether the Tribunal’s order under reference is correct or not that matters. Even if there is prirna facie doubt about the correctness of that order, which in the present case becomes very pronounced in view of the subsequent Tribunal decision of this very Bench which had been cited by the learned Counsel, a referrable question of law has, in fact, arisen. Though the learned DR had explained the background behind the issue of the various notifications in question, the hard fact remains that during the period 1-3-1986 to 24-3-1986, Notification 175/86 was in force and the applicants had effected clearances of their goods directly in terms of that notification. The life of a notification during a particular period cannot be obliterated by a subsequent notification by importing into it a retrospective character. We also note, as has been noted in the Tribunal’s decision in My sore Cork Industries case, the Notification 212/86 had a limited purpose of putting on hold Notification 175/86 prospectively for a period of about a week between 25-3-1986 and 31-3-1986 and thus does not expressly or otherwise provide for their retrospective obliteration of Notification 175/86 during the earlier period of 1-3-1986 to 24-3-1986.
7. With this approach, we have examined the questions which have been framed in the Reference Application, which are reproduced below :-
(1) Whether excise duty can be retrospectively levied under the Central Duties of Excise (Retrospective Exemption) Act, 1.986?
(2) Whether levy of duty at 25% ad valorem under Notification 212/86 legal and justified?
(3) Whether the demand of differential duty of 10% lawful and constitutional?
(4) Is the demand of differential duty of 10% ad valorem violative of Article 265 of the Constitution of India and also contrary to Central Duties of Excise (Retrospective Exemption) Act, 1986?
(5) Whether the differential rate of duty at 10% ad valorem is payable for the whole month of March, 1986 or only for one week between 5th and 31st March, 1986?
8. After these were examined by us in the open Court when both the sides are present, we find that the Question No. (1) does not require to be referred to the High Court. The purpose of exemption notifications read with particular Act cited therein being to confer the benefit of exemption with retrospective effect, there cannot be any retrospective levy on the strength of exemption notification. This question has, therefore, not been referred to by us to the Hon’ble court. After hearing both the sides, we have combined the questions (1), (2) and (3) and reframed it as follows, to bring out the issue in proper perspective:
“Whether levy of duty at 25% ad valorem under Notification 212/86, instead of 15% ad valorem claimed by the applicants under Notification 175/86, during the period 1-3-1986 to 24-3-1986 was legal and justified by denying from 1-3-1986 itself the benefit of the latter Notification 175/86, dated 1-3-1986 and relegating them to the lesser benefit available under the former Notification for the period 1-3-1986 to 24-3-1986”.
The questions at Sl. Nos. (4) and (5) are also referred to the Honourable Court for their valuable advice. The questions as discussed above were finalised in the open Court when both the parties were present; they were agreeable that these questions may be referred on the lines indicated above. Registry to refer the following questions to the Honourable Court with the enclosures cited in the application in para 10 of the Reference Application :
(1) Whether levy of duty at 25% ad valorem under Notification 212/86, instead of 15% ad valorem claimed by the applicants under Notification 175/86, during the period 1-3-1986 to 24-3-1986 was legal and justified by denying from 1-3-1986 itself the benefit of the latter Notification 175/86 and relegating them to the lesser benefit available under the former notification for the period 1-3-1986 to 24-3-1986.
(2) Is the demand of differential duty of 10% ad valorem violative of Article 265 of the Constitution of India and also contrary to Central Duties of Excise (Retrospective Exemption) Act, 1986?
(3) Whether the differential rate of duty at 10% ad valorem is payable for the whole month of March, 1986 or only for one week between 25th and 31st March, 1986?