S.B. Vora And Co. And Anr. vs Union Of India (Uoi) And Ors.
2002 Latest Caselaw 522 Bom

JUDGMENT

J.P. Devadhar, J.

1. In this petition, the petitioners have challenged the adjudication orders dated 28th, 29th & 30th September, 1988 (Exhibits A, B & C to the petition) wherein the Respondents have denied benefit of exemption Notification No. 75/84 on the ground that the Petitioners have not complied with the conditions set out in the said Notification and accordingly confirmed the demand at excise duty under the respective show cause notices issued to the Petitioners.

2. Facts giving rise to the petition are as follows:

The Petitioners manufacture products known as thinners and industrial solvents. For the manufacture of the said products, they require petroleum products like benzene, toulene, etc.

3. By Notification No. 35/73 CE dated 1.3.1973 the Central Government permitted concessional rates of excise duty for benzene, toulene, etc. provided an Officer not below the rank of an Assistant Collector Central Excise is satisfied that the said items are intended for use inter alia as solvent or diluent or thinner for manufacture of paints, varnishes, lacquers or for use in painting. The notification further provided that where such use is elsewhere than in the factory of product, the exemption shall be allowable only if the procedure laid down in Chapter X of the Central Excise Rules, 1944 is followed. The Petitioners in March, 1982 applied for an L-6 licence in the prescribed form under Chapter X of Central Excise Rules and on being satisfied, the Respondents granted the said licence to the Petitioner so as to enable them to obtain benzene and toulene at the concessional rate.

4. Exemption Notification No. 75/84 dated 1.3.1984 replaced the earlier Notification No. 35/73. However, there is no material difference regarding the grant of concessional rate for the said products. Even after the exemption Notification No. 75/84 came into effect the L-6 licence granted to the Petitioners was renewed by the Respondents and the Petitioners were permitted to obtain benzene and toulene at the concessional rate.

5. By a letter dated 8.2.1985 (Exhibit - 'P' to the petition), the Superintendent, Central Excise purported to withdraw the benefit of concession available under the Notification No. 75/84 and the Petitioners were called upon to surrender the L-6 licence granted to them immediately along with C.T.2 certificate issued to them. Being aggrieved by the aforesaid action, the Petitioners filed an appeal before Collector of Central Excise (Appeals) who by the order dated 18.5.1987 (Exhibit-I to the petition) set aside the order contained in the letter dated 8.2.1985, thereby permitting the Petitioners to avail concessional duty under L-6 licence as per Notification No. 75/84.

6. In the meantime, the Respondents issued a show cause notice dated 13th February, 1985 (Exhibit-A-1 to the Petition at page 73) stating that the Petitioners by converting Benzene & touluene into thinner and selling or clearing it as solvent instead of using it in the same factory, have violated the terms of the Notification No. 75/84. By the said notice, the Petitioners were called upon to show cause as to why concession availed by the Petitioners vide Notification No. 75/84 should not be cancelled and why duty for the period from 15.8.1984 to 15.12.1984 amounting to Rs. 2,14,246.69 should not be recovered from them. However, subsequently, by a letter dated 18th June, 1985 (Exhibit-'S" to the petition), the Petitioners were informed that they are entitled to purchase the excisable goods namely benzene and toluene under concessional rate of duty under Chapter X procedure as necessary clarification has been received from the Ministry. Accordingly, no action was taken on the show cause notice dated 13.2.1985.

7. In spite of the aforesaid facts, the Respondents once again issued show cause notices on 5th May, 1986, 7th May, 1986 and 30th March, 1988 (Exhibits-A-2, A-3 & A-4 to the petition) calling upon the Petitioners to show cause why the concession granted to them in respect of benzene and toluene under Exemption Notification No. 75/84 should not be disallowed and amount for the periods set out therein should not be recovered from the Petitioners. The Petitioners filed detailed reply to the said show cause notices stating that the matter having already been decided in their favour, they were entitled to the concessional rate of duty and the show cause notices issued to them be dropped.

8. By the impugned orders dated 28th, 29th & 30th September, 1988 (Exhibits-A, B & C in this petition) the adjudicating authority confirmed the demand raised against the Petitioners in the respective show cause notices. Being aggrieved by the aforesaid orders, the Petitioners have filed the present petition.

