1989 (9) TMI 130 - HC - Central Excise

Summary

Issues:
1. Whether the petitioner company is entitled to exemption from excise duty on manufacturing 'sorbitol' based on Notifications No. 234/82 and No. 234/86.
2. The impact of Trade Notices No. 120/20/83 and No. 264/88 issued by the Central Board of Excise and Customs on the pending proceedings before the Assistant Collector and Additional Collector of Central Excise.
3. Interpretation of Section 37B of the Central Excises and Salt Act, 1944 regarding the binding nature of orders, instructions, and directions issued by the Central Board of Excise and Customs on Central Excise Officers.

Analysis:
1. The petitioner company manufactures 'sorbitol' and claims exemption from excise duty under Notifications No. 234/82 and No. 234/86, arguing that it qualifies as a 'bulk drug' irrespective of end-use. The Excise Department contends that exemption is only applicable if the product is used for medicinal purposes. Show cause notices were issued to the petitioner company by the Assistant Collector and Additional Collector of Central Excise, challenging the claimed exemption. The petitioner filed replies to some notices but not to others, leading to the filing of a petition to quash Trade Notices No. 120/20/83 and No. 264/88, fearing biased decision-making due to these notices.

2. Trade Notices No. 120/20/83 and No. 264/88 issued by the Central Board of Excise and Customs clarified that 'bulk drugs' must be used for specified purposes to qualify for exemption. The petitioner argued that the officers must follow these clarifications, citing Section 37B of the Act. However, the Court rejected this argument, stating that the officers have discretion in assessment and cannot be bound by external directions in quasi-judicial functions. Precedents like Aluminium Corporation of India Ltd. v. Union of India and Orient Paper Mills v. Union of India support this view, emphasizing the quasi-judicial nature of the Collector's appellate powers.

3. Section 37B of the Act prohibits orders, instructions, or directions that interfere with assessment or the Collector's discretion in appeals. The Court highlighted that judicial and quasi-judicial functions require independent decision-making, unaffected by external influences. The petitioner's apprehension that the trade notices would impact the pending proceedings was dismissed, emphasizing that the officers must act independently. The Court directed the petitioner to file replies to show cause notices by a specified date, allowing the authorities to proceed in accordance with the law while maintaining the parties' rights to raise contentions before the departmental authorities.