ORDER
K. Prakash Anand, Member (T)
1.This is an appeal against order passed by Collector of Central Excise (Appeals) Bombay regarding classification of cotton fabrics having different counts of Yarn in weft/warp or both. The issue arose as a result of an audit objection holding that in the case of fabrics containing more than one count in either weft or warp, the average count could not be ascertained under the statutory formula read with Tariff Item 19, as it existed prior to 18th June, 1977, and that, therefore, the duty on these fabrics should be payable under Tariff Item No. 19(1)(2)(f) i.e. at the tariff rate, as “cotton fabrics, not otherwise specified”.
2. In the appeal before us, the department has admitted that there was a problem as regards ascertainment of average count in respect of such fabrics which was resolved prospectively by issuing Notification No. 7/78 dated 17th Jan, 1978. In the order appealed against the Collector has given benefit of this Notification retrospectively and it is against this, that department has come up in appeal before us.
3. The Appellate Collector has held that the amending Notification No. 7/78 dated 17th Jan, 1978 is in the nature of a clarification or explanation which would equally apply to the past cases and hence he has not agreed with the view of the lower authorities that, in such cases, the average count could not be determined. The view taken by the Collector (Appeals) is best expressed in his own words which are extracted below :-
“The appellants do not dispute that the fabrics in question contained yarn of different counts in warp and weft. But the mere fact that these contained yarn of different counts does not mean that the average count of the fabrics could not be determined. The appellants cannot be denied the benefit merely because the Department had the difficulty in determining the average count of the yarn in fabrics in the particular period, more so when subsequently a method was in fact found for such determination. It may be mentioned that subsequently the Govt. of India amended the relevant provisions of different counts in warp or weft or both the count of the yarn which has the highest count, shall be taken to be the count of warp or weft, as the case may be. It is felt that this amendment is in the nature of clarification or explanation which would equally apply to the past cases. In view of this, 1 am not inclined to agree with the lower authority’s views that in such cases, the average count could not be determined. This can be, by taking the yarn of the highest count in the warp or weft, as the case may be. Accordingly the jurisdictional Assistant Collector shall determine the average count and if on this basis, it is found that the average count of the fabrics would be the same as was declared and approved earlier, no differential duty should be demanded. In case, on such re-determination, the average count is found to be on a higher side calling for higher duty, the demand could be worked out accordingly and the appellants shall pay the same.”
4. We have heard Shri K.C. Sachar, Departmental Representative. None appears for Respondents.
5. Shri Sachar briefly submits that the Collector has granted relief in the matter before him by giving a notification of Govt. retrospective effect without any authority for doing so. He has cited the following case law in order to support his submission that such Notifications can have only prospective and not retrospective effect :-
(a) Aryodaya Spg. and Wvg. Co. Ltd. v. Union of India and Ors. -1981 E.L.T. 274 (Guj.)
(b) Shreeram Mills Ltd. and Anr. v. Union of India and Ors. -1982 E.L.T. 457 (Bom.)
(c) Cannanore Spg. & Wvg. Mills v. Customs Collector Cochin -AIR 1970 Supreme Court 1950.
6. We have carefully considered the facts of the case and the submissions made before us. We observe and there is no dispute that the average count in respect of the impugned goods is not. ascertainable as per the formula provided in Notification No. 226/17 dated 15th July, 1977 under which the benefit of exemption is claimed. The Collector of Central Excise (Appeals) has argued that the appellants cannot be denied the benefit of the notification merely because the Department had a difficulty in determining the average count of the yarn in fabrics, in the particular period, as per the formula prescribed herein, more so when subsequently a method was in fact found for such determination. This argument of the Collector is not tenable. Exemption notifications have to be interpreted strictly. Duties are normally payable as per Tariff. Notifications granting exemptions from duties leviable under the Tariff are to be applied for the grant of relief only in terms of and as per the specific provisions of such Notifications. In the particular Notification here a formula is specifically prescribed for determining the average count. It is not open to departmental authorities to go beyond the Notification and to investigate whether average count of yam in the fabrics is determinable in accordance with some different formula.
7. We have seen Notification No. 7/78 which amended Notification No. 226/77. This notification provided a new formula for determination of average count. It is reasonable to expect that the amendment became necessary to get over the difficulty that was being experienced in determining the average count of the yarn in such fabrics under the unamended Notification 226/77. Nevertheless, by no stretch of imagination can Notification No. 7/78 be considered a. “clarification or explanation”, as the Collector has put it. We therefore also reject this argument.
8. In view of above findings, the order of the Collector (Appeals) is set aside insofar as it relates to the grant of exemption under Notification No. 226/77, dated 15th July, 1977.
9. The Collector has held that show cause notices were issued on various dates for the period from 1974 to 1977 and that since the clearances were taken in accordance with approved classification list and assessments were finalised by the department, demands pertaining to period beyond 12 months prior to the date of issue of demand notice are time barred vide Rule 10, read with Rule 173J of the Central Excise Rules 1944, as in force during the material period. In the appeal before us it is urged by the department that not all the demands are time barred. It is submitted that 4 demands out of 12 demands are within time limit and as regards other 8 demands, they are partly in time and partly time barred. It is noted by us that the department admits that demand of duty beyond 21 months is barred by limitation. The order of the Collector in this regard is therefore upheld leaving it is to the lower authorities to revise the demand of duties accordingly. Appeal allowed in the aforementioned terms.
G. Sankaran, Sr. Vice-President
10. I have carefully gone through the Order proposed by Brother Shri K. Prakash Anand. However, I regret I am unable to agree with the conclusions therein.
11. The very order of the Appellate Collector, which is impugned in the present proceedings, was the subject of challenge in Appeal No. ED/662/83-D and five others, filed by other assessees which were heard and disposed of by this Tribunal by Order Nos. 501 to 506/1987-D dated 30-6-1987. In that order, the Tribunal expressed the view that the provisions of Notification No. 7/78 were not really in the nature of enlargement of the scope of Notification No. 226/77 dated 15-7-1977. It only explained the manner of determining the average count of cotton fabrics in which yarn of different counts had been used in the warp and weft or both. Earlier the formula did not cover such a contingency but that would not mean that the average count of such fabrics was not determinable. Only the manner of determination had not been laid down. This omission has been rectified by Notification No. 7/78. There is no good reason why the formula specified in this Notification should not be made use of in determining the average count of such fabrics in the prior period also. In this view, the Tribunal did not find any reason to interfere with the impugned order-in-appeal which was, in consequence, upheld.
12. I do not see any reason to differ from the earlier decision, following which I would propose an order upholding the order of the Appellate Collector and dismissing the present appeal.