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1988 Supreme(Mad) 304
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE SWAMIKKANNU
Sri Meenakshi Foundry - Appellant
Versus
Superintendent of Central Excise - Respondent
Case No : W.P. Nos. 6030 and 6072 of 1981
Decided On : 04 August 1988
A manufacturer is not entitled to exemption from payment of duty under Notification No. 71/78 if the clearance of goods from the factory exceeds Rs. 15 lakhs in the preceding financial year.
Headnote:
CENTRAL EXCISE - EXEMPTION - NOTIFICATION NO. 71/78 - INTERPRETATION - MANUFACTURER OF ELECTRIC MOTORS - CLEARANCE OF GOODS EXCEEDING RS. 15 LAKHS IN PRECEDING FINANCIAL YEAR - NOT ENTITLED TO EXEMPTION - ERRONEOUS REFUND OF DUTY - RECOVERY - LEGALITY - CENTRAL EXCISE ACT, 1944, SEC. 35A(2).
Fact of the Case:
The petitioner, a manufacturer of electric motors, was granted exemption from payment of duty under Notification No. 71/78, which was later found to be erroneous. The Assistant Collector issued a show cause notice for recovery of the duty, which was confirmed by the Appellate Collector. The petitioner filed a revision petition, which was pending. The Superintendent of Central Excise issued a notice directing the petitioner to pay the duty.
Finding of the Court:
The petitioner was not entitled to the exemption as the clearance of goods from the factory exceeded Rs. 15 lakhs in the preceding financial year. The erroneous refund of duty was recoverable under Section 35A(2) of the Central Excise Act, 1944. The Superintendent of Central Excise was correct in issuing the notice directing the petitioner to pay the duty.
Issues: Whether the petitioner was entitled to the exemption under Notification No. 71/78.
Ratio Decidendi: The petitioner was not entitled to the exemption as the clearance of goods from the factory exceeded Rs. 15 lakhs in the preceding financial year. The erroneous refund of duty was recoverable under Section 35A(2) of the Central Excise Act, 1944. The Superintendent of Central Excise was correct in issuing the notice directing the petitioner to pay the duty.
Final Decision: The writ petitions were dismissed.
W.P. No. 6030 of 1981 is for the issue of a writ of Mandamus forbearing the respondents from taking coercive action in pursuant to the notice in O.C.No. 1097/81, dated 14-7-1981 on the file of the first respondent pending disposal of the revision petition before the 4th respondent.
2.W.P. No. 6072 of 1981 is for the issue of a writ of certiorari calling for the records relating to the notice of the 1st respondent in O.C. No. 1096/81, dated 14-7-1981 and for quashing the same.
3.The impugned notice dated 14-7-1981 in O.C. No. 1097/81 emanated from the Office of the Superintendent of Central Excise, Coimbatore II C Range, 6/7, Race Course, Coimbatore reads as follows :
"To
M/s. Meenakshi Foundry,
L4No.8/EM/76
Singanallur, Coimbatore - 5.
Gentleman,
Sub : Center Excise - M/s. Meenakshi Foundry - Arrears of Revenue - payment of - regarding.
Ref: (1) Show Cause Notice OC No. 1234/612/79.
(2) Order in Original C.No. IV/1/160/79 dated 9-1-1981.
(3) Order in appeal C.No.V/30-6-1981 dated 8-6-1981.
Please take notice that you will have to pay duty of Rs. 39, 249.60 (Rs. Thirty-nine thousand two hundred and forty nine and paise sixty only) being the duty on electric motors cleared from 8-6-1979 to 19-7-1979 calculated on the directions received in reference No. 3 out of Rs. 99, 971.20p demanded and confirmed in reference Nos. 1 and 2.
PARTICULARS OF DUTY TO BE PAID
You are hereby instructed to pay the amount within ten days from the date of receipt of this letter and paid up challan produced before the undersigned failing which appropriate action will be taken to realise the amount as per Rules.'
4.The impugned notice in the writ petition No. 6072 of 1981 is O.C No. 1096/81 dated 14-7-1981 from the office of the Superintendent of Central Excise, Coimbatore II C Range, 6/7, Race Course, Coimbatore. It is to the following effect:To
M/s. Meenakshi Foundry,
14 No.8/EM/76,
Singanallur, Coimbatore - 5.
Gentleman,
Sub: Central Excise - Erroneous payment of refund - M/s. Meenakshi Foundry, Coimbatore - Rejection of revision application by Government of India-regarding.
Ref: Collector's order in review C.No.V. 30/30/17/79 C XII dated 17-10-1980.
Please refer to Government of India, Ministry of Finance (Department of Revenue) New Delhi letter E.No. 195/15/18/81-CX5 dated 29-1-1981 wherein your revision application to grant stay has been rejected.
You are hereby directed to pay the amount of Rs. 21.763.20p (Rs. Twenty one thousand seven hundred and sixty-three and paise twenty) which was erroneously refunded vide CBE I Dn.C.No.V/30/18/275/79 dated 25-7-1979 within ten days from the date of receipt of this letter and the paid up challan produced before the undersigned.
Failure to pay the amount will be dealt with appropriately according to Central Excise Rules.'
5.It isinter aliastated by the deponent in the affidavit accompanying both these petitions, who is the Managing Partner of the petitioners that the petitioners are manufacturing Electric Motors and Power Driven Pumps under Small Scale Sector, and that on 28-4-1979 the 2nd respondent had permitted to avail the exemption from the payment of duty for Electric Motors being manufactured by the petitioners under Notification No. 71/78, dated 1-3-1978 during the financial year 1979-1980. In pursuant of permission for exemption the duty paid from 1-4-1979 to 30-4-1979 amounting to Rs. 21, 763.20 was ordered to be refunded by the 2nd Respondent on 26-6-1979.
6.While the 2nd respondent has granted exemption the 1st respondent has issued a show cause notice dated 6-12-1979 requiring duty on Electric Motors cleared under exemption from 1-4-1979 to 19-7-1979, which works out to Rs. 99, 971.20. The 2nd respondent has confirmed the same by his order dated 9-1-1981. The petitioners preferred an appeal to the 3rd respondent on 9-4-1981. The 3rd respondent by his order in Appeal No. 439/81, dated 8-6-1981 and received by the petitioners on 16-6-1981 allowed the appeal in part. The appeal was allowed only for a sum of Rs.
