1978 (12) TMI 54 - HC - Central Excise

Non-levy or short levy - Promissory Estoppel - Agreement between the Govt. and the assessee - Show Cause Notice

Summary

Issues Involved:
1. Validity of notices issued under Rule 10A of the Central Excise Rules, 1944.
2. Application of Rule 10 versus Rule 10A for recovery of short-levied duty.
3. Estoppel against the Central Excise authorities based on prior representations and assurances.
4. Jurisdiction and limitation period for issuing recovery notices under Rule 10.
5. Effectiveness of alternative remedies under Article 226 of the Constitution.

Detailed Analysis:

1. Validity of Notices Issued Under Rule 10A of the Central Excise Rules, 1944:
The petitioner challenged seven notices issued under Rule 10A of the Central Excise Rules, 1944, on the grounds that these notices were issued for the recovery of duties short-levied due to non-levy of appropriate rate of duty on wrappers used for reel cores. The court noted that the last notice, which was entirely within the purview of Rule 10A, was not pressed by the petitioner, thus focusing on the remaining six notices.

2. Application of Rule 10 Versus Rule 10A for Recovery of Short-Levied Duty:
The court examined whether the grounds for short-levy or non-levy of duty fell under Rule 10 or Rule 10A. It was established that Rule 10 deals with recovery of duties short-levied due to inadvertence, error, collusion, or mis-construction on the part of an officer, or mis-statement by the owner. Rule 10A, on the other hand, is a residuary provision for recovery of sums due to the government where no specific provision exists. The court held that if a case is covered by Rule 10, it cannot be reopened under Rule 10A.

3. Estoppel Against the Central Excise Authorities Based on Prior Representations and Assurances:
The petitioner argued that the Central Excise authorities had previously agreed that duty on wrapping paper used for packing different varieties of paper would be levied at the rate appropriate to the paper contents. The court considered the representations and assurances made by the authorities and held that the petitioner had acted to its detriment based on these representations. Therefore, the authorities were estopped from challenging the previous procedure and issuing the impugned notices.

4. Jurisdiction and Limitation Period for Issuing Recovery Notices Under Rule 10:
The court examined whether the notices were issued within the limitation period specified under Rule 10. It was found that the short-levy was due to inadvertence, error, or mis-construction on the part of the officer, or mis-statement by the owner, thus falling under Rule 10. Since the notices were issued beyond the three-month limitation period specified in Rule 10, they were deemed to be barred and without jurisdiction.

5. Effectiveness of Alternative Remedies Under Article 226 of the Constitution:
The court addressed the argument that the petitioner had an effective and alternative remedy through departmental proceedings. It was held that if an authority acts without jurisdiction, the petitioner should not be compelled to go through departmental proceedings. Hence, the court found it appropriate to entertain the petition under Article 226.

Conclusion:
The court quashed the six notices issued under Rule 10A, holding that they were barred by the limitation period under Rule 10 and that the Central Excise authorities were estopped from reopening the assessments. The court restrained the respondents from giving effect to the impugned notices or proceeding in respect thereof. The Rule nisi was made absolute, and no order as to costs was issued.