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High Court Of Calcutta
Sudhir Ranjan Roy
INDIAN ALUMINIUM CO.LTD - Appellant
Versus
UNION OF INDIA - Respondent
C. R 9877 (W) Of 1979
Decided On : 05/20/1988
CENTRAL EXCISE - Export of goods under bond - Interpretation of Rule 13 of Central Excise Rules - Whether goods exported under Rule 13 are liable to excise duty - Scope and applicability of Rules 12 and 13 - Distinction between the two Rules - Whether Rule 13 is supplementary to Rule 12 - Constitutional validity of Rule 13 - Principle of promissory estoppel.
Fact of the Case:
The petitioner, an Aluminium manufacturing company, exported Aluminium products under bond without payment of excise duty. However, the petitioner received a show cause notice demanding differential excise duty on the exported goods based on an alleged order from the Government of India requiring exporters to pay the unrebatable quantum of duty under Rule 12 of the Central Excise Rules for goods cleared for export under bond without payment of duty under Rule 13.
Finding of the Court:
The court interpreted Rule 13 of the Central Excise Rules and held that goods exported under Rule 13 are not liable to excise duty. The court found that Rule 13 is an independent provision and is not supplementary to Rule 12. The court also held that the classification between exporters under Rule 12 and exporters under Rule 13 is based on a reasonable differentia and has a reasonable nexus to the object sought to be achieved. The court further held that the show cause notice issued to the petitioner was based on an executive interpretation of Rule 13, contrary to its real intent and purpose, and is therefore bad in law.
Issues: 1. Whether goods exported under Rule 13 of the Central Excise Rules are liable to excise duty. 2. Whether Rule 13 is supplementary to Rule 12 of the Central Excise Rules. 3. Whether the classification between exporters under Rule 12 and exporters under Rule 13 is constitutionally valid. 4. Whether the principle of promissory estoppel applies in the present case.
Ratio Decidendi: 1. Rule 13 of the Central Excise Rules is an independent provision and is not supplementary to Rule 12. 2. Goods exported under Rule 13 are not liable to excise duty. 3. The classification between exporters under Rule 12 and exporters under Rule 13 is based on a reasonable differentia and has a reasonable nexus to the object sought to be achieved. 4. The show cause notice issued to the petitioner was based on an executive interpretation of Rule 13, contrary to its real intent and purpose, and is therefore bad in law. 5. The principle of promissory estoppel does not apply in the present case as the claim for differential excise duty has no legal basis.
Final Decision: The court quashed the show cause notice and all consequential orders relating thereto.
( 1 ) THE petitioner No. 1, the Indian Aluminium Company Ltd. is a Company within the meaning of the Companies Act, 1956 and the petitioner No. 2 is a shareholder of the petitioner No. 1 Company.
( 2 ) AT all material times the petitioner No. 1 carried on and still carries on bunsiness of manufacturing and selling Aluminium and its allied products including Aluminium Sheets and Aluminium Container Sheets.
( 3 ) FOR the purpose of carrying on the said business the petitioner No. 1 owns and runs factories and/or plants at Belur (West Bengal), Hirakud (Orissa), Alupuram (Kerala), Belgaum (Karnataka), Kalwa (Maharashtra) and Taloja (Maharashtra ).
( 4 ) AT all material times Aluminium and its allied products including Aluminium Sheets and Aluminium Container Sheets as specified in Tariff Item 27 of the First Schedule to the Central Excises and Salt Act, 1944 were and still are excisable commodities.
( 5 ) FOR the purpose of obtaining benefit of Rules 13 and 14 of the Central Excise Rules, the petitioner No. 1 at all material times has been exporting Aluminium products manufactured by it under Bond without payment of Excise Duty.
( 6 ) ON or about 3rd August, 1979 the petitioner No. 1 received a show cause-cum-demand notice dated 2nd August, 1979, whereby the petitioner No. 1 was required to show-cause to the respondent Assistant Collector, as to why the petitioner should not be required to pay a sum of Rs. 25,316. 06 paise as differential amount of Excise Duty as between the duty leviable and rebatable in terms of Notification No. 148-69-C. E', dated 17. 5. 1969 (An-nexure"a" ).
( 7 ) ACCORDING to the petitioners, the impugned show cause-cum-demand notice is bad and/or illegal and/or has been issued without authority of law and jurisdiction.
( 8 ) IT is clear from the said show cause notice that it has been issued as a consequence of an alleged order passed by the Government of India to the effect that the exporters are required to pay the unrebatable quantum of duty under Rule 12 of the Central Excise Rules even in respect of the goods cleared for export under bond without payment of duty under Rule 13 of the said Rules.
( 9 ) SIMITAR show cause notices were also issued upon the petitioner No. 1 in respect of other consignments of Aluminium products exported by the petitioner No. 1 under bond in terms of Rule 13 of the Central Excise Rules.
( 10 ) ACCORDING to the petitioner, no duty is leviable on goods exported in terms of Rule 13 of the Central Excise Rules and that being so, the show cause notices issued upon the petitioner No. 1 for payment of differential duties, are absolutely without jurisdiction. But since the respondent No. 6, the Assistant Collector of Central Excise will unnecessarily feel himself bound to follow the alleged order of the Government of India referred to in the show cause-cum-demand notices, the petitioners have come up before this Court directly for redress without showing any cause to the said Assistant Collector on the ground that it would be totally futile.
( 11 ) IN the instant Writ petition the petitioners have asked for the issuance of a writ in the nature of Mandamus declaring that the Aluminium products under Item No. 27 of the First Schedule to the Central Excises and Salt Act, 1944 and exported under the provisions of Rules 13 and 14 of the Central Excise Rules, 1944 are not liable to and/or chargeable with any duty for excise whatsoever and also for a direction upon the respondents to forthwith withdraw, recall, cancel and/or rescind the impugned show cause-cum-demand notices and certain other connected orders and also for consequential reliefs.
( 12 ) THE respondents having entered appearance through Mr. Sanjoy Bhattacharyya, the learned Counsel, seriously controverted the material averments as made in the writ petition, but did not file any affidavit-in-opposition.
( 13 ) NOW, the petitioner No. 1, the Indian Aluminium Co. Ltd. , as already seen, carries
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