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Issues Involved:
1. Assessment of excise duty on 2-ply crimped nylon yarn. 2. Refund of excess excise duty collected. 3. Legality of directives issued by Central Excise authorities. 4. Applicability of the principle of res judicata or estoppel in tax matters. Issue-wise Detailed Analysis: 1. Assessment of Excise Duty on 2-ply Crimped Nylon Yarn: The primary issue concerns the assessment of excise duty on 2-ply crimped nylon yarn. The petitioner company, M/s. J.K. Synthetics Limited, argued that excise duty should be based on the resultant denier of the 2-ply yarn, which was thicker and thus attracted a lower rate of duty. The Central Excise Department, however, assessed the duty based on the denier of the single yarns used to create the 2-ply yarn, which resulted in a higher rate of duty. The Court noted that the Central Government had previously accepted the petitioner's argument in a revisional order dated 26th May 1972, stating that "the assessment of crimped yarn on the basis of the resultant denierage cannot be denied." This order had become final and binding. 2. Refund of Excess Excise Duty Collected: The petitioner sought a refund of Rs. 68,84,365.86, which was the excess excise duty collected based on the incorrect assessment method. The Court observed that the Central Government's order dated 26th May 1972, which favored the petitioner, had already been partially implemented, with refunds granted for certain periods. However, the amount due for the period from May 1964 to December 1969 had not been refunded. The Court directed the respondents to verify and refund the remaining amount within three months, failing which the petitioner would be entitled to interest at 12% per annum from the expiry of the three-month period until the actual payment. 3. Legality of Directives Issued by Central Excise Authorities: The Court examined the directives issued by the Assistant Collector of Central Excise on 3rd March 1973, which instructed the petitioner to assess excise duty based on the denier of the single yarns. This directive was supported by a trade notice dated 6th March 1973 and a letter from the Central Government dated 9th March 1973. The Court found that these directives contradicted the Central Government's earlier revisional order, which had accepted the petitioner's method of assessment. The Court held that the respondents could not arbitrarily change their stance without any new facts or legal changes, emphasizing the principle of finality in administrative decisions. 4. Applicability of the Principle of Res Judicata or Estoppel in Tax Matters: The Court discussed the applicability of the principles of res judicata or estoppel in tax matters. It noted that while these principles generally do not apply to tax assessments, there should be a limitation on the authorities' power to change their stance arbitrarily. The Court cited several precedents, including decisions from the Supreme Court and various High Courts, which established that an earlier decision could only be disregarded for cogent reasons, such as new facts or changes in the law. The Court concluded that the excise authorities were bound by the Central Government's revisional order unless there were valid reasons to depart from it. Since no such reasons were presented, the Court upheld the petitioner's preliminary objection and restrained the respondents from enforcing the disputed directives. Judgment: The writ petition was allowed. The Court issued a writ of certiorari quashing the trade notice dated 6th March 1973, the letters dated 3rd and 6th March 1973, and the letter dated 9th March 1973. A writ of mandamus was also issued, restraining the respondents from taking any steps based on these directives. The respondents were directed to refund the amounts due to the petitioner within three months, failing which interest would be payable. The petitioners were awarded costs, with counsel's fee set at Rs. 500.
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