1996 (3) TMI 144 - HC - Central Excise

Summary

Issues Involved:
1. Quashing of the memo dated 6-10-1994 issued by the Assistant Collector of Central Excise.
2. Quashing of the circular issued by the Central Board of Excise and Customs dated 11-2-1994.
3. Validity and implications of the amendment to Rule 52A of the Central Excise Rules, 1944.
4. Authority and power of the Additional Collector versus the Assistant Collector.
5. Impact of the amended Rule 52A on the petitioner's delivery system and duty payment.

Issue-wise Detailed Analysis:

1. Quashing of the memo dated 6-10-1994 issued by the Assistant Collector of Central Excise:
The petitioners sought the quashing of the memo dated 6-10-1994, which informed them that the permission granted by the Additional Collector on 25-2-1987 stood automatically withdrawn due to the amendment to Rule 52A of the Central Excise Rules, 1944. The court found that the Assistant Collector was justified in issuing this memo because the amendment to Rule 52A required excisable goods to be delivered under an invoice signed by the factory owner or his authorized agent, specifying the exact quantities and the duty paid thereon. The earlier permission allowing removal of goods without payment of duty became inconsistent with the amended rules and thus inoperative.

2. Quashing of the circular issued by the Central Board of Excise and Customs dated 11-2-1994:
The petitioners also sought to quash the circular issued by the Central Board of Excise and Customs, which directed that clearance of liquefied gas in lorries should not be allowed without payment of duty, and any such permissions should be immediately withdrawn. The court upheld the validity of this circular, stating that it was an administrative instruction issued under Rule 233, which allows the Board to provide supplementary instructions. The instruction was found to be neither perverse nor arbitrary, and within the Board's power to ensure compliance with the amended rules.

3. Validity and implications of the amendment to Rule 52A of the Central Excise Rules, 1944:
The amendment to Rule 52A, effective from 1-4-1994, required that no excisable goods be delivered from a factory except under an invoice signed by the owner or his authorized agent, detailing the quantity, value, and duty paid. The court noted that this amendment was significant and aimed at implementing the Modvat scheme. The new rule did not permit the delivery of goods without specifying the exact quantities and duty, thus rendering any previous administrative orders inconsistent with it inoperative.

4. Authority and power of the Additional Collector versus the Assistant Collector:
The petitioners argued that the Additional Collector's order was binding and could not be overridden by the Assistant Collector. However, the court clarified that the power exercised by the Additional Collector under Rule 173G(1) proviso (iv) was administrative and could be recalled at any time. The Assistant Collector's action was consistent with the amended Rule 52A, and therefore, the earlier order of the Additional Collector could not be sustained.

5. Impact of the amended Rule 52A on the petitioner's delivery system and duty payment:
The petitioners contended that the amended Rule 52A would compel them to pay duty twice. The court found this argument misconceived, noting that the delivery system followed by the petitioner-company was the cause of such a situation. Compliance with the requirements of Rule 52A could be achieved by reverting to the delivery system in place before 1986. The court also highlighted that Rule 51A provided provisions to avoid double duty payment, allowing duty-paid goods to enter or be retained in the factory premises.

Conclusion:
The court concluded that both the memo dated 6-10-1994 and the circular dated 11-2-1994 were legal and justified. The amended Rule 52A mandated that no excisable goods could be delivered from a factory without an invoice specifying the quantity and duty paid. The petitioners could not claim a right to deliver goods without such an invoice, and the earlier arrangement approved by the Additional Collector could not operate without violating the amended Rule 52A. The writ petition was rejected, with the court noting that the petitioners could seek appropriate orders or directions from the authorities in accordance with the law.