SECTION 5A

(1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after removal) as may be specified in the notification, excisable goods of any specified description from the whole or any part of the duty of excise leviable thereon :

Provided that, unless specifically provided in such notification no exemption therein shall apply to excisable goods which are produced or manufactured –

(i) in a free trade zone or a special economic zone * and brought to any other place in India; or

( * Words in bold are inserted wef 01/03/2001 )

(ii) by a hundred per cent export-oriented undertaking and brought to any other place in India. *

( * Words in bold are substituted in place of "allowed to be sold in India" wef 01/03/2001 )

Explanation. - In this proviso, “free trade zone” "Special economic zone" * and “hundred per cent export-oriented undertaking” shall have the same meanings as in Explanation 2 of sub-section (1) of section 3.

( * Words in bold inserted wef 01/03/2001 )

(1A) For the removal of doubts, it is hereby declared that where an exemption under sub-section (1) in respect of any excisable goods from the whole of the duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods.

(Sub-section (1A) inserted vide Finance Bill 2005-2006)

(2) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by special order in each case, exempt from payment of duty of excise, under circumstances of an exceptional nature to be stated in such order, any excisable goods on which duty of excise is leviable.

(Sub-Section (2) has been substituted vide Finance Bill 2003)

[OLD -
(2) If the Central Government is satisfied that it is necessary in the public interests so to do, it may, by special order in each case, exempt from payment of duty for reasons to be stated in such order, any excisable goods of strategic or secret nature, or for charitable purpose, on which duty is leviable.]

(2A) The Central Government may, if it considers it necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an explanation in such notification or order, as the case may be, by notification in the Official Gazette at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be.

((2A) inserted wef 01/03/2002)

(3) An exemption under sub-section (1) or sub-section (2) in respect of any excisable goods from any part of the duty of excise leviable therein (the duty of excise leviable thereon being hereinafter referred to as the statutory duty) may be granted by providing for the levy of duty on such goods at a rate expressed in a form or method diff4erent from the form or method in which the statutory duty is leviable and any exemption granted in relation to any excisable goods in the manner provided in this sub-section shall have effect subject to the condition that the duty of excise chargeable on such goods shall in no case exceed the statutory duty.

Explanation. – “Form or method”, in relation to a rate of duty or excise means the basis, namely, valuation, weight, number, length, area, volume or other measure with reference to which the duty is leviable :

(4) Every notification issued under sub-rule (1), and every order made under sub-rule (2), of rule 8 of the Central Excise Rules, 1944, and in force immediately before the commencement of the Customs and Central Excises Laws (Amendment) Act, 1988 (29 of 1988) shall be deemed to have been issued or under the provisions of this section and shall continue to have the same force and effect after such commencement until it is amended, varied, rescinded or superseded under the provisions of this section.

(5) Every notification issued under sub-section (1) or sub-section (2A)* shall, -

(* Words in bold inserted wef 01/03/2002)

(a) unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette;

(b) also be published and offered for sale on the date of its issued by the Directorate of Publicity and Public Relations, Customs and Central Excise, New Delhi, under the Central Boards of Revenue Act, 1963 (54 of 1963).

(6) Notwithstanding anything contained in sub-section (5), where a notification comes into force on a date later than the date of its issue, the same shall be published and offered for sale by the said Directorate of Publicity and Public Relations on a date on or before the date on which the said notification comes into force.


*(1) The notification of the Government of India in the Ministry of Finance (Department of Revenue) No. G.S.R. 509(E), dated the 8th July, 1999, issued under sub-section (1) of section 5A of the Central Excise Act by the Central Government shall stand amended and shall be deemed to have been amended in the manner as specified in the Third Schedule, on and from the 8th July, 1999 to the 28th February, 2002 (both the dates inclusive) retrospectively, and, accordingly, nothwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority, any action taken or anything done or purported to have been taken or done under the said notification, shall be deemed to be and always to have been, for all purposes, as validly or effectively taken or done as if the notification as amended by this sub-section had been in force at all material times.

(2) For the purposes of sub-section (1), the Central Government shall have and shall be deemed to have the power to amend the notification referred to in the said sub-section with retrospective effect as if the Central Government had the power to amend the said notification under sub-section (1) of section 5A of the Central Excise Act, retrospectively at all material times.

(3) Notwithstanding the cessation of the amendment under sub-section (1) on the 1st March, 2002, no suit or other proceedings shall be maintained or continued in any court, tribunal or other authority for any action taken or anything done or omitted to be done, in respect of any goods under the said notification, and no enforcement shall be made by any court, tribunal or other authority of any decree or order relating to such action taken or anything done or omitted to be done as if the amendment made by sub-section (1) had been in force at all material times.

(4) Notwithstanding the cessation of the amendment under sub-section (1) on the 1st March, 2002, recovery shall be made of all amounts of duty or interest or other charges which have not been collected or, as the case may be, which have been refunded but which would have been collected or, as the case may be, which would have not been refunded if the provisions of this section had been in force at all material times, within a period of thirty days from the date on which the Finance Bill, 2002 receives the assent of the President, and in the event of non-payment of duty or interest or other charges so recoverable, interest at the rate of fifteen per cent. per annum shall be payable, from the date immediately after the expiry of the said period of thirty days, till the date of payment.

Explanation - ­For the removal of doubts, it is hereby declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable if the notification referred to in sub-section (1) had not been amended retrospectively by that sub-section.

(* Words inserted wef 01/03/2002)

(Please refer NTF.NOs.27/2002-CE, 28/2002-CE, & 29/2002 all dated 13/05/2002)