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2005 Supreme(Mad) 387
High Court of Judicature at Madras
THE HONOURABLE CHIEF JUSTICE MR. MARKANDEY KATJU & THE HONOURABLE MR. JUSTICE D. MURUGESAN
Madras Fertilizers Limited - Appellant
Versus
The Customs & Others - Respondents
W.A.No.2794 of 2002 and W.A.M.P.No.4720 of 2002
Decided On : 01 March 2005
Exclusion of time spent in pursuing the matter before the High Powered Committee from the appeal filing period and the requirement of a prior show cause notice for a valid demand.
Headnote:
Exemption - Central Excise - Schedule I of the Central Excise and Salt Act, 1944 - Notification No.25/70-CE - Civil Appeal Nos. 4531 & 4532 of 1986 - Section 35 of the Central Excise Act, 1944
Fact of the Case:
The appellant, a Public Sector Undertaking, claimed exemption under Notification No.25/70-CE for the period from 05.03.1976 to 29.2.1977. Dispute arose regarding the entitlement to the exemption, leading to a series of legal proceedings.
Finding of the Court:
The court set aside the impugned orders and remanded the matter to the Commissioner of Central Excise (Appeals) for a fresh decision, staying the impugned demand till the new decision.
Issues: Entitlement to exemption under Notification No.25/70-CE, time limitation for filing appeal, and the legality of the demand raised by the Commissioner of Central Excise (Appeals).
Ratio Decidendi: The period spent in pursuing the matter before the High Powered Committee had to be excluded from the appeal filing period. The demand without a prior show cause notice and the post facto notice was deemed illegal.
Final Decision: The appeal was allowed, and the matter was remanded to the Commissioner of Central Excise (Appeals) for a fresh decision.
The Chief Justice:
This writ appeal has been filed against the impugned judgment of the learned single Judge dated 11.06.2001.
2. We have heard the learned counsel for the parties, and have perused the impugned judgment and the records.
3. The appellant is a Public Sector Undertaking, and 51% of its shares are held by the Central Government. It is engaged in the manufacture of fertilizers. The relevant period in this case is from 05.03.1976 to 29.2.1977, for which period the appellant cleared complex fertilizers claiming the benefit of exemption under Notification No.25/70-CE dated 01.03.1970. The Assistant Collector had initially allowed the exemption on 05.03.1976, but the Department took the stand that the appellant was not entitled for the benefit of this notification and accordingly, a show cause notice dated 07.06.1976 was issued. The Assistant Collector subsequently passed an order confirming the denial of exemption against which order W.P.No.152 of 1977 was filed before this Court to quash the said order, and W.P.No.455 of 1977 claiming refund of duty paid on NPK fertilizers. These writ petitions were allowed by the learned single Judge, but subsequently W.A.Nos. 507 & 508 of 1980 were allowed in favour of the Department by a Division Bench of this Court by judgment dated 10.03.1986, which order was confirmed in appeal by the Supreme Court by its order dated 20.01.94.
4. Thus, the facts of the case disclose that the appellant had claimed the benefit of Notification No.25/70 issued under Rule 8 of the Central Excise Rules exempting mixed fertilizers falling under Item-14 of Schedule I to the Central Excise and Salt Act, 1944.
5. The issue as to whether the appellant was entitled to the benefit of the said notification went upto the Supreme Court, and the Supreme Court by its order dated 20.01.94 in Civil Appeal Nos. 4531 & 4532 of 1986 held that the mixture manufactured by the appellant does not satisfy all the conditions prescribed by the notification, and hence the appellant cannot get the benefit of the said notification. The appeals were consequently dismissed by the Supreme Court.
6. After dismissal of the appeal by the Supreme Court by its order dated 20.01.94, the Assistant Collector (Central Excise) wrote a letter to the appellant on 11.03.1994 demanding Rs.8.94 crores. This was disputed by the appellant, and the matter was discussed with the Principal Collector, who by letter dated 19.01.95 informed the appellant that it had to pay the undisputed balance amount of Rs.4.84 crores with interest at 17.5%. This amount was duly paid by the appellant, and it appears that after 1995 the entire dispute was treated as closed.
7. However, surprisingly, the appellant after three years received a letter on 5.2.1998 from the Department asking it to pay additional amount of Rs.3.1 crores on or before 11.02.1998, failing which recovery proceedings would be initiated against it under Rule 230.
8. It is alleged by the appellant that since it is a Public Sector Undertaking it could not file any case/appeal without clearance by a Higher Powered Committee in view of the decisions of the Supreme Court referred to later in this judgment. Hence, against the fresh demand of Rs.3.1 crores, the appellant wrote a letter on 24.04.1998 to the High Powered Committee seeking permission to file a petition before the Supreme Court against the fresh demand of Rs.3.1 crores. The appellant has alleged that it did not seek permission to file appeal before the Commissioner (Appeals), because the demand raised in the letter dated 5.2.1998 was not in pursuance of any show cause notice. Further, it could not be treated as an assessment order or an appealable order.
9. The High Powered Committee refused to grant permission to the appellant to file a petition before the Supreme Court, but instead passed the following order: -
“ The Committee, having, regard to the fact that the dispute under consideration had arisen out of fresh demand did not pe
