1979 (11) TMI 110 - HC - Central Excise

Issues Involved:
1. Jurisdiction of the Assistant Collector of Central Excise.
2. Applicability of Notification No. 25/70-C.E., dated 1-3-1970.
3. Entitlement to refund of excise duty.
4. Res judicata and functus officio principles.
5. Maintainability of writ petitions under Article 226 of the Constitution of India.

Detailed Analysis:

1. Jurisdiction of the Assistant Collector of Central Excise:
The petitioners argued that the Assistant Collector had no jurisdiction to reopen the matter after the Central Government's revisional order dated 18-2-1976, which was final. The Assistant Collector's subsequent order dated 7-1-1977 was therefore without jurisdiction. The court agreed, stating that the revisional order was a final order allowing the exemption under Notification No. 25/70-C.E., provided certain conditions were met. The Assistant Collector's action to review the classification list and withdraw the exemption was beyond his jurisdiction.

2. Applicability of Notification No. 25/70-C.E., dated 1-3-1970:
The core issue was whether the NPK complex fertilizers manufactured by the petitioners qualified for exemption under the said notification. The Assistant Collector initially denied the exemption, arguing that the fertilizers were not merely mixed but involved chemical reactions, thus not meeting the notification's criteria. However, the Central Government's order clarified that the notification did not stipulate that the mixture should be obtained only by physical action without chemical reaction. The court held that the petitioners were entitled to the exemption if the conditions of the notification were fulfilled, which they were.

3. Entitlement to Refund of Excise Duty:
The petitioners sought a refund of the excise duty paid on the complex fertilizers up to 5-3-1976. The court found that since the petitioners were entitled to the exemption under Notification No. 25/70-C.E., they were also entitled to a refund of the duty paid, subject to the conditions that duty was paid on the urea and muriate of potash used in the manufacture and no credit was taken for the countervailing duty paid on the imported muriate of potash.

4. Res Judicata and Functus Officio Principles:
The petitioners argued that the revisional order dated 18-2-1976 operated as res judicata, barring the Assistant Collector from reopening the matter. The court agreed, stating that the Assistant Collector became functus officio after issuing the letter dated 5-3-1976 permitting the petitioners to avail the exemption. The revisional order was final and binding, and the Assistant Collector had no authority to reconsider the matter.

5. Maintainability of Writ Petitions under Article 226:
The respondents contended that the writ petitions were not maintainable as the petitioners had not exhausted the alternative remedies available under Sections 35 and 36 of the Central Excises and Salt Act, 1944. However, the court held that the writ petitions were maintainable because the Assistant Collector's order was without jurisdiction, and the revisional order was final. The court cited precedents where writ petitions were entertained despite the availability of alternative remedies, especially when fundamental rights were at stake or when the order challenged was without jurisdiction.

Conclusion:
The court allowed both writ petitions, quashing the impugned order dated 7-1-1977 and directing the refund of the excise duty paid on the complex fertilizers up to 5-3-1976. The Assistant Collector's actions were found to be without jurisdiction, and the petitioners were entitled to the exemption under Notification No. 25/70-C.E. and the corresponding refund.

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