1985 (6) TMI 33 - HC - Central Excise

Summary

Issues Involved:
1. Interpretation of exemption notifications No. 203/72 and 189/73.
2. Validity of the demands made under rule 10A of the Central Excise Rules, 1944.
3. Applicability of the principle of promissory estoppel.
4. Maintainability of writ petitions under articles 226 and 227 of the Constitution.

Issue-wise Detailed Analysis:

1. Interpretation of Exemption Notifications No. 203/72 and 189/73:
The petitioners, manufacturers of sugar, claimed rebates under notifications No. 203/72 and 189/73, which provided excise duty exemptions for excess sugar production during specified periods. The adjudicating authority denied the rebates, arguing that the petitioners must have produced some sugar during the corresponding period in the previous year to qualify for the rebate. The court disagreed, stating that the object of the notifications was to incentivize early and increased sugar production. The court interpreted that even nil production in the base period could qualify for rebates if there was production in the subsequent year, aligning with the purpose of the notifications. The court supported its interpretation by referencing the Andhra Pradesh High Court's decision in Etikoppaka Coop. Agricultural Society Ltd.'s case, which emphasized that the incentive should apply even if no sugar was produced in the base year.

2. Validity of the Demands Made Under Rule 10A:
The court examined whether the demands for refund issued under rule 10A were valid. The petitioners argued that the demands fell under rule 10, which has a limitation period, and not rule 10A, which pertains to residuary powers for recovery of sums due to the government. The court noted that once it was established that the interpretation by the adjudicating authority was incorrect, the demands were unsustainable. Additionally, the Andhra Pradesh and Madras High Courts had previously ruled that such demands fall under rule 10(1), not rule 10A, further supporting the petitioners' position.

3. Applicability of the Principle of Promissory Estoppel:
The petitioners invoked the principle of promissory estoppel, arguing that the government could not retract its earlier representations that confirmed the rebates. The court acknowledged this principle, noting that the respondents could not go back on their confirmations made to the Indian Sugar Mills Association. The court referenced several High Court decisions that supported the application of promissory estoppel in similar contexts.

4. Maintainability of Writ Petitions:
The respondents contended that the petitioners had an alternate remedy through appeals and revisions under the Act and Rules, making the writ petitions under articles 226 and 227 non-maintainable. The court dismissed this preliminary objection, citing the Andhra Pradesh High Court's reasoning that pursuing statutory remedies would be futile given the predetermined stance of the highest authority under the Act. The court found no bar to the maintainability of the writ petitions.

Conclusion:
The court ruled in favor of the petitioners, granting them the benefits of the exemption notifications. The demands made under rule 10A were deemed invalid, and the principle of promissory estoppel was upheld. The writ petitions were found maintainable, and the respondents were directed to refund any amounts recovered from the petitioners within two weeks. The court refused the request for leave to appeal to the Supreme Court.