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TMI Blog1986 (2) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... rties are as follows:- The respondent-company is a Government Company within the meaning of Section 617 of the Companies Act, 1956. The Company has erected a plant at Manali for the manufacture of fertilizers. The plant consists of three units, which are respectively designed to produce Ammonia, UREA AND COMPLEX fertilizers. Central Excise Duty is levied on fertilizers at 15% ad valorem under item 14 HH of the First Schedule to the Central Excises and Salt Act. By means of Notification No. 25/70-C.X dated 1-3-1970, by the Government of India, Ministry of Finance (Department of Revenue and Insurance), the Central Government exempted the whole of duty of excise leviable on mixed fertilizers falling under this item, which are manufactured with the aid of power from two or more fertilizers, on all of which appropriate amount of duty of excise, or, as the case may be, countervailing duty, under Section 2-A of the Indian Tariff Act, 1934, has already been paid. The reason for the grant of this exemption, as has been pointed out in Coromandal Fertilizers Ltd. v. Union of India (W.P. 1400 to 1403/76 order dated 24-9-1976 by Andhra Pradesh High Court) - 1979 E.L.T. (J 501) (A.P.) is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e can be obtained with the aid of power and the mixed fertilizers should contain not more than one nutrient. Thus, the order in appeal is not a proper speaking order on the issue involved and is set aside, the exemption under the said notification is allowed if the conditions thereof are fulfilled." 8. Interpreting the Central Government's Order to be in favour of the respondent, the Assistant Collector, Central Excise, wrote to So respondent on 5-3-1976 giving it the benefit of exemption, subject to certain procedural conditions. On the basis of this order, respondent claimed refund of duty paid under protest before 5th March, 1976 after making the necessary adjustments for duty payable on the urea consumed in the manufacture of complex fertilisers and the credit taken for countervailing duty on imported muriate of potash used in the manufacture of the fertilizers. From 5-3-1976 onwards, the respondent started Paying duty on the urea consumed in the manufacture of the complex fertilizers and did not avail the credit for the countervailing duty paid on the imported muriate of potash used in the manufacture of complex fertilizers. 8A. On 7-6-1976, the Assistant Collector of Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the excise duty collected from it and that the availability of an alternate remedy by filing an appeal and a revision to the Appellate Authority and the Central Government, respectively, would not preclude the respondent from invoking the extra-ordinary jurisdiction of the High Court under Article 226 of the Constitution. 11. Arguing the appeals before us, Mr. Somasundaram Additional Central Government Counsel appearing for the appellants urged that the scope and effect of the notification has been considered by the Supreme Court in Coramandel Fertilizers Ltd. v. Union of India - 1984 (17) E.L.T. 607 (S.C.)= (A.I.R. 1984 S.C. 1772) and that the very question involved in this case arose for determination before the Supreme Court and the Supreme Court has categorically held that the exemption granted under the notification will be attracted only where mixed fertilizers are produced by mixture of two or more fertilizers which have suffered excise duty and the exemption cannot be claimed where a mixed fertilizer is produced by mixture of not only duty paid items of fertilizers, but also other products viz., sulphuric acid and ammonia. The learned counsel therefore argued that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he notification used. It deals with mixed fertilizers manufactured with the aid of power from two or more fertilizers. When in the Act itself this distinction between fertilizers, including mixed fertilizers, on one hand and acids like Sulphuric Acid and gases like Ammonia is pointed out and maintained, it is futile to argue that notification No. 25/70 grants exemption to mixed fertilisers which are manufactured from two or more fertilisers and acids and gases. To say that is only to introduce something which is not in the notification. We are therefore, of the view that Gromor NPK 14 : 35 : 14 is not within the exemption given under the notification. 13. We entirely agree with the views expressed by the High Court. We may also note that the High Court has further aptly pointed out :- The process of manufacture of NPK 14 : 35 : 14 bringing into existence several other substances, and once again utilising them in the process, treating one substance with the other cannot be "said to be mixture of fertilisers as postulated by the notification. So, it will have to be held that NPK 14 : 35 : 14 is not entitled to exemption under Notification No. 25/70." 14. In view of this authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of Government is subjected to scrutiny, as found extracted above. On a close study of the order, it is seen that what the Central Government had done is to lay down that the views of the Appellate Collector on certain matters are not correct and further more, the order 'is not a proper speaking order on the issue involved.' The Appellate Collector had held that only mixed fertilizers, which are produced by physical action and without chemical reaction would be entitled to claim the benefit of exemption. It is this portion of the order, that has been set aside by the Central Government by pointing out that the notification does not lay down any such conditions and that the notification only required the mixture to be obtained with the aid of power and the mixed fertiliser contained not more than one nutrient. The order does not say that by reason of the setting aside of the Appellate Collector's order, the exemption under the notification is readily available to the respondent and as such, it is entitled to the benefit of the notification. On the other hand, the Government's order states that the exemption under the notification would be available to the respondent, if the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oda, 1983 E.L.T. 1763 (Gujarat). In all these cases, it has been held that an assessee should not be allowed to derive unjust enrichment by having the benefit of collection of excise duty from the consumers and also the benefit of refund from the Government. 18. Mr. Utham Reddy cited two decisions, viz. Patel India (P) Ltd. v. Union of India 1983 (13) E.L.T.1495 AIR 1973 S.C. 1300 - 1973-3-SCR 811 and Maharashtra Vegetable Products P. Ltd. v. Union of India, 1981 E.L.T. 468 (Bombay) taking a contrary view. But though these two decisions take the view that if excise is not collectible then the duty collected should be refunded to the assessee notwithstanding the principle of unjust enrichment being offended, we find the preponderance of judicial opinion to be against the contention of the respondent. The learned single Judge has not considered this aspect of the matter at all; but, on the other hand, the major portion of his discussion is devoted to the right of the respondent to seek remedy under Art. 226 of the Constitution, instead of availing the alternative remedy available to it under the Act. We are therefore, of the view that this appeal too has to be allowed, both on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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