1980 (3) TMI 86 - HC - Central Excise

Exemption - Valuation - Determination of - Board s directions - Validity - Writ Jurisdiction - Alternative remedy - Existence of

Summary

Issues Involved:

1. Validity and applicability of the Central Government's Press Note and Trade Notice No. 54/77.
2. Entitlement to benefits under Notification No. 198/76 dated 16-6-1976.
3. Entitlement to benefits under Notification No. 8/74 dated 18-1-1974.
4. Jurisdiction and maintainability of the writ petition.
5. Allegations of promissory estoppel and violation of constitutional provisions.
6. Assessment of excise duty and the implications of Section 4 of the Central Excises & Salt Act, 1944.

Detailed Analysis:

1. Validity and Applicability of the Central Government's Press Note and Trade Notice No. 54/77:

The petitioners challenged the Press Note issued by the Central Government and the subsequent Trade Notice No. 54/77, arguing that these administrative directions interfered with the quasi-judicial functions of the excise authorities. The Court found that the Press Note, being an administrative direction, could not override the statutory notification dated 16-6-1976 issued under Rule 8 of the Central Excise Rules. This position was supported by the Division Bench decision in the case of Modi Rubber Ltd. v. Board of Central Excise and Customs, which held that the benefits of a statutory notification could not be withheld by any subsequent administrative Press Note or Trade Notice. The Court followed this precedent and struck down the Press Note and Trade Notice as invalid and inoperative.

2. Entitlement to Benefits under Notification No. 198/76 dated 16-6-1976:

The petitioners argued that they were entitled to the benefits under Notification No. 198/76, which provided relief in excise duty for new industrial units. The respondents contended that the benefit was rightly denied as the petitioners did not pass on the benefits to the consumers. The Court, however, held that since the notification did not impose such a condition, the petitioners were entitled to the benefits irrespective of whether they passed on the rebate to the consumers. The Court quashed the orders that deprived the petitioners of these benefits and directed the respondents to refund the amounts realized under the invalid Press Note and Trade Notice.

3. Entitlement to Benefits under Notification No. 8/74 dated 18-1-1974:

The petitioners claimed benefits under Notification No. 8/74, which provided excise duty exemptions for certain production levels. The respondents argued that the petitioners did not qualify as their production started only in December 1976, and thus, they could not be considered operational during the entire financial year 1975-76. The Court agreed with the respondents, stating that the notification required actual clearance of goods in the preceding financial year, which the petitioners did not meet.

4. Jurisdiction and Maintainability of the Writ Petition:

The respondents challenged the maintainability of the writ petition on the grounds that an alternative remedy of revision before the Central Government was available. The Court held that since the impugned Press Note emanated from the Central Government, it was futile to seek revision before the same authority. Therefore, the writ petition was maintainable.

5. Allegations of Promissory Estoppel and Violation of Constitutional Provisions:

The petitioners argued that they incurred heavy expenses based on the notifications and that the impugned orders violated Articles 19 and 31 of the Constitution by depriving them of their property. The Court found that the benefits under the statutory notifications constituted property and that the administrative directions could not override these statutory benefits. The plea of promissory estoppel was upheld as the petitioners had relied on the notifications to make significant investments.

6. Assessment of Excise Duty and the Implications of Section 4 of the Central Excises & Salt Act, 1944:

The respondents argued that the assessable value for excise duty should consider the benefits passed on to consumers. The Court, referencing the Modi Rubber Ltd. case, held that the assessable value should be determined based on the normal price without considering the relief and exemption under the notification. The Court found that recalculating the assessable value to include the rebate would lead to an absurd situation and was not intended by the notification.

Conclusion:

The Court allowed the writ petition, quashing the orders and directions that deprived the petitioners of the benefits under the notifications dated 18-1-1974 and 16-6-1976. The Press Note and Trade Notice were struck down as invalid and inoperative. The respondents were directed to refund the amounts realized under these invalid directions, but no interest was granted on these amounts. The parties were left to bear their own costs.