M/S. W.P.I.L. LTD., GHAZIABAD versus COMMISSIONER OF CENTRAL EXCISE, MEERUT, U.P.

Citation: [2005] 2 S.C.R. 246 · Decided: 22-02-2005 · Supreme Court of India · Bench: RUMA PAL · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
MIS. W.P.1.L. LTD .• GHAZIABAD 
r. 
COMMISSIONER OF CENTRAL EXCISE, MEERUT, U.P. 
FEBRUARY 22, 2005 
B 
[RUMA PAL, ARIJIT PASA Y AT AND C.K. THAKKER, JJ.] 
Central Excise Rules, 1944-Rule 8 : 
Parts of power driven pumps used for manufacturing pumps within the 
C factory-Eligibility to benefit of exemptionji-0111 payment of duty-Notification 
No.46194, dated March 1, 1994, a composite notification incorporating earlier 
exemption notifications, did not show the said item to be exempted, though it 
had all along been exempted since 1978 in view of consistent Govt. policy-
Notification No.95194 issued subsequently, however, clarified that the said 
D item was also exempted-Held, the subsequent notification was merely 
clarificat01y and made explicit what was implicit-Hence, exemption from 
payment of duty is available for the intervening period between issuance of 
Notification Nos. 46194 and 95194 i.e. between March 1, 1994 and April 25, 
1994-Central Excise Tari.ff Act, 1985-Tarijf Heading No. 84.13-Centra/ 
E 
. Excise and Salt Act, 1944-First Schedule .. Item No. JOA. 
Exemption from duty-ClarificatOJy notification-Being clarificatory in 
nature, it would take effect retrospectively. 
Appellant is a manufacturer of power driven pumps and parts 
thereof, designed for handling water. According to it, with a view to 
F reducing special exemption notifications and consolidating various 
exemption notifications, in 1994, the Government rescinded 389 
notifications with effect from March I, 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 
G shown as an exempted item. 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 satisfied and amended notification. No.46/94 dated March 
H 
246 
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Ir
W.P.l.L. LTD. v. C.C.E. 
247 
1, 1994 by issuing another notification No.95/94 on April 25, 1994 A 
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. 
Show cause notices were, however, issued by the Assistant Collector, 
Central Excise, alleging that the appellant had cleared the parts of power B 
driven pumps for use within the factory for the manufacture of 
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; that the said item was exempted with effect from 
April 25, 1994 and the appellant was, therefore, liable to pay excise duty C 
for the intervening period, i.e. 1st March, 1994 and 21st April, 1994. 
Appellant submitted reply denying its liability to pay excise duty, 
but the Assistant Commissioner, Central Excise confirmed the demand. 
That order was confirmed by the Commissioner (Appeals) and also by the 
Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi D 
(CEGAT). Hence the present appeals. 
Allowing the appeals, the Court 
HELD : 1.1. Both power driven pumps as well as parts of power 
driven pumps used for manufacture of pumps within the factory were E 
exempted from payment of excise duty. Notifications were rescinded and 
consolidated notification was issued on March 1, 1994 with a view to 
reduce the number of notifications. No demand hence could have been 
made against the appellant in respect of parts of power driven pumps by 
issuing show cause notices. [252-H; 253-A] 
1.2. The Government was satisfied about the policy which was in 
vogue not to impose excise duty on parts of power driven pumps used in 
the factory premises for manufacture of power driven pumps and to clarify 
F 
the position, the subsequent notification dated April 25, 1994 was issued. 
This is· also clear if one reads at both the notifications Nos. 46/94 dated G 
March 1, 1994 and 56/94 dated April 25, 1994. Therefore the authorities 
were in error in upholding the demand and in directing the appellant to 
pay excise duty. [253-B; 254-A) 
2.1. A clarificatory notification would take effect retrospectively. 
Such a notification merely clarifies the position and makes explicit what H 
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