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High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE D. RAJU
Madras Vanaspati Limited - Appellant
Versus
Union of India - Respondents
Writ Petition No. 12979 of 1989
Decided On : 04 February 1992
CENTRAL EXCISE - CREDIT OF MONEY SCHEME - WITHDRAWAL OF SCHEME - WHETHER PETITIONER ENTITLED TO UTILISE CREDIT EARNED PRIOR TO WITHDRAWAL - APPLICABILITY OF PRINCIPLE OF PROMISSORY ESTOPPEL - INTERPRETATION OF RELEVANT RULES AND NOTIFICATIONS.
Fact of the Case:
The petitioner, a manufacturer of Vanaspati, challenged the validity of a notification issued by the Government of India withdrawing a scheme that allowed manufacturers to avail credit of money on the usage of minor oils in the manufacture of Vanaspati. The petitioner claimed that it had earned credit under the scheme prior to its withdrawal and was entitled to utilize the same.
Finding of the Court:
The court held that the petitioner was entitled to utilize the credit earned by it in accordance with the scheme when the scheme was in force and prior to the date of withdrawal of the scheme. The court found that the notification rescinding the earlier notifications did not have the effect of abrogating the rights already earned by the petitioner under the scheme or disallowing the petitioner from utilizing the credit accrued to it.
Issues: 1. Whether the petitioner was entitled to utilize the credit earned by it under the scheme prior to its withdrawal? 2. Whether the principle of promissory estoppel was applicable in the present case?
Ratio Decidendi: 1. The court held that the petitioner was entitled to utilize the credit earned by it under the scheme prior to its withdrawal. The court relied on the fact that the notification rescinding the earlier notifications did not have the effect of abrogating the rights already earned by the petitioner under the scheme or disallowing the petitioner from utilizing the credit accrued to it. The court also relied on the continued existence of Rule 57N which regulated or protected the right to utilize the credit already earned. 2. The court did not discuss the applicability of the principle of promissory estoppel in the present case.
Final Decision: The court issued a writ of mandamus directing the respondents to allow the petitioner to avail of the credit legitimately earned by the petitioner in terms of the relevant notification prior to the date of withdrawal of the scheme.
The Order of the Court is as follows :-
This Petition coming on for hearing on this day upon perusing the petition and the affidavit filed in support thereof the order of the High Court dated 25-9-1989 and made herein and the records relating to the order in Notification 39/89-C.E.(N.T.), dated 25-8-1989 on the file of the 3rd Respondent comprised in the return of the said respondent to the Writ made by the High Court, and upon hearing the arguments of Mr. A.K. Mylsamy, Advocate for the petitioner and of Mr. K. Jayachandran, Additional Central Government Standing Counsel on behalf of the Respondents the Court made the following order -
The writ petition is for the issue of a writ ofcertiorarified mandamusto call for and quash the proceedings in the Notification No. 39/89-C.E.(N.T.), dt. 25-8-1989 of the 3rd respondent and to direct the respondents to allow the petitioner to avail the credit of Rs. 15, 88, 336.63 earned and accrued to it in R.G. 23-B, Part II.
2.The petitioner company is carrying on business of manufacturing Vanaspati and Refined oil. The raw material for the manufacture of Vanaspati is Palm oil, Ricebran oil, Rapeseed oil, Mustard oil, Soyabean oil, Sesame oil, Cotton Seed oil, Solvent Extracted oil, etc. According to the affidavit filed in support of this writ petition, the Central Government was originally supplying the raw materials through the State Trading Corporation of India till the control was lifted and now the oil price is fixed according to the fluctuation of the oil market by the manufacturers That in exercise of the powers conferred under Rule 57K of the Central Excise Rules, 1944, the Government of India issued a Notification bearing No. 27/87-C.E., dt. 1-3-1987 allowing money credit on the usage of minor oils in the manufacture of Vanaspati falling under sub-head 1504 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); and the grant of credit and the utilisation is subject to the rights and terms of the Notification issued under Rule 57K and subsequently the said Notification dt. 1-3-1987 appears to have been amended by the Notification No. 192/87-C.E., dt. 12-8-1987. The petitioner would claim that by virtue of the notifications referred to above, the petitioner earned the credit in respect of Minor oil subjected to hydrogenation on or before 1-3-1987 and that the credit so earned could be used at any time subject to certain restrictions. It is also claimed that as on 25-8-1989 the credits earned by the petitioner in terms of the Notification referred to above, amounted to Rs. 15, 88, 336-63 and that the Register R.G. 23-B Part II, maintained under Rule 57K of the Rules would go to substantiate the details with regard to the quantum of credit earned. While so, the Government of India appears to have published the Notification No. 39/89-C.E.(N.T.) rescinding the earlier Notifications 27/87 dated 1-3-1987 and 192/87 dt. 12-8-1987 and thereby withdrawing the scheme of money credit in respect of minor oils used in the manufacture of Vanaspati and soaps. The petitioner also claims that on 10-9-1989 the petitioner came to know of the Notification No. 39/89 and the petitioner has been paying Central Excise duty in cash, without prejudice to its right to the Money Credit earned till 25-8-1989. It is further stated that the petitioner received a letter from the 1st respondent pointing out, that the petitioner is not entitled to claim credit or to avail credit earned till 25-8-1989 on the said scheme based on the Notifications 27/87 and 192/87, and directed the petitioner to debit a sum of Rs. 38, 580/- and further directed the petitioner to reverse the said credit of Rs. 38, 580/- and to pay a sum of Rs. 83, 130/- the credit utilised by the petitioner from 25-8-1989 to 31-8-1989. The 1st respondent so appears to have sent another letter dt. 15-9-1989 demanding once again a sum of Rs. 2, 13, 630/- on the clearance made by the petitioner utilising the credit earned during 25-8-19
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