1987 (12) TMI 41 - HC - Central Excise

Summary

Issues Involved:
1. Quashing of orders dated April 14, 1972, May 17, 1973, and July 30, 1975, and refund of excess duty paid.
2. Quashing of orders dated March 2, 1977, August 20, 1977, and March 21, 1979, and directions to allow concessional rates in duty under Exemption Notifications.
3. Interpretation and applicability of Exemption Notifications Nos. 163/65, 208/67, and 21/68.
4. Limitation period for issuing demand notices under Rule 10 and Rule 10A of the Central Excise Rules, 1944.

Detailed Analysis:

1. Quashing of Orders and Refund of Excess Duty Paid:
The petitioner sought directions to quash the orders dated April 14, 1972, May 17, 1973, and July 30, 1975, issued by the Assistant Collector, Appellate Collector, and Joint Secretary, respectively. The petitioner claimed a refund of excess duty paid on the full quantity attributed to the enlargement of capacity as claimed under the application dated June 5/6, 1970. The Assistant Collector rejected the claim for a rebate of 20% in excise duty on the excess production of 1719.965 M.T. of paper, stating that the petitioner had already availed the concession for the first 1000 M.T. of paper cleared during the financial year under Notifications Nos. 208/67 and 21/68. The Appellate Collector and Joint Secretary upheld this decision, leading to the filing of the first writ petition.

2. Quashing of Orders and Directions to Allow Concessional Rates:
In the second writ petition, the petitioner challenged the orders dated March 2, 1977, August 20, 1977, and March 21, 1979, which demanded recovery of duty for the financial years 1970-71, 1971-72, and 1972-73. The petitioner argued that the demands were time-barred under Rule 10 of the Central Excise Rules, 1944, which prescribed a six-month limitation period. The Assistant Collector, however, applied Rule 10A, which had no limitation period, and confirmed the demands, stating that the petitioner had enjoyed double benefits of concessional duty.

3. Interpretation and Applicability of Exemption Notifications:
The core issue revolved around the interpretation of Exemption Notifications Nos. 163/65, 208/67, and 21/68. Notification No. 163/65 provided concessional duty for enlarged production capacity, while Notification No. 208/67, read with Notification No. 21/68, provided a 75% duty exemption for the first 1000 M.T. of paper cleared annually. The third notification clarified that the same quantity of paper could not avail concessions under both notifications simultaneously. The petitioner contended that the concessional duty for the first 1000 M.T. of paper cleared was not part of the excess production and thus should not preclude additional concessions for the enlarged production.

4. Limitation Period for Issuing Demand Notices:
The court examined whether the demand notices were issued within the limitation period prescribed by Rule 10 or were valid under Rule 10A. Rule 10 provided a six-month limitation for recovering short-levied duties, while Rule 10A applied to cases not specifically covered by other rules and had no limitation period. The court found that the demands were based on erroneous interpretation by the officers and were thus covered by Rule 10, making them time-barred.

Conclusion:
The court concluded that the petitioner was entitled to the benefits of both sets of notifications as they pertained to different quantities of paper. It quashed the impugned orders and demands, directing the respondents to refund the excess duty paid and release the bank guarantee. The court also held that the demands were barred by limitation under Rule 10, as there was no concealment of facts by the petitioner. Both writ petitions were allowed, with each party bearing its own costs.