2016 (2) TMI 529 - HC - Central Excise

Manufacture of rosin and turpentine without aid of power - seeking retrospective exemption - writ of mandamus for directing the respondent to issue a Notification under Section 11C of the Act extending the benefit of not requiring the Central Excise Duty for the units manufacturing rosin and turpentine without the aid of power, except for the purpose of using electricity to pump, for lifting up water to overhead tanks; for the period from 27.05.1994 to 28.02.2006. Held that - The categorical finding in the case of M/s Gurukripa Resins Pvt. Ltd. 2011 (7) TMI 26 - SUPREME COURT OF INDIA is that the use of pump for lifting water would amount to manufacturing with the aid of power and the clarification of 1978 was deemed to have been withdrawn from 27.05.1994 and, thus, the units using pump for lifting water would not be entitled to exemption from the period 27.05.1994 to 28.02.2006. In view of the findings returned by the Supreme Court in the case of M/s Gurukripa Resins Pvt. Ltd., which manufacturing unit was admittedly identically situated as that of the petitioner s unit, the petitioner cannot, thus, seek the benefit of quashing of the decision communicated by the Ministry of Finance by letter dated 30.09.2014. The power under Section 11C is discretionary and it is not mandatory for the Government to issue a notification under Section 11C under all circumstances. As emerges from the counter affidavit, the policy of the Government is to issue such a notification only if it benefits a large section of the trade and not if it benefits only a few assessees. As per the respondent, only two manufacturers would be affected by such a notification. We do not find any fault with such a view and decision of the Government. We are further of view that discretion is granted to the Government to issue or not to issue such a notification and the discretion has been exercised after conducting survey and resurvey and on a justifiable ground, the said decision, in our view, does not require any interference. - Writ petition dismissed - Decided against the assessee.

Summary

Issues Involved:
1. Quashing of the decision communicated by the respondent on 30.09.2014.
2. Issuance of a Notification under Section 11C of the Central Excise Act, 1944.
3. Exemption from Central Excise Duty for units manufacturing rosin and turpentine without the aid of power.
4. Interpretation and application of Section 11C of the Central Excise Act, 1944.
5. Discretionary power of the Government under Section 11C.
6. Impact of the Supreme Court's judgment in the case of M/s Gurukripa Resins Pvt. Ltd.
7. Policy considerations for issuing notifications under Section 11C.

Issue-wise Detailed Analysis:

1. Quashing of the Decision Communicated by the Respondent on 30.09.2014:
The petitioner sought to quash the decision communicated by the respondent on 30.09.2014, which stated that a Notification under Section 11C of the Central Excise Act, 1944 could not be issued to extend the benefit of not requiring to pay Central Excise Duty to units manufacturing rosin and turpentine without the aid of power, except for the purpose of using electricity to pump water to overhead tanks, for the period from 27.05.1994 to 28.02.2006.

2. Issuance of a Notification under Section 11C of the Central Excise Act, 1944:
The petitioner requested a writ of mandamus directing the respondent to issue a Notification under Section 11C of the Act, extending the benefit of not requiring Central Excise Duty for the specified period. Section 11C allows the Central Government to direct that the whole or part of the duty of excise payable on goods shall not be required to be paid if a general practice of non-levy or short-levy was prevalent.

3. Exemption from Central Excise Duty for Units Manufacturing Rosin and Turpentine Without the Aid of Power:
The petitioner contended that units using the Bhatti process, which is manual except for using power to pump water for condensation, should be exempt from excise duty. Earlier notifications and clarifications exempted such units from excise duty, but subsequent notifications and circulars rescinded these exemptions.

4. Interpretation and Application of Section 11C of the Central Excise Act, 1944:
Section 11C empowers the Central Government to issue notifications exempting certain goods from excise duty if a general practice of non-levy or short-levy existed. The court noted that this power is discretionary and not obligatory.

5. Discretionary Power of the Government under Section 11C:
The court emphasized that Section 11C grants discretionary power to the Government to issue or not issue notifications. The Government's decision not to issue a notification was based on the policy that such notifications should benefit a large section of the trade and not just a few assessees.

6. Impact of the Supreme Court's Judgment in the Case of M/s Gurukripa Resins Pvt. Ltd.:
The Supreme Court in M/s Gurukripa Resins Pvt. Ltd. held that using power to pump water for condensation is integrally connected with the manufacture of goods, and thus, such units would not be entitled to exemption. This judgment was binding and applicable to the petitioner's case as well.

7. Policy Considerations for Issuing Notifications under Section 11C:
The Government's policy is to issue notifications under Section 11C only when it benefits a large section of the trade. Issuing a notification that benefits only a few assessees would appear to favor a selected few and could override the Supreme Court's decision. The Government's decision was based on surveys and was deemed justifiable.

Conclusion:
The court dismissed the petition, finding no merit in the petitioner's claims. The decision of the Government not to issue a notification under Section 11C was upheld, and no mandamus could be issued to compel the Government to issue such a notification. The court concluded that the Government's discretion was exercised on justifiable grounds and did not require interference.