THE EAST ASIATIC COMPANY (INDIA) LTD. Vs. THE MARITIME COLLECTOR OF CENTRAL EXCISE AND THE JOINT SECRETARY TO THE GOVERNMENT OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE AND INSURANCE

JUDGEMENT

(1.) This Writ 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 10.11.1976 and made herein and the counter affidavit filed herein and the records relating to the Order in C. No. VI/Y/15/19/63 -E.C. and Order No. 766 of 1975 dated 12.4.71 and 12.11.75 on the file of respondent comprised in the return of Respondents to the writ made by the High Court, and upon hearing the arguments of Mr. S.V. Subramaniam of M/s Subbaraya Iyer Padmanabhan and Ramamani and S.V. Subramaniam, Advocates for the petitioner, and of Mr. T. Chengalvarayan, Central Government Senior Standing Counsel on behalf of the respondents the Court made the following order:

(2.) The petitioner was engaged in manufacturing V.N.E. oil for home consumption as well as for export. During the months of March, April and May 1963, the petitioner exported out of India a certain quantity of processed V.N.E. oil and claimed the ad hoc rebate of duty under Notification No. 197/62 dated 17.11.1962, besides the full amount of duty paid on the processed V.N.E. oil ex -ported. The claim for rebate was granted and a sum of Rs. 1,59,683.77 was refunded to the petitioner by means of two cheques dated 20.4.63 and 19.7.63. On account of subsequent investigation and verification, the Central Excise authorities found that the petitioner had manufactured processed oil out of unprocessed oil produced in the same factory and a quantity of 1,212.050 M.T. out of the exported quantity of 1474.730 M.T. of processed oil did not suffer duty at the unprocessed stage. The authorities therefore demanded repayment of a sum of Rs. 1,03,505.50 & a further sum of Rs. 27,735.27 on the ground that the ad hoc rebate on processed oil can be claimed only if the oil had suffered duty at the unprocessed stage. As the demands were not honoured, the department sought to withhold refund of amounts payable for the future period to the petitioner so as to adjust the amount towards the demands raised earlier. This adjustment was objected to by the petitioner and the objection was considered by the Maritime Collector of Central Excise. Madras, who is the first respondent herein. The first respondent overruled the objections and the petitioner thereupon preferred an appeal to the Appellate Collector of Central Excise. When the appeal failed, there was a revision to the Second respondent, but that also ended in failure. It is thereafter that the petitioner has moved this court under Article 226 of the Constitution.

(3.) When the petition was taken up for hearing, Mr. S.V. Subramaniam, the learned Counsel for the petitioner raised the contention that the demand made on the petitioner by the first respondent in exercise of his power under Rule 10A of the Central Excise Rules is not a legally sustainable one, because Rule 10A is itself ultra vires the Act. He therefore contended that if the very rule on the basis of which the demand had been raised is not sustainable, then the demand and the proposed adjustment of future refund towards the demand will also have to fall down. He therefore pleads that it is not necessary to go into the question whether the petitioner is not entitled to claim ad hoc rebate on processed oil. In support of his contention, the learned Counsel places reliance on the decision in W.P. Nos. 265 and 266 of 1967 rendered by a division Bench of this Court (Murugen and Company v/s. The Deputy Collector of Central Excise, 6, Royal Road, Tiruchirappalli and Ors.). The learned Judges who decided that case have applied the ratio laid down in Citadel Fine Pharmaceuticals Pvt. Ltd. v/s. : (1973)1MLJ99 and held that the Rule 10A of the Central Excise Rules is ultra vires the Act. Yet another decision where the same ratio has been laid down is in Parker and Co. Madras v/s. Union of India and Ors. W.P. Nos. 1492 and 4198 of 1970.