1985 (12) TMI 57 - HC - Central Excise

Issues Involved:
1. Entitlement to rebate on exported sugar under Notification No. 152/74.
2. Applicability of Notification No. 197/62 to the petitioner's case.
3. Suppression of material facts by the petitioner.
4. Barred by limitation for recovery of rebate.
5. Estoppel against the Government from recovering the amount.

Detailed Analysis:

1. Entitlement to rebate on exported sugar under Notification No. 152/74:
The petitioners, manufacturers of sugar, claimed a rebate under Notification No. 152/74 for excess sugar produced during the period 1-12-1973 to 30-9-1974. The notification provided a concessional rate of excise duty on excess sugar produced. The Assistant Collector allowed proforma credit of Rs. 33,79,904.30 on 11-6-1975. However, a show cause notice was issued on 3-4-1978 to recover Rs. 9,14,370.39, asserting that the petitioner had availed concessional duty on sugar exported, which was exempt from duty under Notification No. 197/62.

2. Applicability of Notification No. 197/62 to the petitioner's case:
Notification No. 197/62, issued under Rule 12, exempts exported sugar from duty. The Assistant Collector held that the quantity of sugar exported was not entitled to any rebate since it was exempt from duty. The petitioner contested this, arguing that Notification No. 197/62 was not applicable to their case, and the rebate was granted under Notification No. 152/74.

3. Suppression of material facts by the petitioner:
The petitioner argued there was no suppression of material facts regarding the exported sugar. However, the Department contended that the petitioner had willfully suppressed the fact that they exported 21,264.274 quintals of sugar, thus availing of both the exemption and concessional duty, which was not permissible.

4. Barred by limitation for recovery of rebate:
The petitioner argued that the recovery was barred by limitation, as the show cause notice was issued beyond the period prescribed under Rule 10. The Department countered that the limitation did not apply as the action was to correct an erroneous rebate and was not an assessment of duty. The Department also argued that under the proviso to Rule 10, the limitation for withdrawing or rectifying any order of assessment or concession is five years in cases of suppression of information.

5. Estoppel against the Government from recovering the amount:
The petitioner contended that the Government was estopped from recovering the amount after having allowed the proforma credit. The Department argued that the rebate granted was a mistake and needed to be rectified.

Judgment:
The Court held that the petitioner was not entitled to the concessional rate of duty on the sugar exported, as it was exempt from duty under Notification No. 197/62. The proforma credit granted under Notification No. 152/74 was a mistake, and the Department was justified in withdrawing it. The Court dismissed the writ petition and upheld the order of the Assistant Collector, directing the recovery of Rs. 9,14,370.39 from the petitioner's personal ledger account. The Court also noted that the limitation period did not apply as the action was to correct an erroneous rebate, not an assessment of duty.

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