1. This is a revision application filed before the Central Government (hereinafter called an "APPEAL") which under Section 35P of the Central Excises and Salt Act, 1944, stands transferred to this Tribunal to be disposed of as if it were an appeal presented before the Tribunal.
2. The appellants M/s. Southern Petrochemical Industries Corporation Limited, Madras, are the manufacturers of various type of fertilisers.
The Government of India by Notification No. 198/76-C.E., dated 16-6-1976 announced, a scheme of excise relief to encourage higher production to the extent of 25% duty on the goods cleared in excess of base clearance. As per the notification, the base clearance worked out to 46501.083 MT which was approved by the Assistant Collector, Excise, Tirunelveli. The appellants started availing of the 25% relief w.e.f.
14-8-1976 after clearing the base clearance allowed, as per Notification No. 198/76.
3. Superintendent of Central Excise, Tuticorin, served the appellants with the show cause notice dated 16-8-1978 showing cause as to why differential duty should not be demanded from them under Rule 10 of the Central Excise Rules, 1944, for the reasons that they did not pass on the benefit of concessional duty to the consumers. In their reply the appellants submitted that the purpose of granting relief was to encourage higher production and there were no conditions attached in the notification granting exemption. However, the Assistant Collector, rejected the objections of the appellants and demanded differential duty under Rule 10, of the Central Excise Rules, 1944.
4. Aggrieved by the said order of the Assistant Collector of Central Excise, the appellants filed an appeal to the Appellate Collector of Central Excise on 6-3-1979 and the Appellate Collector also rejected the appeal by his order dated 16th January, 1980.
5. Not satisfied with the order of the Appellate Collector the appellants filed a revision application before the Government of India which was transferred to this Tribunal and is treated as an appeal.
6. We have heard Shri M. Uttarn Reddi, Advocate, for the appellants and Smt. Dolly Saxena, S.D.R. for the department and have gone through the record.
7. The appellants contentions are that the rebate in duty under the provisions of Notification No. 198/76-C.E., dated 16-6-1976 has been granted by the Central Government to encourage higher production and therefore, the authority below has erred in withdrawing a part of the rebate to which the appellants were entitled, only on the plea that the benefit was not given to the consumers. According to the learned counsel of the appellants, the purpose of granting relief is to encourage higher production and if the. relief is passed on to the consumers, it cannot be considered as an incentive for higher production. It has also been argued that in this case the assessable value has been fixed by the Agriculture Ministry, Government of India, and assessment is to be done as per Section 4(1) (a) (ii) of the Central Excises and Salt Act, 1944. If the assessable value is to be recalculated, it will be higher than the assessable value fixed by the Agriculture Ministry under Fertiliser Control Order. Our attention was drawn towards various decisions of Delhi High Court, namely Modi Rubber Limited, Modinagar v. Union of India and Ors. (1978 E.L.T. J 27), Madras Rubber Factory Limited v. Union of India and Ors. (1981 E.L.T.804) and in Indian Aluminium Company Limited and Anr. v. Union of India and Ors. (1983 E.L.T. 349) and one decision of Andhra Pradesh High Court, namely Andhra Pradesh Paper Mills Limited v. Assistant Collector of Central Excise, Rajahmundry and Anr. [1980 E.L.T. 210 (AP)], in support of his contention that if the Exemption Notification does not contain a condition that its benefit should be passed on to the consumer, the manufacturer can retain the benefit of Exemption Notification.
8. According to the learned counsel, this Notification No. 198/76 does not lay down that the benefit should go to the consumers and therefore, the order passed by the authority below is erroneous and should be set aside.
