2014 (6) TMI 919 - HC - Central Excise

Denial of concessional rate of duty - Notification No. 28/96, dated 11-9-1996 - Held that - Impugned orders are based on either ignorance of the directives of the C.B.E. & C. and the Commissioner of Central Excise, Nagpur or without correctly interpreting the same. In that view of the matter, we are not inclined to accept the contention of the learned ASGI, insofar as the non-exercise of the jurisdiction on the ground of alternative remedy is concerned. For the same reason, we are not inclined to accept the contention of the learned ASGI that since the complete machinery is provided under the statute, we should throw away the petition after having entertained the petition for last 16 years. The contention of Mr. Mishra that if this is permitted every person will rush to this Court, is heard only to be rejected. The learned ASGI is himself aware of various petitions wherein he has appeared and which have been dismissed by the Benches to which either of us are party, on the ground of availability of alternative remedy. However, that has been done at the threshold. The same analogy cannot be applied to the petition which is pending before this Court for last 16 years. If a waste paper is used as a raw material and if such waste paper itself contains the conventional material, then the resultant product may contain the conventional material more than the permissible limit. As such the method that is adopted by the respondent-Authority would not truly depict as to whether the use of the material at the stage of preparation of pulp was within the permissible limit or not. No doubt that we do not possess any expertise in such matters. However, the Commissioner of Central Excise , Nagpur on the basis of the communication of the C.B.E. & C. has itself now clarified the entire procedure which should be gone into while considering as to whether the assessee is entitled to exemption or not. Communication of the C.B.E. & C. and the subsequent trade notice only clarify as to what is provided under the notification. The said trade notice or the communication do not have effect of either substituting or replacing as to what is provided under the notification. The said communication and the trade notice are only clarificatory in nature and provide for the manner in which the procedure has to be followed for determining as to whether an assessee is entitled to exemption or not. In any case though the period for which the show cause notices were issued to the petitioner, are prior to the communication of the C.B.E. & C. and the trade notice issued by the Commissioner and the impugned orders are passed much thereafter. The communication of the C.B.E. & C. is dated 24-9-1997 whereas the trade notice is dated 29-10-1997. The impugned orders are passed on 4-12-1997. The Assistant Commissioner of Central Excise who is undoubtedly an Authority inferior to the Commissioner of Central Excise and the C.B.E. & C. ought to have taken into consideration the said communication and the trade notice. In the light of the communication of the Central Board of Excise & Customs dated 24-9-1997 and the trade notice dated 29-10-1997 issued by the Customs & Central Excise, Nagpur. Insofar as the challenge to the show cause notice dated 2-11-1998 is concerned, we dismiss the petition and direct the petitioner to submit to the authority of the respondent No. 1. - Decided against assessee.

Issues Involved:
1. Validity of the impugned orders and show cause notice.
2. Entitlement to concessional rate of excise duty.
3. Consideration of waste paper as unconventional raw material.
4. Availability of alternative remedy.
5. Retrospective application of clarifications and trade notices.

Detailed Analysis:

1. Validity of the Impugned Orders and Show Cause Notice:
The petitioner challenged three orders and a show cause notice issued by the respondent. The court found that these orders were based on an incorrect interpretation of the relevant notifications and failed to consider the clarifications issued by the Central Board of Excise & Customs (C.B.E. & C.) and the Commissioner of Central Excise, Nagpur. The court quashed the impugned orders and remitted the matter back to the authority for a fresh decision in light of the clarifications and trade notice.

2. Entitlement to Concessional Rate of Excise Duty:
The petitioner argued that they were entitled to a concessional rate of 10% ad valorem excise duty as per Notification No. 8/1996 and its subsequent modification by Notification No. 28/96, which required the pulp to contain not less than 75% by weight of unconventional raw materials. The court agreed with the petitioner, stating that the exemption depends on whether 75% or more of the pulp used in manufacturing the paper is made from unconventional materials.

3. Consideration of Waste Paper as Unconventional Raw Material:
The petitioner contended that waste paper should be considered an unconventional raw material. The court supported this view, referencing a Full Bench decision of the CEGAT and an order by the Deputy Commissioner, Central Excise & Customs, Rayagada Division, which held that waste paper, even if containing conventional materials, should be treated as an unconventional raw material for the purpose of granting exemption.

4. Availability of Alternative Remedy:
The respondent argued that the petitioner should have availed alternative remedies provided under the statute instead of approaching the High Court. The court rejected this argument, noting that the petition had been pending for 16 years and that the issue involved a narrow legal question. The court cited the Supreme Court's decision in L. Hirday Narain v. Income Tax Officer, Bareilly, which allowed the High Court to entertain the petition despite the availability of an alternative remedy.

5. Retrospective Application of Clarifications and Trade Notices:
The respondent contended that the clarifications and trade notices issued by the C.B.E. & C. and the Commissioner of Central Excise, Nagpur, should not be applied retrospectively. The court disagreed, stating that these clarifications were merely explanatory and did not alter the substance of the original notifications. The court emphasized that applying different procedures for different periods based on the same notification would lead to discriminatory treatment.

Conclusion:
The court quashed the impugned orders and remitted the matter back to the respondent authority for a fresh decision in accordance with the clarifications issued by the C.B.E. & C. and the trade notice by the Commissioner of Central Excise, Nagpur. The court dismissed the challenge to the show cause notice and directed the petitioner to submit to the authority of the respondent for further proceedings. The court held that the clarifications and trade notices should be considered while deciding the matter afresh.

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