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Issues:
1. Whether excise duty erroneously refunded to the petitioner should be paid back. 2. Nature and character of iron and steel products manufactured by the petitioner. 3. Validity of the show cause notice issued by the Assistant Collector of Central Excise. 4. Legality of the impugned action based on the show cause notice. 5. Applicability of Trade Notice dated June 21, 1967. 6. Interpretation of the relevant tariff items under the Central Excises and Salt Act, 1944. 7. Authority to issue directions in matters of excise duty assessment. Detailed Analysis: The judgment pertains to a petition challenging an order by the Assistant Collector of Central Excise directing the petitioner to pay back excise duty erroneously refunded. The petitioner, a manufacturer of iron and steel products, claimed that its products were not subject to excise duty, while the authorities contended otherwise. The dispute revolved around the classification of the products under tariff Item 26AA of the Central Excises and Salt Act, 1944. The petitioner had initially paid excise duty under protest and later submitted refund claims, leading to a series of assessments and refund approvals. The impugned order was based on a show cause notice alleging that the refunded amount should be recovered due to non-conformity with tariff items and trade notices. The court found two main grounds for quashing the action. Firstly, the exemption notification under which the refund was granted remained applicable for the period in question, and thus, the entire refunded amount could not be reclaimed. Secondly, the reliance on a Trade Notice to determine the classification of products was deemed improper as it could not supplement legislative provisions. Referring to the case law of Orient Paper Mills v. Union of India, the court emphasized the quasi-judicial nature of excise duty assessment and the limitations on issuing directions in such matters. It held that instructions from higher authorities, like the Collectorate of Central Excise, could not bind subordinate authorities in the absence of legislative backing. Consequently, the impugned action based on such instructions was deemed invalid, leading to the quashing of the decision. The judgment concluded by allowing the petitioner's claim, setting aside the impugned decision, and leaving room for the excise authorities to issue a fresh notice based on legal grounds for any alleged erroneous refunds. The court clarified that its ruling did not prevent lawful recovery attempts by the authorities. The petitioner succeeded in the case, with costs not awarded.
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