1991 (2) TMI 117 - HC - Central Excise

Summary

Issues Involved:
1. Legality of the Demand Notice issued by the Central Excise Department.
2. Applicability of Section 11C of the Central Excises and Salt Act, 1944.
3. Finality of the assessment order dated 12-11-1984.
4. Scope of the Notification dated 16-10-1984 under Section 11C.
5. Right to recover excise duty for the period not covered by the notification.

Issue-wise Detailed Analysis:

1. Legality of the Demand Notice issued by the Central Excise Department:
The petitioners, M/s. Techno Pack Ltd. and J. Krishna Murthy, sought a Writ of Prohibition to prevent the enforcement of Demand Notice No. V/15A/30/656/83.T. 2, dated 29-5-1989, issued by the Central Excise Department. The notice demanded excise duty for the period 23-10-1977 to 22-10-1982. The petitioners argued that the demand was not enforceable due to a subsequent notification under Section 11C of the Central Excises and Salt Act, 1944.

2. Applicability of Section 11C of the Central Excises and Salt Act, 1944:
Section 11C allows the Central Government to stop the recovery of excise duty not levied or short-levied due to a general practice. The notification dated 16-10-1984, issued under this section, directed that excise duty on polyethylene films not exceeding 0.25 mm in thickness, for the period from 25-11-1978 to 22-10-1982, should not be recovered. The court emphasized that Section 11C is intended to prevent the recovery of excise duty that was not levied due to a generally prevalent practice.

3. Finality of the assessment order dated 12-11-1984:
The Assistant Collector of Central Excise had issued an order on 12-11-1984, demanding excise duty from the petitioners, which had become final as no appeal was filed against it. The respondents argued that this finality precluded the application of Section 11C. However, the court held that the finality of the assessment order does not negate the applicability of Section 11C and the notification dated 16-10-1984, which aims to prevent the recovery of duty despite any existing levy.

4. Scope of the Notification dated 16-10-1984 under Section 11C:
The notification covered the period from 25-11-1978 to 22-10-1982 and directed that the duty of excise on polyethylene films should not be recovered if it was not levied due to a general practice. The court clarified that this notification applied to the petitioners' case, preventing the recovery of excise duty for the specified period, notwithstanding the finality of the assessment order. The court rejected the respondents' argument that Section 11C applies only to cases where no levy was made, emphasizing that the section also applies when a levy was made contrary to the general practice.

5. Right to recover excise duty for the period not covered by the notification:
The court noted that the notification did not cover the period from 23-10-1977 to 24-11-1978. Therefore, the respondents were allowed to issue a revised demand for the excise duty payable for this period. The court directed the respondents not to enforce the demand for the period from 25-11-1978 to 22-10-1982, as covered by the notification.

Conclusion:
The writ petition was allowed to the extent that the respondents were prohibited from enforcing the demand for excise duty for the period from 25-11-1978 to 22-10-1982. The respondents were permitted to issue a revised demand for the period from 23-10-1977 to 24-11-1978. No costs were awarded.