1978 (2) TMI 104 - HC - Central Excise

Summary

Issues Involved:
1. Interpretation of the notification regarding eligibility for rebate of excise duty.
2. Equitable estoppel against the Government of India.
3. Legitimacy of directions issued by the Government of India in the trade notice.
4. Availability of alternate remedy under the Central Excises Act.

Summary:

1. Interpretation of the Notification:
The primary issue was whether a manufacturer of sugar who had worked the factory during the base period but did not produce any sugar during the specified periods would be entitled to a rebate of excise duty on the entire production achieved during the corresponding periods in the "Sugar year." The court agreed with the petitioners' submission that the earlier interpretation by the Government of India was correct. The notification aimed to incentivize manufacturers to produce more sugar, particularly during lean periods. Therefore, if no sugar was produced during the relevant period in the base year, the manufacturer would be entitled to a rebate on the entire production during the corresponding period in the subsequent year. The court found the Central Government's interpretation unreasonable and inconsistent with the notification's objective.

2. Equitable Estoppel:
The petitioners argued that the Government of India should be equitably estopped from changing its interpretation of the notification, as they had relied on the earlier interpretation to their detriment. The court rejected this argument, stating that there can be no estoppel against a statute. The notification issued under Rule 8 of the Central Excise Rules is 'law,' and an incorrect interpretation by the Central Government at one stage does not create an equitable estoppel preventing a correct interpretation later.

3. Legitimacy of Directions in the Trade Notice:
The petitioners contended that the Government of India was wrong in issuing directions contained in the trade notice dated 28-7-1976. The court agreed, referencing the Supreme Court decision in Orient Paper Mills v. Union of India (AIR 1969 S.C. 48), which held that such directions should not have been issued.

4. Availability of Alternate Remedy:
The respondents argued that the petitioners had an alternate remedy by way of an appeal u/s 35 of the Central Excises Act and revision to the Central Government u/s 36. The court held that pursuing the statutory remedy would be futile, as the highest authority under the Act had already pre-determined the question and directed subordinate tribunals to interpret the notifications in a particular manner. Therefore, the statutory remedy ceased to be a remedy, and the writ petitions were maintainable.

Conclusion:
The writ petitions were allowed with costs, and the court declared the interpretation of the Government of India in the trade notice dated 28-7-1976 as incorrect. The Central Excise authorities were restrained from taking further action pursuant to the trade notices and the consequential notices issued to the petitioners.