The power to exempt goods from duty under section 37 (2) (xvii) of the Central Excises and Salt Act, 1944 carries the incidental and ancillary power to grant refund in respect of such exemption in case the duty imposed by the Act had already been collected.

1. THIS is an appeal from the judgment and decree of Mr. Justice G. K. Mitter, dismissing the plaintiff's suit against the Union of India for the recovery of a sum of Rs. 12,415-10 as refund of salt duty paid by the plaintiff to the Government before the 1st April, 1947. The learned trial Judge dismissed the suit on a preliminary ground on which alone the only issue in the suit was framed in the following terms:-

"are the Notifications being Nos. 1/customs/47, l/salt/47 and 2/salt/47 dated the 28th February, 1947 and published in the Gazette of India (Extraordinary) on the 1st March, 1947, binding on the defendant?"

2. FOLLOWING a decision of Kapur, J. in Union of India v. F. Gianchand (1) in A. I. R. 1954 Punjab 159, the learned Judge came to the conclusion that these Notifications were not made under any of the sections of the Central Excises and Salt Act, 1944 and were, therefore, not binding on the Government itself which issued that Notification.

There were other pleas taken in the written statement of the Union of India but no issue was raised before' the trial Judge in respect of such issues by the Union of India. The learned Counsel Mr. B. K. Ghosh appearing for the Union of India before us in this Appeal abandoned formally all the pleas taken by the Union of India in its written statement and relied only on this issue on which the learned Judge found in his favour.

3. BEFORE discussing the essential points in the controversy, a short view of the relevant facts will not be out of place. The plaintiff as a purchaser of salt paid Rs. 12,556-6 as and by way of salt duty on 8,036 maunds 4 seers and 8 chhataks of salt. Such payment of duty was made before the 1st April, 1947. The plaintiff held that quantity of salt in stock on the 1st April, 1947. The above Notifications issued by the Government, and particularly Notification No. 2/salt/47, expressly provided that a refund of duty paid on stocks of salt held on the 1st April, 1947 would be admissible subject to the conditions set out in the Rules published there. According to these published Rules and the Notification, the Government invited applications for refund of salt duty, and the plaintiff on the 3rd April, 1947 submitted an application to the Office of the Central Excise at Narayangunge, Dacca, now in Eastern Pakistan, for refund of this sum of Rs. 12,556-6 -. The Customs and Excise Authorities checked and verified the stock and issued a certificate to that effect and sanctioned for payment at the Narayangunge Station the sum of Rs. 12,415-10-, a sum which was slightly less than the sum claimed by the plaintiff. Leaving aside the many pleas of the Union off India in the written statement as they are no longer relevant for our purposes having been abandoned by the learned counsel for the Union, it is necessary only to state that so far as the material defense now is concerned, the Government defense is that the Notifications: are not binding upon the Government because the Notification for refund of salt duty was ultra vires the power of the Central Government under that Act and, therefore, not binding. It is also pleaded in the written statement that the Government's offer sanctioning and refunding the duty was only an ex gratia offer to refund without any legal obligation.

4. THROUGHOUT the correspondence, the Government never took up this defense. It never said that the Notifications and the Rules granting refund for the exempted salt were not binding on them. In fact, the whole of their conduct and action is just the contrary. Not only did they invite applications for refund under those very Rules which they now say are not binding on them but they also sanctioned payment of a specific sum after verification of the Appellant's stock. It is said by the Government that it was done ex gratia but the document itself does not say so. Even after the notice under section 80 of the Civil Procedure Code, where also the plaintiff expressly pleaded these Notifications