1988 (10) TMI 52 - HC - Central Excise

Writ Petition - Exemption to paper if used for educational purposes - Adjudication - Demand - Estoppel

Issues Involved:
1. Entitlement to concessional rate of excise duty.
2. Validity of show-cause notices and orders issued by the Assistant Collector.
3. Maintainability and procedural aspects of the writ petition.
4. Interpretation of statutory declarations in gate-passes.
5. Application of principles of estoppel and approbate and reprobate.

Issue-wise Detailed Analysis:

1. Entitlement to Concessional Rate of Excise Duty:
The petitioners claimed entitlement to a concessional rate of excise duty for white printing paper supplied for educational purposes as per the Central Government's notification dated 16-3-1976. The notification prescribed a concessional rate of 5.5% ad valorem if the paper was supplied to the Directorate General of Supplies and Disposals or for various educational purposes at a wholesale factory price not exceeding Rs. 2,750/- per metric tonne.

The petitioners argued that they complied with these conditions by supplying the paper as per the orders issued by competent authorities of the Central Government for educational purposes. However, the excise authorities contended that the concessional rate could only be claimed if the paper was actually used or consumed by the institutions to which it was sold.

2. Validity of Show-Cause Notices and Orders:
The Assistant Collector issued multiple show-cause notices to the petitioners, questioning the concessional rate claimed based on gate-passes that indicated "removal to self." The petitioners argued that the gate-passes were used for commercial practices related to bill discounting and that the actual supply was made to the designated institutions as per the allotment orders.

The court found that the Assistant Collector did not properly verify the relevant documents and failed to consider the commercial practice followed by the petitioners. The court held that the impugned orders were perfunctory and demonstrated non-application of mind, thus quashing the orders and directing a fresh decision after proper verification of all relevant materials.

3. Maintainability and Procedural Aspects:
The respondents raised preliminary objections regarding the maintainability of the writ petition, arguing that it was premature and involved disputed questions of fact. The court rejected these objections, stating that the questions of fact and law were common across all show-cause notices and could be conveniently disposed of in a single petition. The court also directed the petitioners to pay additional sets of court fees for the multiple show-cause notices.

4. Interpretation of Statutory Declarations in Gate-Passes:
The respondents argued that the declaration made in the gate-passes was statutory and conclusive, binding the petitioners by principles of estoppel and approbate and reprobate. The court, however, found that there was no specific provision in the Act or Rules making the declaration in the gate-pass conclusive or binding. The court emphasized that in the absence of such a provision, the petitioners could prove by other evidence that the paper was supplied for the intended educational purposes.

5. Application of Principles of Estoppel and Approbate and Reprobate:
The respondents contended that the petitioners were estopped from explaining the declaration made in the gate-passes. The court rejected this contention, noting that the Assistant Collector had allowed the petitioners to produce relevant evidence and had inspected the documents. The court also referred to the principle that in tax matters, the principles of estoppel do not apply, as held by the Supreme Court in Dunlop India Ltd. v. Union of India.

Conclusion:
The court quashed the impugned orders passed by the Assistant Collector in respect of the show-cause notices and directed a fresh decision after proper verification of all relevant materials. The court also allowed the Assistant Collector to proceed with the remaining show-cause notices, giving the petitioners an opportunity to produce all relevant materials. The principles of estoppel and statutory declarations were not found applicable in the manner argued by the respondents.

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