1981 (1) TMI 80 - HC - Central Excise

Value of clearances - Maida - Alternative remedy no bar if the writ petition has been admitted on merits

Issues Involved:
1. Whether the writ application is maintainable despite the availability of alternative remedies under the Excise Act.
2. Whether the value of Maida, which is exempt from excise duty, should be included in calculating the total value of excisable goods cleared for determining the exemption under the notification dated 18th June, 1977.
3. Whether Maida, after being exempted from excise duty, can still be considered "excisable goods" under Section 2(d) of the Excise Act.

Issue-wise Detailed Analysis:

1. Maintainability of the Writ Application:
The respondents argued that the writ application was not maintainable because the Mills had not availed the alternative remedies provided under the Excise Act, specifically under Sections 35, 35A, and 36, which provide for appeals and revisions. The petitioner contended that where a fundamental right is involved, the consideration of alternative remedies is irrelevant. It was further argued that once a writ petition is admitted, it should not be dismissed on the ground of alternative remedy. The court referred to the case of Loba Kant v. State of Bihar and L. Hirday Narain v. Income-tax Officer, Bareilly, which established that alternative remedy is not a bar to the exercise of power under Articles 226 and 227 of the Constitution. The court concluded that since the writ application was admitted and heard on merits, it should not be dismissed merely on the ground of alternative remedy.

2. Inclusion of Maida in Total Value Calculation:
The petitioner argued that Maida, having been exempted from excise duty, should not be included in determining the exemption under the notification dated 18th June, 1977. The notification exempts goods falling under item 68 if the total value of all excisable goods cleared in the preceding financial year does not exceed Rupees thirty lakhs. The petitioner contended that the word "cleared" refers to goods on which excise duty is actually paid, and since no duty is paid on Maida, it should not be included. The court examined the language of the notification and relevant rules, including Rule 9 and Rule 52, and concluded that the word "cleared" in the context of the notification signifies the removal of goods only after payment of excise duty. Therefore, Maida, being exempt from duty, should not be included in the calculation of the total value of excisable goods cleared. The court quashed the order (Annexure 6) that included Maida in the calculation.

3. Definition of "Excisable Goods":
The petitioner argued that Maida, after being exempted from excise duty, ceased to be "excisable goods" as defined in Section 2(d) of the Excise Act, which defines excisable goods as goods specified in the First Schedule as being subject to a duty of excise. The petitioner contended that excisable goods must be both specified in the First Schedule and subject to duty. The court examined the definition and relevant case law, including the decision in Sulekh Ram and Sons v. Union of India and others, which suggested that goods exempted from duty are not "excisable goods." However, the court also considered the argument that the character of excisable goods does not depend on the actual levy of duty but on the description as excisable goods in the First Schedule. The court ultimately decided not to address this issue in detail, as the petitioner was already entitled to relief based on the second issue.

Conclusion:
The court allowed the writ application, quashed the impugned order, and held that Maida should not be included in the calculation of the total value of excisable goods cleared for determining the exemption under the notification dated 18th June, 1977. The court did not find it necessary to decide whether Maida, after being exempted from duty, could still be considered "excisable goods" under Section 2(d) of the Excise Act.

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