2017 (4) TMI 1223 - SC - Central Excise

Right to have retrospective exemption from duty - Prayer for Issuance of notification u/s 11C of the CEA, 1944 to the effect that duty payable by the appellant on goods manufactured by it shall not be paid - use of power in manufacturing process - Held that - there is no clinching evidence to suggest the existence of a general practice not to levy excise duty. Under the impression that it was to be demanded from registered units and five such registered units were, in fact, paying the duty, show cause notices were issued to the remaining two units, namely, the appellant and Gurukripa. That itself negates the argument of existence of general practice of not levying the duty of excise. It is stated at the cost of repetition that merely because some unregistered firms which were initially getting the SSI exemption, but omitted to be covered under the Act on their crossing the SSI limits, would not, in our opinion, establish any such practice. Issuance of a notification under Section 11C of the Act is in the nature of subordinate legislation. Directing the Government to issue such a notification would amount to take a policy decision in a particular manner, which is impermissible. In the instant case the appellant has already paid the duty. Section 11C contemplates those situations where duty is not paid. It does not cover the situation where duty is paid and that is to be refunded. It would neither be a case of discrimination nor it can be said that the appellants have any right under Article 14 or Article 19(1)(g) of the Constitution which has been violated by non-issuance of notification under Section 11C of the Act. Once the appellant accepts that in law it was liable to pay the duty, even if some of the units have been able to escape payment of duty for certain reasons, the appellant cannot say that no duty should be recovered from it by invoking Article 14 of the Constitution. It is well established that the equality clause enshrined in Article 14 of the Constitution is a positive concept and cannot be applied in the negative. Appeal dismissed - decided against appellant.

Issues Involved:
1. Whether the conditions under Section 11C of the Central Excise Act, 1944 were satisfied.
2. Whether it is mandatory for the Central Government to issue a notification under Section 11C if the conditions are satisfied.
3. Whether the Court can issue a mandamus to the Central Government to issue a notification under Section 11C.

Detailed Analysis:

Issue 1: Conditions under Section 11C of the Central Excise Act, 1944
The appellant sought a mandamus for the Central Government to issue a notification under Section 11C of the Central Excise Act, 1944, exempting it from paying excise duty on goods manufactured using the Bhatti method. Section 11C allows the Central Government to issue such notifications if a generally prevalent practice of non-levy or short-levy of excise duty exists. The High Court concluded that Section 11C grants discretionary power to the Government, not an obligation.

The appellant argued that a re-survey indicated a general practice of non-levy of excise duty for units using the Bhatti method. However, the Department’s surveys did not conclusively establish such a practice. The first survey found that registered units were paying duty, and only two units, including the appellant, were not. The second survey revealed that some unregistered units had crossed the Small Scale Industry (SSI) exemption limit but were not paying duty, which the Department attributed to oversight rather than a general practice.

The Court found no clinching evidence of a general practice of non-levy of excise duty. The Department’s consistent view was that even units using the Bhatti method were liable for excise duty, as confirmed by the Supreme Court’s judgment in Commissioner of Central Excise, Nagpur v. Gurukripa Resins Private Limited. Thus, the conditions under Section 11C were not satisfied.

Issue 2: Mandatory Nature of Notification under Section 11C
The appellant argued that once the conditions under Section 11C are fulfilled, the Government is obligated to issue a notification. The Court distinguished between administrative duties and statutory functions, emphasizing that issuing a notification under Section 11C is a legislative action, not an administrative one.

The Court cited precedents, including Julius v. Lord Bishop of Oxford and Ambica Quarry Works v. State of Gujarat, to explain that not all statutory powers are coupled with a duty. The issuance of a notification under Section 11C involves policy considerations, and the Government is not mandated to issue such notifications merely because the conditions are met.

Issue 3: Judicial Review and Mandamus
The Court held that directing the Government to issue a notification under Section 11C would amount to judicial overreach into policy-making, which is impermissible. Issuance of such notifications is a form of subordinate legislation, and courts generally refrain from interfering with legislative functions.

The Court referred to Census Commissioner v. R. Krishnamurthy and other cases to underscore that judicial review of legislative actions is limited. The Government’s decision not to issue the notification, based on the policy that it would benefit only two units, was found to be valid and justified.

The Court also noted that the appellant had already paid the excise duty, and Section 11C does not cover situations where duty is paid and needs to be refunded. Thus, there was no basis for issuing a mandamus to the Government to issue the notification.

Conclusion:
The appeal was dismissed, with the Court finding no merit in the appellant’s arguments. The conditions under Section 11C were not satisfied, and the Government’s decision not to issue a notification was upheld as a valid policy decision. The Court reiterated that it cannot mandate the Government to exercise its legislative powers in a particular manner.

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