SPECIAL EXCISE DUTY – LEVY AND EXEMPTION

By

K.Vijay Kumar, M.A.,B.Ed., B.L.,

SUPERINTENDENT OF CENTRAL EXCISE

 

This has reference to your editor's comments on the landmark judgment of Supreme Court in Collector of Central Excise v. Vazir Sultan Tobacco Company – 1996(83) E.L.T.12(SC) regarding the levy of special Excise Duty(SED) on goods manufactured prior to 28-2-1979 and cleared after 28-2-1979 .You have stated, as per Notification No. 90/79, dated 1-3-1979 there was statutory exemption from S.E.D leviable under Section 37 of the Finance Act, 1978 to all the goods cleared during 1-3-1979 to 31-3-1979 and had this been brought to the notice of the Hon'ble Supreme Court the decision might have been different. But another important factor appears to have been missed.

 

As per Section 32 of the Finance Act, 1979, S.E.D. is leviable from 1-3-1979 to 31-3-1980 Sub-sections (1) and (2) of Section 32 of Finance Act,1979 read as follows:

• In the case of goods chargeable with a duty of excise under the Central Excise Act as amended from time to time read with any notification for the time being in fore issued by the Central Government in relation to the duty so chargeable, there shall be levied and collected a special duty of excise equal to five per cent of the amount so chargeable on such goods.
  

1. Sub-section(1) shall cease to have effect after the 31^st day of March,1980,except as respects things done or omitted to be done before such Ceasar; and section 6 of the General Clauses Act,1897 (10 of 1897), shall apply upon such cesser as if the said sub-section had then been repealed by a Central Act."
   

 

As per Provisional Collection of Taxes Act ,1931 this S.E.D. was leviable from 1-3-1979 , that is immediately on presentation of the Finance Bill to the Parliament. Now the situation is like this:

 

As per Section 37 of the Finance Act, 1978 , S.E.D. is leviable from1-3-1978 to 31-3-1979. As per Section 32 of the Finance Act, 1979, S.E.D. is leviable from 1-3-1979 to 31-3-1980. So there are two levies of S.E.D. for the period 1-3-1979 to 31-3-1979. It is to remove this anomaly that Notification No. 90/79 , dated 1-3-1979 (which you have cited ) was issued whereby the S.E.D. leviable under Section 37 of the Finance Act , 1978 was exempted for the period 1-3-1979 to 31-3-1979 which means that S.E.D leviable under Section 32 of the Finance Act, 1979 would be applicable for this period.

 

    S.E.D. was levied on a year to year basis. The Finance Act contained a Section for levy of S.E.D. and since the Finance Bill is effective from the day following the date of presentation of the Bill to the Parliament, S.E.D. was effective from 1^st March but as S.E.D. leviable under the previous Finance Act was also in force till 31^st March, a specific exemption notification used to be given to exclude the period 1^st March to 31^st March from the previous year's Finance Act. Notification No. 90/79 is one such Notification.

 

    Now the decision of the Hon'ble Supreme Court has created a noel situation for the period 1-3-1979 to 31-3-1979 (for that matter the month of March in any year when S.E.D. was levied). For goods manufactured prior to 1-3-1979 but cleared in March 1979 the judgment says duty payable as on 28-2-1979is applicable .But by Notification No. 90/79 there is a clear exemption for these goods. And this is an exemption, not withdrawal of levy. But for the same period S.E.D. was leviable under Section 32 of the Finance Act, 1979. And this levy as per the judgment applies only to goods manufactured during the period, not earlier.

 

    Since there is no S.E.D., the whole issue is now only of academic interest.

EXCISE LAW TIMES – 15.08. 1996 – A 15