1983 (2) TMI 49 - HC - Central Excise

Summary

Issues Involved:
1. Entitlement to exemption from payment of excise duty.
2. Legality of the demand for differential duty.
3. Refund of excise duty paid under protest.
4. Jurisdiction and discretion of the court in directing refunds.
5. Procedural objections regarding exhaustion of remedies and delay.

Summary:

1. Entitlement to Exemption from Payment of Excise Duty:
The main question was whether the petitioner company was entitled to claim exemption from payment of excise duty for lead suboxide and lead monoxide manufactured in its factory as per Notification No. 119/75-C.E., dated 30th April, 1975. The respondents argued that the exemption could only be claimed if the same article supplied by the customer was returned after the manufacturing process. The court, however, disagreed with this interpretation, stating that the exemption applied to job work even if a new or distinct article emerged from the manufacturing process. The court referenced the settled law that manufacturing involves creating a new commodity (Chowgule & Co. Pvt. Ltd. v. Union of India, A.I.R. 1981 S.C. 1014; Union of India v. Delhi Cloth and General Mills Co. Ltd., A.I.R. 1963 S.C. 791).

2. Legality of the Demand for Differential Duty:
The Assistant Collector of Central Excise had confirmed a demand for payment of differential duty of Rs. 19017.59 P, which was upheld by the Appellate Collector. The court found that the respondents had acted illegally by levying excise duty on the products processed by the petitioner as job work, thus entitling the petitioner to exemption under the said Notification.

3. Refund of Excise Duty Paid Under Protest:
The petitioner claimed that it had paid Rs. 1290292.84 P. in excess of the duty payable under protest. The court noted that the respondents did not dispute this assertion in their affidavit. The court held that the levy of full excise duty was illegal and contrary to the Notification No. 119/75-C.E., and thus, the respondents should refund the excise duty paid by the petitioner.

4. Jurisdiction and Discretion of the Court in Directing Refunds:
The court exercised its discretionary power to direct the refund of illegal tax or duty paid, referencing the Supreme Court's decision in State of Madhya Pradesh v. Bhailal Bhai, A.I.R. 1964 S.C. 1006. The court found it just to issue a mandate for refunding the duty paid by the petitioner, as it would be unjust to require the petitioner to initiate fresh proceedings for the refund.

5. Procedural Objections Regarding Exhaustion of Remedies and Delay:
The respondents argued that the petitioner had not exhausted the remedies provided under the Central Excise and Salt Act, 1944, and had delayed in moving the court. The court dismissed these objections, noting that the petitioner had been paying excise duty under protest and that it would have been futile to pursue a revision application. The court held that the writ petitions were rightly entertained and decided on merits.

Conclusion:
The court made the Rules absolute, issuing Writs of Mandamus and Certiorari to command the respondents not to levy excise duty on the goods processed by the petitioner as job work and to refund the excise duties paid under protest. The petitioner was directed to produce necessary documents for verification within two months, and the respondents were to complete the verification and issue the refund within four months. The bank guarantee furnished by the petitioner was discharged.