1979 (9) TMI 191 - HC - Central Excise

Issues Involved:
1. Interpretation of the Notification dated 12-10-1974.
2. Entitlement to Excise Duty Rebate.
3. Application of Promissory Estoppel.
4. Bar of Limitation under Rule 10 read with Rule 173-J.
5. Exhaustion of Alternative Remedies.

Issue-wise Detailed Analysis:

1. Interpretation of the Notification dated 12-10-1974:
The primary issue in W.P. Nos. 436, 550, and 2467 of 1977 was the interpretation of Item 2 of the Notification dated 12-10-1974. The petitioners contended that the different slabs of rebate must be calculated on the excess produced over the average production of sugar in the preceding five years and not on the basis of the percentage which the excess bears on the average production in the preceding five years. The court agreed with the petitioners, stating that the notification should be interpreted by giving effect to the actual words used and not by adding any words thereto. The court held that the intention of the Government was to grant rebate at the different rates provided for in the notification in respect of different slabs of excess production without reference to the percentage which each of the slabs bears to the average production in the preceding five years.

2. Entitlement to Excise Duty Rebate:
The court examined various writ petitions concerning different notifications and periods. In W.P. Nos. 551 of 1977 and 1625 of 1978, the court held that the petitioners were entitled to rebate under Item 1 of the Notification dated 12-10-1974, notwithstanding the fact that there was no production of sugar at all during October and November of any of the preceding five years. Similarly, in W.P. Nos. 1006, 1016, and 4513 of 1978, the court held that the petitioners were entitled to excise duty rebate under Item 1 of the Notification dated 28-9-1972, notwithstanding the fact that there was no production of sugar at all during October and November 1971. The court also held that the petitioners in W.P. Nos. 978, 1685, and 2483 of 1979 were entitled to excise duty rebate under different items of the Notification dated 4-10-1973, notwithstanding the fact that there was no production of sugar at all during the corresponding periods in the previous years.

3. Application of Promissory Estoppel:
The court applied the principle of promissory estoppel, noting that the petitioners had been induced by the various notifications to produce sugar in the lean months of certain sugar years. The court held that the petitioners had acted upon these representations and assurances and exerted themselves for producing sugar in the lean months, thus acting to their detriment. The court concluded that the respondents were estopped from giving different interpretations to the notifications and attempting to deny the rebate or asking for repayment of the rebate already granted, as the case may be, on a different interpretation.

4. Bar of Limitation under Rule 10 read with Rule 173-J:
The court examined the applicability of Rule 10 and Rule 10-A of the Central Excise Rules. The court held that the demands for repayment of the amounts on the basis that they had been erroneously credited to the petitioners could only be on the basis that the excise duty had been short levied and, therefore, Rule 10 would apply to these cases and not the residuary Rule 10-A. The court found that the demands made in certain writ petitions were barred by limitation under Rule 10 read with Rule 173-J.

5. Exhaustion of Alternative Remedies:
The respondents contended that the petitioners had not exhausted the alternative remedies available by way of an appeal or revision before coming to the court by way of petitions under Article 226 of the Constitution of India. The court, however, held that any remedy by way of appeal or revision to the Appellate Collector, the Central Board of Excise and Customs, or the Central Government would be futile, as it could not be stated that those authorities would not be influenced by the view taken at the highest level as to how the Notification should be interpreted. Consequently, the court held that the writ petitions were maintainable even without exhausting the alternative remedies.

Conclusion:
The court allowed all the writ petitions as prayed for with costs, holding that the petitioners were entitled to the excise duty rebate as claimed and that the respondents were estopped from denying the rebate or demanding repayment based on a different interpretation of the notifications. The court also held that the demands for repayment were barred by limitation and that the writ petitions were maintainable despite the petitioners not having exhausted the alternative remedies.

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