9. Mr. Parekh, learned Counsel appearing on behalf of the Petitioners submitted that there is no difference whatsoever between the Notification No. 35/73 and Notification No. 75/84. It was submitted that under both the Notifications end use verification was not necessary. Mr. Parekh relied upon the decision of CEGAT, New Delhi in the case of Shalimar Chemical Industries Pvt. Ltd. v. Collr. Of C. Ex. Bombay and the decision of CEGAT, Calcutta in the case of Shalimar Paints Ltd. v. Commissioner of C. Ex., Calcutta II reported in 1997 (95) ELT 555 (Tribunal) and submitted that under Notification No. 75/84 end use verification was not necessary and both the Notifications viz. 35/73 & 75/84 being similar, the Petitioners were entitled to obtain benzene and toluene at concessional rate as per the notification No. 75/84 and, therefore, the impugned orders are liable to be quashed and set aside.

10. Mr. Shah, the learned Counsel appearing on behalf of the Respondents submitted that the Petitioners have suitable alternate remedy of filing appeal against the adjudication orders and, therefore, no interference is called for in a writ jurisdiction under Article 226 of the Constitution of India. It was submitted by Mr. Shah that Notification Nos. 35/73 and 75/84 are materially different and as per the Government instructions dated 11th February, 1988 (Exhibit Z-2 to the petition), it was necessary on the part of the petitioners to submit end use verification. In the instant case, since the petitioners have failed to submit the end use certificate, the petitioners were not entitled to the benefit under the Exemption Notification No. 75/84 and accordingly the orders passed by the adjudicating authority must be sustained.

11. After hearing the Counsel for both the sides and after perusing the records place before us, we are of the opinion that the orders of the Respondents No. 3 cannot be sustained. First of all in the instant case, after the exemption Notification No. 75/84 was issued, the Respondents have renewed the L-6 licence of the Petitioners so as to enable them to obtain benzene and toluene at concessional rate. Secondly, in the past the Respondents had issued similar show cause notice on 13th February, 1985 stating that the Petitioners are not entitled to the concession under the said notification No. 75/84. Thereafter, the Superintendent of Central Excise by his letters dated 18th June, 1985 (Exhibit-S to the petition) and 19.6.1985 (Exhibit-V to the petition) had stated that the necessary instructions have been received from the Ministry thereby holding that the Petitioners are entitled to obtain toluene-toluol, benzene-benzol at concessional rate of duty under the Notification No. 75/84. Therefore, in the absence of any new material on record, the impugned show cause notices dated 5.5.1986, 7.5.1986 and 30.3.1988 could not be issued. Counsel for Respondents could not point out to us existence of any material in that behalf. It is not open to the Respondents to rely upon the Government, instructions dated 11.2.1988 (Exhibit Z-2 to the petition) which were issued after the issuance of the two show cause notices. In any event, the said Govt. instructions dated 11.2.1988 run counter to the plain words contained in the Notification No. 75/84. As held by the Tribunal in the case of Shalimar Chemical Industries Pvt. Ltd. (supra) and In the case of Shalimar Paints Ltd. (supra), the two notifications are part materia and Notification No. 75/84 talks about the intended use of the goods as 'thinners' in the manufacture of 'allied materials'. The use of inputs like benzene and toluene in the manufacture of thinners is not disputed by the Respondents. The 'thinners' are covered by the expression 'allied materials' and stand on the same platform on which paints, varnishes and lacquers stand. Accordingly, we hold that the Petitioners are entitled to the benefit of Notification No. 75/84.

12. In the result the orders impugned in the petition dated 28th, 29th & 30th September, 1988 (Exhibits-A, B & C to the petition) are quashed and set aside.

13. We are informed by the Counsel for the Respondents that the show cause notice dated 29th September, 1988 (Exhibit-H-1 to the petition) has been subsequently dropped vide order dated 9.8.1991 with liberty to revive the same subject to the result of this Petition. Since we have allowed the petition and quashed and set aside the order passed by the Respondents, this notice dated 29.9.1988 (Exhibit-H-1) to the Petition) stands cancelled and will not be revived.

14. Accordingly, rule is made absolute in terms of prayer Clause (a).

15. However, in the facts and circumstances of the case there will be no order as to costs.

C.C. expedited.