Under Section 50 (1) of the Finance Act, 1982, the exemption by set off under the notification should be availed of first and the special duty calculated thereafter, as the intention of the Legislature was to provide relief to the assessee by allowing the exemption first.

( 1 ) BY the present writ petition, petitioners seek to, interalia, challenge the Directive No. 15/16/63-CXI of the Central Board of Excise and Customs, respondent no. 2 herein, whereby it has been clarified that, where an exemption of set off is given under the notification, the special duty of excise is to be calculated first, without applying the exemption notification, which is to be applied thereafter.

( 2 ) TO appreciate the respective contentions of learned counsel for parties, it will be useful, to refer to, in briefs, the facts of the case.

( 3 ) PETITIONER No. 1 manufactures tyres, tubes, flaps and rubber products, which are classifiable under Tariff Items 16, 16a and 68 of the 1st Schedule to the Central Excise and Salt, 1944, hereinafter referred to as the Act. In the manufacture of finished products, petitioner Company uses certain raw materials, which are classified and, on which duty is paid under Tariff Item 68 of the 1st Schedule to the Act. Petitioner, also uses synthetic rubber, carbon black and rubber processing chemicals, in the manufacture of rubber products. These products, are, hereinafter, referred to as the inputs.

( 4 ) ON June 4, 1979 the Central Government, issued a notification No. 201/79-CE whereby, exemption was granted to goods, in the manufacture of which, items failing under Tariff Item 68, have been used as inputs, to the extent of duty paid, on such inputs. The Central Government, further issued an amendment to notification, dated March 1. 1979, vide notification No. 58/82-CE dated February 28, 1982, by which, the Central Government, exempted tyres and lube-, in the manufacture of which, synthetic rubber, carbon black and rubber processing chemicals have been used to the extent of the duty, paid on such synthetic rubber, carbon black and rubber processing chemicals.

( 5 ) ON September 7, 1982, petitioners wrote to the Assistant Collector of Centra! Excise, thereby pointing out, that on a true and proper interpretation of Section 50 of the Finance Act, 1982, the exemption of set off, granted under the afores aid notifications, would be availed of first, and the. special duty, to be calculated thereafter.

( 6 ) IT is further alleged that petitioners, however, came to know that the Centra! Government, had issued a Directive to all Collectors of Central Excise that, where exemption was granted by set off, the special excise duty was to be calculated first, and the exemption by way of set off, availed off , subsequently.

( 7 ) ON the basis of the aforesaid Directive, issued by respondent no. 2, the Assistant Collector, respondent No. 4 herein, vide his letter dated September 24, 1932, rejected the contention of petitioners, and directed petitioners to first calculate special excise duty, and claim exemption, by set off thereafter. According to petitioners, this letter was issued by respondent no. 4, without giving a personal hearing to petitioners, before passing the order, thereby rejecting the contention of petitioners. This is in complete violation of the principles of natural justice. Respondent no. 4, in his said letter, also directed petitioners, to debit the credit taken, in respect of exempted tyres, under the aforesid notification. It is thus clear from the letter of respondent no. 4, that he is acting on the basis of the Directive, issued by respondent no. 2. In view there of, petitioners have no other remedy, but to approach this Court by way of writ petition. Petitioners have thus submitted that the impugned Directive (annexure d ), of respondent no. 2, the letter dated September 21, 1982, (annexure e ), issued by respondent no. 4 and the letter of the Superintendent dated September 13, 1982, are illegal without jurisdiction and contrary to law.

( 8 ) RESPONDENTS have not filed any reply to the writ petition. However reply has been filed to the application, being C. M. No. 4929 of 1982, for temporary stay. Mr. Rajinder Dutt, learned counsel for respondents, has subm