1982 Supreme(Mad) 253

High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE PADMANABHAN
Indian Organic Chemicals Limited - Appellant
Versus
Union of India and Others - Respondent
Case No : Writ Petition No. 179 of 1980
Decided On : 27 July 1982

The authorities do not have the power to review their earlier order granting unconditional approval to the classification lists and treating them as a provisional order under Rule 9B long afterwards.

Headnote:

CENTRAL EXCISE - EXEMPTION - FIBRE/TOPS MANUFACTURED OUT OF DUTY PAID WASTE - APPROVAL GRANTED TO CLASSIFICATION LIST - SUBSEQUENT TREATMENT AS PROVISIONAL - REVIEW OF EARLIER ORDER - POWER OF AUTHORITIES - NOTIFICATION NO. 37/78, DATED 1-3-1978 - NOTIFICATION NO. 44/80-CE, DATED 24-4-1980 - CENTRAL EXCISES AND SALT ACT, 1944 - RULE 8(1) - RULE 9 - RULE 9B.

Fact of the Case:

The petitioner, a limited company registered under the Indian Companies Act, was engaged in the business of manufacturing fibres/tops, which fell under sub-item I of Item 18 of the First Schedule to the Central Excises and Salt Act, 1944. During the process of manufacturing, the petitioner obtained solid undrawn waste and fibrous drawn waste, which were then sorted, washed, cleaned, dried, crushed, and fed into the main plant reactor. MEG (Glycol) was used only as an assisting agent, and the entire quantity of MEG came out in the same form except for a marginal loss due to handling. On 12th August, 1977, the Government of India issued two Notifications, Nos. 278 of 1977 and 279 of 1977, which made it clear that man-made fibres and tops falling under sub-item I of Item No. 18 of the First Schedule to the Central Excises and Salt Act, 1944 were exempt from excise duty. On 6-3-1978, the petitioners filed a classification list of excisable goods, which was approved by the Assistant Collector of Central Excise, Madras, subject to certain conditions. Similar classification lists were filed and approved on 4-10-1978 and 4-4-1979. However, on 16th November, 1979, the Assistant Collector of Central Excise, Madras, sent a communication stating that the approval granted to the petitioners in the classification list No. 7/78, dated 6-3-1978, extending the benefit of Notification No. 279/77, dated 12-8-1977, as amended by Notification No. 37/78, dated 1-3-1978 to the polyester fibre manufactured out of duty paid waste may be treated as provisional till the completion of certain enquiries undertaken. A similar communication was sent on 26-11-1979. Thereafter, on 6-12-1979, the Superintendent of Central Excise, Madras, called upon the petitioners to execute a bond for Rs. 60, 00, 000/ with security amount equivalent to 25% of the bond amount or with surety.

Finding of the Court:

The court held that the impugned communications dated 16-11-1979 and 26-11-1979, which treated the approval granted to the classification list filed by the petitioners as early as on 13-3-1978, 4-10-1978 and 4-4-1979 as provisional under Rule 9B of the rules, were liable to be quashed. The court also held that the third impugned communication calling upon the petitioners to execute a bond for Rs. 60, 00, 000/ with a solvent surety must also fall to the ground, as that only can be demanded when a provisional assessment is made under Rule 9B. The court further held that the petitioners were entitled to the exemption granted by Notification No. 37/78, as the notification merely referred to fibre/tops manufactured out of duty paid waste and did not say that no other material should be used along with duty paid waste.

Issues: 1. Whether the authorities had the power to review their earlier order granting unconditional approval to the classification lists and treating them as a provisional order under Rule 9B long afterwards? 2. Whether the petitioners were entitled to the exemption granted by Notification No. 37/78, even though they used MEG (Glycol) as an assisting agent in the manufacturing process?

Ratio Decidendi: 1. The court held that there is no inherent power of review in an authority while acting judicially or quasi judicially. The power of review must be conferred expressly or by necessary implication by the provisions of the statute. The Central Excises and Salt Act and the rules made thereunder do not confer upon the authorities any power of review of their own order. Therefore, the respondents had no power to review the earlier order of approval to the classification lists and treat them as provisional under Rule 9B long afterwards. 2. The court held that the petitioners were entitled to the exemption granted by Notification No. 37/78, as the notification merely referred to fibre/tops manufactured out of duty paid waste and did not say that no other material should be used along with duty paid waste. The court also noted that the petitioners had used MEG (Glycol) only as an assisting agent, and the entire quantity of MEG came out in the same form except for a marginal loss due to handling.

Final Decision: The court allowed the writ petition and quashed the impugned orders dated 16-11-1979, 26-11-1979 and 6-12-1979.