SRI KRISHANARAJENDER MILLS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner is a Company manufacturing textile goods in Mysore City. Under the Central Excises and Salt Act (hereinafter referred to as the Act) excise duty was leviable by virtue of Entry 19 in Schedule I of the Act on some of the cotton fabrics manufactured by the petitioner. By a Notification issued by the Central Government on March 1, 1969, as amended by Notifications dated 6-6-1970, 29-5-1971 and 20-6-1971, cotton fabrics - medium - A grey (unprocessed), cotton fabrics - medium - B grey (unprocessed) and Bleached or/and dyed but not printed were exempted from payment of excise duty levied under the Act. Under the Khadi and other Handloom Industries Development (Additional Excise Duty on Cloth) Act (No.12 of 1953) (hereinafter referred to Act 12 of 1953) additional excise duty was leviable on cloth. Under a Notification issued by the Government of India, dated 25-7-1953 all varieties of cloth which were for the time being exempted from the payment of excise duty levied under the Act were exempted from the additional excise duty leviable under Act No.12, 1953. By a Notification, dated 1-10-1966, the Notification, dated 25-7-1953 was amended by the addition of a proviso stating that the said exemption was not applicable to certain kinds of cloth. The above proviso was substituted by another Notification of the Government of India, dated 7-7-1970. After the -said substitution, the Notification issued on 25- 7-1953 read as follows :

(2.) It is not disputed that the petitioner Mill is a composite mill and the goods with which we are concerned are those which are referred to in clauses (i) and (ii) of the proviso as it stood after the amendment on 7-7-1970. After the above amendment was made, unfortunately, the Superintendent of Central Excise, Mysore, on a wrong interpretation of the Notification, dated 7-7-1970 wrote to the petitioner on 26-9-1970 that all varieties of cloth which were for the time being exempted from the duty of excise under the Act were also exempted from the additional duty levied under Act 12 of 1953. He omitted to notice the effect of the proviso to the Notification, dated 25-7-1953 substituted by the Notification, dated 7-7-1970 which took away from the purview of exemption the kinds of cloth referred to in clauses (i) and (ii) of the proviso which was introduced on 7-7-1970. On the basis of the representation of the Superintendent as contained in his letter, dated 26-9-1970, the petitioner did not include in its sale price the additional excise duty which it was liable to pay under Act 12 of 1953 thinking that no such duty was recoverable in respect of said goods as they had been exempted from payment of duty under the Act. Later on, the Assistant Collector of Central Excise, who was the proper officer empowered to exercise the power under Rule 10 of the Central Excise Rules read-with Rule 1733 of the said Rules, realised that there was a short levy of additional excise duty payable under Act 12 of 1953 in respect of certain goods which answered the description of goods referred to in clauses (i) and (ii) of the proviso to Notification, dated 25-7-1953 as amended by the Notification, dated 7-7-1970 and called upon the petitioner to show cause as to why the additional duty payable under Act 12 of 1953 should not be recovered from it. The petitioner represented that it had not paid the excise duty in view of the letter, dated 26-9-1970 received from the Superintendent of Central Excise and that the revenue was debarred from claiming the said amount by virtue of the principle of equitable estoppel. It was contended by the petitioner, that but for the representation made by the Superintendent, the petitioner would have passed on the additional duty payable by it to the consumers and that the petitioner having been prevented from doing so, it was unjust on the part of the revenue to insist on the payment of the same.

(3.) The Assistant Collector who functioned as the proper officer in this case was of the view that the contention of the petitioner could not be upheld and ordered that a sum of Rs.58,052-73 was liable to be paid by the petitioner as additional excise duty under Act 12 of 1953. The appeal filed by the petitioner before the Appellate Collector and the revision petition before the Central Government, were unsuccessful. Hence, this writ petition.