1. The appellant is a manufacturer of unbranded chewing tobacco. Under the impugned order a duty demand of Rs. 69,262/- has been made in respect of the unbranded chewing tobacco manufactured by the appellant.
A penalty of Rs. 20,000/- has also been imposed.
2. The duty demand is the Additional Excise Duty (AED) held to be payable on unbranded chewing tobacco cleared by the appellant during the period June 1998 to March 1999. The finding is that there was no exemption from AED during the particular period in question. Prior to and thereafter unbranded chewing tobacco remained exempt from AED.3. The demand has come to be made in these circumstances, Notification No. 9/96 dated 23rd July 1996 gave exemption from AED to many items which were specified in the Notification. Notification No. 28/97 dated 7th May 1997 inserted the following entry in the above notification so as to include unbranded chewing tobacco among the items exempted from AED.1A. Chewing tobacco and preparations containing Nil24.04 chewing tobacco, other than those bearing a brand name, which are exempt from the whole As would be noticed from the above entry, while specifying unbranded chewing tobacco, the entry also referred to its being exempt from basic excise duty. Which are exempt from the whole of duty of excise vide Notification No. 16/97-CE dated 1st April 1997". Notification No. 16/97 related to exemption from Central Excise (basic) duty to small scale manufacturer. This notification was superceded on 2nd June 1998 by Notification No. 8/98 dated 2nd June 1998. The superceding Notification also continued with exemption from Central Excise duty for small scale manufacturers. It is also to be noted that unbranded chewing tobacco also continued to enjoy exemption from basic excise duty under Notification No. 8/98 also. However, while substituting notification No. 8/98 for 16/97 on the 2nd June, parallel correction was not made in Notification No. 9/96 so as to substitute the reference in that notification under entry No. 1A to Notification No. 16/97 with Notification No. 8/98. This was done on the 1st April 1999 by the issue of Notification No. 18/99 which inter alia made the following amendment:3 9/96-CE, dt. the 23rd In the Table annexed to the said July, 1996 notification, against Section No. 1A, in column (3), for the figures, 4. In the impugned order, the view taken is that the exemption to unbranded chewing tobacco from AED under Notification No. 9/96 was available only during the validity period of Notification No. 16/97 and since that Notification was superceded on 2nd June 1998 under Notification No. 8/98, the exemption was not available from the date of issue of Notification No. 8/98.
5. The contention of the appellant assessee is that the exemption from the Additional Duties of Excise was under Notification No. 9/96 and that Notification continued to be in force during the instant period also and therefore, the exemption was correctly availed by the appellant. The appellant's contention is that the exemption would cease only on the rescinding of notification No. 9/96 or the deleting of entry "1A" in the notification which specified unbranded chewing tobacco as one of the items exempt from AED. It is being pointed out that the reference in the entry to Notification No. 16/97 was only by way of describing the goods and noting that exemption from basic excise duty is already in place and the replacement of that notification by another notification would not affect the exemption from the AED. The learned Counsel for the appellant has also submitted that it is well settled that reference to rescinded provisions of law has to be taken as reference to the new enactment, unless a contrary intention is clear. In this connection, reliance has been placed on the Judgment of the Supreme Court in the case of D.K. Trivedi & Son AIR 1986 Supreme Court 1323. During the hearing of the case, the Id. Advocate for the assessee took us specifically to para 63 of the judgement.
6. As against this, the learned DR has pointed out that it is clear from entry "1A" to Notification No. 9/96 that the exemption was to chewing tobacco "which are exempt from the whole of the Duties of Excise under vide Notification No. 16/97-CE dated 1st April 1997." Learned DR has emphasized that a fiscal provision is to interpreted strictly and in view of the rescinding of notification No. 16/97 on the 2nd June 1998, the assessee ceased to be eligible for the exemption which was dependent on Notification No. 16/97.
7. The exemption from AED was granted to the goods in question under Notification No. 9/96. That notification was in force during the relevant period also. The entry in the notification in relation to the goods in question has not also been deleted. The exemption was in terms for "chewing...tobacco other than those bearing a brand name". The reference in entry "1A" to notification No. 16/97 only noted that the same goods remain exempt from the whole of Excise (basic) Duty. That exemption from basic duty continued under the substituted notification also. Therefore, even if exemption from basic excise duty is taken as a requirement for exemption from AED that requirement is also met.
8. The effect of reference in "any other enactment or in any other instructment to a repealed provision" consequent to enactment remains settled by the observations of the Hon'ble Supreme Court in the case of D.K. Trivedi & Sons. We may extract para 63 of that judgment.
63. In order to reach the conclusion that the 1974 Notification was inoperative, the Gujarat High Court held that for altering the rates of royalty specified in Schedule I. Two steps were required, namely, (1) the amendment of the Explanation to Rules 21, and (2) the amendment of Schedule I, and that by amending only Schedule I by substituting it but leaving the Explanation to Rule 21 intact, the intended amendment did not come into effect and that it was only when Rule 21 was amended and a new Schedule I substituted by the 1975 Notification that a proper amendment in the rates of royalty was effected and, therefore, what was operative was the 1975 Notification. We are unable to accept either the above conclusions reached by the Gujarat High Court or the reasoning upon which these conclusions were based. The Explanation to Rule 21 provided that "For the purpose of this rule Schedule I means Schedule I as substituted by the Gujarat Minor Minerals (Third Amendment) Rules, 1966" Thus, the reference to Schedule I in Rule 21 was to Schedule I as substituted by the 1974 Notification dated November 25, 1966.
That Schedule was, however, again substituted by the 1974.
Notification. The effect of such substitution was to repeal the 1966 Schedule I and to substitute it by a new Schedule I, Under Section 8(1) of the General Clauses Act, 1897, where the said Act or any Central Act or Regulation made after the commencement of the said Act, repeals and re-enacts, with or without modification, any provision of a former enactment, then references in any other enactment or in any instrument to the provision so repealed are, unless a different intention appears, to be construed as references to the provision so re-enacted. Though Section 8(1) of the General Cluses Act does not in express terms refer to rules made under an Act, the same principle of construction would, in our opinion, apply in the case of rules made under an Act. Thus, after the coming into force of the 1974 Notification, the Explanation to Rule 21 must be read as "For the purpose of this rule Schedule I means Schedule I as substituted by the Gujarat Minor Mineral (Fourth Amendment) Rules, 1974" and references to Schedule I in Rule 21 must be construed as references to Schedule I as sc substituted and not as references to Schedule I as substituted by the Gujarat Minor Minerals (Third Amendment) Rules, 1966.
In view of the above pronouncement of the Hon'ble Supreme Court the continued (after 2nd June 1998) reference in Notification No. 9/96 to Notification No. 1/97 can be taken only as referring to Notification No. 8/98 which notification, after rescinding notification No. 16/97, continued with the exemption available under the rescinded notification in regard to chewing tobacco. Further, as already noted, notification No. 9/96 is the mother notification for AED and that notification continued to be in and in terms, granted exemption from AED to the goods in question. The view taken by the lower authorities renders the exemption so given, inoperative. Such an interpretation is not permissible in the facts and circumstances of the present case.
10. In the light of what is stated above, the appeal suceeds and is allowed after setting aside the impugned order. The appellant shall be entitled to consequential relief.