1. This is a revision application filed before the Central Govt. (now transferred under Section 35P of the Central Excises and Salt Act, 1944) against the order-in-appeal No. 1656/80 dated 1-8-1980 passed by the Appellate Collector of Central Excise, Madras.
2. A perusal of the record shows that the appellants, who are manufacturers of Sodium Silicate are availing the exemption granted under notification No. 71/78, dated 1-3-1978 but while availing the duty exemption under the aforesaid notification, they did not pass it on to the buyers, nor did they pay duty so collected from the consumers to the government under these circumstances, the Assistant Collector of Central Excise treated the entire dutycum-value as assessable value and redetermined the total value for the purpose of exemption under Notification No. 71/78 and accordingly demanded the differential duty.
The appeal before the Appellate Collector also failed.
3. Aggrieved by the said order of the authority below, the appellant firm preferred a revision petition before the Government of India and the same stands transferred to this Tribunal and is treated as an appeal.
4. We have heard Shri B.M. Patel, Partner of the Appellant firm and Smt. Vijay Zutshi, SDR for the department and have gone through the record.
5. As per the submissions made by Shri Patel, Partner of the appellant firm, in order to determine the excise duty leviable on the goods produced by a manufacturer it is necessary first to determine the assessable value under Sec- tion 4 of the Act. It is only after the assessable value is determined that the excise duty leviable thereon is ascertained. To him, redetermination of the assessable value after taking into consideration the relief and exemption granted under Notification No. 71/78 dated 1-3-1978 is contrary to law. It is neither intended by the notification nor is practicable that the assessable value should be redetermined after giving effect to the relief and the exemption contemplated under the said notification. Where duty is calculated on the basis of Section 4 of the Act, the benefit of the duty is not required to be passed on to the consumers. He cited the decision of Delhi High Court in Modi Rubber Ltd. v. Union of India (1978 ELT J 127) and Anr. decision of Orissa High Court M/s. Bizi Industries v. Supdt of Central Excise and Anr. [ELT 109 (Orissa) in support of his contention. According to Shri Patel, the assessable value once fixed cannot be redetermined by the department unless there is a price revision or change in the duty. Redetermination of the assessable value and denying the full benefit to the appellant is against the Central Excise Rules.
6. Submission made by the Departmental Representative is that as per Section 4(4)(b)(ii) of the Central Excises 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 words "duty payable" would mean the actual duty paid. Therefore, when the appellant has collected the full duty and has not paid that much amount of duty to the Government, the amount so retained by the appellant will naturally go to increas3 the assessable value, Our attention has also been drawn towards the fact that after the decision of the various High Courts on this point, in the year 1982 the Central Excise Act was amended by Clause 47 of the Finance Bill, 1982 retrospectively w.e.f. 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, 1944 is the effective duty of excise only. As per the amendment, the ratio of the decision of the various High Courts on this point has now become irrelevant.
That Notification No. 71/78, dated 1-3-78 is intended to provide incentive for the manufacturer is not disputed. There is also no dispute that a notification for exemption has to be interpreted as it is worded. Exemption by notification is under the rules and rules are subordinate to the Section of the Act. Notifications are only part of the law and not the law by themselves. This Notification No. 71/78 has further implications in regard to matters concerning valuation of goods chargeable to duty at rates ad valorem and as such attracts provisions of Section 4 of the Central Excises and Salt Act, 1944. In 1982, Section 4 of the Central Excise Act was amended by Clause 47 of the Finance Bill, 1982 retrospectively w.e.f. 1-10-1975. This is what the amendment says :- "Explanation;-For the purposes of this Sub-clause, the amount of 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 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 othere case, the duty of excise computed with reference to the rate specified in such Act in respect of such goods." It is clear from this at 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 bsing 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 been 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 subsection 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 notwith standing 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 contained 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." In view of the above retrospective 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.
8. Judicial pronouncements of certain High Courts in regard to interpreta tion of Notification No. 71/78 referred to by the appellants in the memorandum of appeal are prior to the year 1982 i.e. before the Central Excises and Salt Act, 1944 was amended by Clause 47 of the Finance Bill, 1982.
9. After this amendment (effective from 1-10-1975) this position stands changed and now only the money paid as duty will be regarded as the duty payable under the Act.
10. That being the position, the money recovered in excess of the effective duty 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. We, therefore, reject the appeal.