Judgment of the above
noted case bearing Civil Appeal No. 6433 of 2003 was delivered by the bench of
Supreme Court of India comprising of Mr. H. L. Dattu J. and Mr. Anil R. Dave J.
on February 14, 2012.
The prime question of
law involved in this matter was “whether
an assessee would become liable to duty if by mistake it makes payment of duty
which is otherwise exempted from duty through any notification?”
While arriving
at decision, the court referred to precedent Union of India v. Wood Papers
Ltd., (1990) 4 SCC 256, where it observed:
“ Literally exemption is freedom from
liability, tax or duty. Fiscally it may assume varying shapes, specially, in a
growing economy. For instance tax holiday to new units, concessional rate of
tax to goods or persons for limited period or with the specific objective etc.
That is why its construction, unlike charging provision, has to be tested on
different touchstone. In fact an exemption provision is like an exception and
on normal principle of construction or interpretation of statutes it is construed
strictly either because of legislative intention or on economic justification
of inequitable burden or progressive approach of fiscal provisions intended to
augment State revenue. But once exception or exemption becomes applicable no
rule or principle requires it to be construed strictly. Truly speaking liberal
and strict construction of an exemption provisions are to be invoked at
different stages of interpreting it. When the question is whether a subject
falls in the notification or in the exemption clause then it being in nature of
exception is to be construed strictly and against the subject but once
ambiguity or doubt about applicability is lifted and the subject falls in the
notification then full play should be given to it and it calls for a wider and
liberal construction.
… A construction which results in
inequitable results and is incongruous, has to be avoided.”
Having referred to
above, the hon’ble bench of apex court held that merely because the assessee,
may be, by mistake pays duty on the goods which are exempted from such payment,
does not mean that the goods would become goods liable for duty under the Act. Also,
merely because the assessee has not claimed any refund on the duty paid by him
would not come in the way of claiming benefit of the Notification No. 175/86-
CE dated 1.3.86.
Therefore appeal was allowed and the judgement and order passed by the erstwhile Customs, Excise and Gold (Control) Appellate Tribunal [presently Customs, Excise and Service Tax Appellate Tribunal] in Appeal No. E/1352/ 2002-B, dated 25.10.2002 was set aside with direction to the adjudicating authority to apply the Notification dated 1.3.86 in the assessee's case without taking into consideration the excess duty paid by the assessee under the Notification dated 1.3.1988.
Therefore appeal was allowed and the judgement and order passed by the erstwhile Customs, Excise and Gold (Control) Appellate Tribunal [presently Customs, Excise and Service Tax Appellate Tribunal] in Appeal No. E/1352/ 2002-B, dated 25.10.2002 was set aside with direction to the adjudicating authority to apply the Notification dated 1.3.86 in the assessee's case without taking into consideration the excess duty paid by the assessee under the Notification dated 1.3.1988.
