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SURUCHII AGGARWALB. KRISHNA PRASAD

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CASE NO.:

Appeal (civil) 4228-4229 of 1999

PETITIONER:

W.P.I.L. Ltd., Ghaziabad

RESPONDENT:

Commissioner of Central Excise, Meerut, U.P.

DATE OF JUDGMENT: 22/02/2005

BENCH:

Ruma Pal & Arijit Pasayat & C.K. Thakker

JUDGMENT:

JUDGMENT

Thakker, J.

These appeals have been filed by the appellant against an Order in Original

Nos. 123-29 of 1996 passed by the Assistant Commissioner, Central Excise,

Division I, Ghaziabad, confirmed by the Commissioner (Appeals), Customs &

Central Excise, Ghaziabad and also confirmed by the Customs, Excise and

Gold (Control) Appellate Tribunal, New Delhi (‘CEGAT’ for short).

The case of the appellant is that it is the manufacturer of power driven

pumps and parts thereof designed for handling water. The power driven pumps

as well as parts thereof which are used for manufacture of pumps have been

exempted from levy of excise duty since 1978. Various notifications had

been issued from time to time granting exemption to both, i.e. power driven

pumps and also parts of power driven pumps which were used in the

manufacture of the power driven pumps. Parts of power driven pumps which

were not utilized for manufacture of power driven pumps within the factory

were, however, outside the purview of exemption and they were subjected to

levy of excise duty.

According to the appellant, with a view to reducing special exemption

notifications and consolidating various exemption notifications, in 1994,

the Government rescinded 389 notifications with effect from March 1, 1994

and re-issued a consolidated notification incorporating earlier

notifications vide Notification No.46/94 dated March 1, 1994. In the said

notification, power driven pumps were shown as an exempted item. Due to

inadvertence, however, parts of power driven pumps used in manufacture of

pumps within the factory which were all along exempted from 1978 were

omitted. But there was no change in the Government policy in 1994 which was

in vogue since 1978. The omission was, therefore, brought to the notice of

the Government by the industries. The Government was also satisfied and

amended the notification No.46/94 dated March 1, 1994 by issuing another

notification No.95/94 on April 25, 1994 correcting the mistake and

clarifying the position that parts of power driven pumps which were used in

manufacture of power driven pumps would also be exempted. According to the

appellant, the notification No.95/94 dated April 25, 1994 was thus merely

clarificatory in nature and an obvious error or omission which remained

while issuing notification No.46/94 on March 1, 1994 was rectified by the

subsequent notification No.95/94 on April 25, 1994 and hence it was

retrospective in operation. The resultant effect, according to the

appellant, was that parts of power driven pumps which were to be utilized

for manufacturing power driven pumps within the factory would continue to

be exempted from payment of excise duty.

Unfortunately, however, show cause notices were issued by the Assistant

Collector, Central Excise, Division I, Ghaziabad on October 3, 1994 and

October 24, 1994 alleging therein that the appellant had cleared the parts

of power driven pumps for use within the factory for the manufacture of

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submersible power driven pumps during the period between 1st March, 1994

and 21st April, 1994 without payment of duty which was subjected to central

excise duty. The said item was exempted with effect from April 25, 1994 and

the appellant was, therefore, liable to pay excise duty for the intervening

period, i.e. 1st March, 1994 and 21st April, 1994.

The appellant submitted a reply on October 31, 1994 inter alia contending

that it was not liable to pay excise duty. No suppression of facts or mis-

declaration was alleged against the appellant and the demand was barred by

limitation. It was also stated that notification No.95/94 dated April 25,

1994 was retrospective