1989 (6) TMI 55 - HC - Central Excise

Summary

Issues Involved:
1. Legality of assessment orders levying excise duty on ultramarine blue from 1962-63 to 1976-77.
2. Whether ultramarine blue is classified as excisable goods under the Central Excises and Salt Act, 1944.
3. Jurisdiction and authority of Central Excise authorities to levy and collect duty on ultramarine blue.
4. Refund of excise duty collected on ultramarine blue.

Detailed Analysis:

1. Legality of Assessment Orders:
The petitioner, Seth Chemical Works Private Ltd., challenged the assessment orders levying duty on ultramarine blue from 1962-63 to 1976-77, arguing that the excise duty imposed was illegal and without jurisdiction. The petitioner contended that the product ultramarine blue is not excisable under the Central Excises and Salt Act, 1944, and thus, the assessment orders should be struck down.

2. Classification of Ultramarine Blue:
The petitioner argued that ultramarine blue is not known in the commercial parlance or in the industry as a dye, pigment, or colorant and is primarily used for temporarily brightening the whiteness of textiles. The petitioner asserted that the product does not dissolve in water but disperses, thus not fitting the description of a pigment or colorant. The Central Excise authorities, however, classified ultramarine blue under Item No. 14(1)(5) of the First Schedule to the Central Excises and Salt Act as pigments, colors, paints, enamels not otherwise specified.

3. Jurisdiction and Authority of Central Excise Authorities:
The petitioner highlighted that the Central Excise authorities have no power under Section 3 or other provisions of the Central Excises and Salt Act, 1944, to levy duty on non-excisable goods. They argued that the authorities' actions were ultra vires the Act and violated Articles 31(1) and 265 of the Constitution of India. The respondent authorities maintained that ultramarine blue falls under the specified tariff item and that the assessments were made following due process.

4. Refund of Excise Duty:
The petitioner sought a refund of the excise duty collected from 1962-63 to 1976-77, arguing that the collection was illegal and amounted to unjust enrichment by the authorities. The petitioner cited several legal precedents to support their claim for a refund, emphasizing that any tax collected without legal sanction must be refunded.

Court's Findings:
The court, after considering the arguments and various legal precedents, found that the product ultramarine blue is indeed classified as a pigment under Item 14I(5) of the Central Excise Tariff. The court referred to the decision in Nilsin Company v. Collector of Central Excise, Calcutta and Orissa and Ors., where it was established that ultramarine blue is understood as a pigment in common parlance and thus subject to excise duty.

The court also noted that the principles of natural justice were observed by the Central Excise authorities, and the petitioner had the opportunity to appeal the assessments but chose to file a writ petition instead. The court held that the excise duty on ultramarine blue was legally sanctioned, and thus, the question of refund did not arise.

Conclusion:
The writ petition was dismissed, and the rule was discharged. The court vacated all interim orders and did not impose any costs. The court granted a stay of operation of the order for a period of a fortnight.