1990 (3) TMI 74 - HC - Central Excise

Summary

Issues Involved:
1. Maintainability of the writ petition.
2. Interpretation of Section 50 of the Finance Act, 1982.
3. Legality of the Directive issued by the Central Board of Excise and Customs.
4. Legality of the direction to debit the credit taken in respect of exempted tyres.

Summary:

1. Maintainability of the writ petition:
The respondents argued that the writ petition is not maintainable as the petitioners have alternative efficacious remedies available under the amended Act. However, the court accepted the contention of the petitioners that they are challenging the Directive issued by the Central Board of Excise and Customs, which is the highest Administrative Authority under the Act. The court held that the writ petition is maintainable.

2. Interpretation of Section 50 of the Finance Act, 1982:
The main question was whether the exemption of set off granted under the notification should be availed of first and the special duty calculated thereafter, or vice versa. The court held that the exemption by set off was first to be given effect and special excise duty was to be calculated thereafter. The court interpreted Section 50(1) of the Finance Act, 1982, stating that the special duty of excise is to be levied and collected equal to ten percent of the amount "so chargeable" on such goods, meaning after giving effect to the exemption notifications.

3. Legality of the Directive issued by the Central Board of Excise and Customs:
The court found that the clarification given by the impugned Directive issued by respondent No. 2 was not correct. The Directive stated that the special duty of excise was to be calculated first, and the exemption by way of set off availed of subsequently. The court held that this interpretation was contrary to the true meaning of Section 50 of the Finance Act, 1982.

4. Legality of the direction to debit the credit taken in respect of exempted tyres:
The court held that the direction given by the Assistant Collector to debit the credit taken in respect of exempted tyres, tubes, and flaps under the notification was illegal and contrary to law. The court noted that under Notification No. 201/79 and Rule 56-A of the Rules, there is no requirement for correlation between the inputs and the final product. The credit can be utilized for payment of duty against any excisable products brought from the factory, and no debit can be claimed after the credit has been taken on goods brought into the factory.

Conclusion:
The writ petition was allowed, and the Rule was made absolute. The court found the Directive issued by the Central Board of Excise and Customs and the direction to debit the credit taken in respect of exempted tyres to be illegal and contrary to law. No order as to costs was made.