9. The submission made by the departmental representative is that as per Section 4(4) (d) (ii) of the C.E.S. Act, "Value in relation to any excisable goods does not include the amount of excise duty, sales tax and other taxes payable on such goods. The word "duty payable" would mean the actual duty paid. Therefore, when the appellants have collected the full duty even though only 75% is payable to the Government under the provisions of Notification No. 198/76-C.E., dated 16-6-1976 and when the appellants having collected full duty have paid only 75% to the Government retaining the remaining 25% of the duty, naturally the 25% retained by the appellants will go to increase the assessable value. Our attention was also drawn towards the Trade Notice No. 2/78 (l/Genl/78) dated 24-1-1978 of the Collector of Central Excise, Madurai in this regard. According to the S.D.R. the authority below is correct in demanding the differential duty on account of taking into consideration the 25% of the duty retained by the appellants. Our attention has also been drawn that after the decisions of various High Courts on this aspect, in the year 1982, the Central Excise Act was amended by Clause 47 of Finance Bill, 1982 retrospectively from 1-10-1975 and as per this amendment the matter stands resolved inasmuch as the amount of money that can be taken as duty under the Central Excises and Salt Act is the effective duty of excise only. As per the amendment, the ratio of the decisions of various High Courts on this point has become irrelevant.
10. There is no dispute about the fact that all the decisions cited by the learned counsel of the appellants are prior to the year 1982. In 1982, the Central Excise Act was amended by Clause 47 of Finance Bill, 1982 retrospectively from 1-10-1975. This is what the amendment says :- "Explanation.-For the purposes of this Sub-clause, the amount of the duty of excise payable on any excisable goods shall be the sum total of- (a) the effective duty of excise payable on such goods under this Act; and (b) the aggregate of the effective duties of excise payable under other Central Acts, if any, providing for the levy of duties of excise on such goods, and the effective duty of excise on such goods under each Act referred to in Clause (a) or Clause (b) shall be : (i) In a case where a notification or order providing for any exemption (not being an exemption for giving credit with respect to, or reduction of duty of excise on such goods equal to, any duty of excise on such goods equal to, any duty of excise already paid on the raw material or component parts used in the production or manufacture of such goods) from the duty of excise under such Act is for the time being in force, the duty of excise computed with reference to the rate specified in such Act in respect of such goods as reduced so as to give full and complete effect to such exemption ; and (ii) in any other case, the duty of excise computed with reference to the rate specified in such Act in respect of such goods." 11. It is clear from this that the amount of money that can be taken as duty under the Central Excises and Salt Act, is the effective duty of excise only; and that the effective duty is the duty resulting under the Act and from an exemption, if any, under the Act having been given effect to, if the exemption is not one which arises from credit or reduction being given for duty paid on raw materials used in the manufacture of the finished goods.
"(2) Any action or thing taken or done or purporting to have taken or done at any time during the period commencing on the 1st day of October, 1975 and ending with the 27th day of February, 1982 (hereinafter in this Sub-ection referred to as the said period) under the Central Excises Act, shall be deemed to be and to have always been, for all purposes, as validly and effectively taken or done as if the amendment made by Sub-section (1) had been in force at all material times and, accordingly notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority- (a) all duties of excise levied, assessed or collected during the said period on any excisable goods under the Central Excises Act, shall be deemed to be and shall be deemed always to have been, as validly levied, assessed or collected as if the amendment made by Sub-section (1) had been in force at all material times ; (b) no suit or other proceeding shall be maintained or continued in any court for the refund of, and no enforcement shall be made by any court of any decree or order directing the refund of, any such duties of excise which have been validly collected if the amendment made by Sub-section (1) had been in force at all material times." 13. In view of the above restrospective amendment of the Central Excises and Salt Act, only the money paid as duty by the appellants can be regarded as the duty payable in the Act. Any money recovered by the manufacturer ostensibly as duty, but which was not payable and was not paid as duty under the Central Excises and Salt Act, cannot be accepted as forming part of the duty.
14. That being the position, the money recovered in excess of the effective duty (viz. 75% of the duty payable), must form part of the assessable value unless it is shown to be deductible for any other reason, such as being a sales tax. We have seen that it is not such a deductible sum, and the appellants do not claim it as any such permissible deduction. They maintain it as duty. We hold that it is not duty and must form part of the assessable value. Therefore, the action of including the money in the assessable value is correct and we cannot pronounce it wrong.