1. 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.1097/81 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 :
M/s. Meenakshi Foundry, L4 No. 8/EM/76 Singanallur, Coimbatore – 5.
Sub : Centre 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 fortynine 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 June 1979 : Rs.21,170-40 July (19-7-79) : Rs.18,079-20 ____________ Total Rs.39,249-60 ____________ 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 : Centre 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- 10-80. 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 dt. 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 is inter alia stated by the deponent in the affidavit accompanying both these petitions, who is the Managing Partner of the petitioners that the petitioner are manufacturing Electric Motors 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.39,249.60. The petitioners preferred a Revision petition and no order was passed till now.
7. As regards the refund of Rs.21,763.20, the 4th respondent by his order dated 17-10-1980 set aside the orders of sanction of refund of the 2nd respondent and directed the 1st respondent to consider his order and decide upon the same in his show cause notice. On 6-12-1979, the 1st respondent has already included the said sum of Rs.21,763.20 in his show cause notice which is for a total sum of Rs.99,971.20 for the period 1- 4-1979 to 19-7-1979. The third respondent, by his order in appeal No. 439.80 dated 8-6-1981 has disallowed the claim of the 1st respondent to the tune of Rs.60,721.60 as time barred. As such the aforesaid sum of Rs.21,763.20 was included and to be treated as time barred.
8. It is submitted on behalf of the petitioners herein that the first respondent has issued again a notice under OC 1096/81 dated 14-7-1981 demanding the payment of the said amount of Rs.21,763.20 within 10 days failing which appropriate action would be taken against the petitioners. The action of the first respondent in issuing the said notice is illegal and unconstitutional.
9. In other words, the case put forward by the petitioners is that the first respondent had already issued a demand notice on 6-12-1979 for a sum of Rs.99,971.20 inclusive of the aforesaid sum of Rs.21,763.20, that the issuance of two notices for the same dues is illegal and unconstitutional and that when the 3rd respondent has disallowed the claim of the 1st respondent by his order dated 8-6-1981, the 1st respondent’s claim by his notice dated 14-7-1981 for a sum of Rs.21,763.20 which has also been disallowed by the 3rd respondent is against law and unsustainable. The 1st respondent is not authorised to take penal action twice for the same amounts due. The first respondent’s action in issuing the notice as already stated, is illegal and unconstitutional. It is further submitted on behalf of the petitioners that the amount demanded by the first respondent on 14-7- 1981 has already been the subject matter of his earlier demand notice dated 6-12- 1979 and was subsequently disallowed by the 3rd respondent on 8-6-1981.
10. In W.P. No.6030 of 1981, it is submitted on behalf of the petitioners that on 28-4-1979 the 2nd respondent has 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 1979-80, and that while the 3rd 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 Second 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.39,249.60. As already stated the petitioner preferred a revision petition before the 4th respondent on 29-7-1981. A stay petition was preferred along with the said revision petition. According to the respondents the said revision petition was dismissed, though in the affidavit it is stated that no order was passed on the said stay petition.
11. According to the petitioners, it was during the pendency of the revision petition before the 4th respondent, the first respondent issued a notice dated 14-7-1981 demanding payment of duty of Rs.39,249.60. It is against law.
12. The point for consideration is whether the reliefs prayed for in both these writ petitions by the petitioner can be granted.
13. M/s. Sri Meenakshi Foundry, Coimbatore, the petitioner in both these writ petitions are manufacturing Electric Motors and the power driven pumps under Small Scale Sector. The value of clearance of Electric Motors from the factory during 78-79 is Rs.18, 37,652/-
14. According to the condition (ii) of the Notification No.71/78, the manufacturer of the specified goods are not entitled to the exemption if the clearances during the preceding financial year had exceeded Rs.15 lakhs. Therefore the petitioner is not entitled to the exemption since the value of clearances during the preceding financial year (i.e. 1978- 79) is more than Rs. 15 lakhs (i.e. Rs.18,37,652/-).
15. It is seen that by misinterpreting 71/78 notification applying the condition a(iii) of the Notification which is applicable for the factory manufacturing more than one tariff item and by taking that even in respect of factory manufacturing one tariff item, the limit of the clearances should be Rs. 20 lakhs, the Assistant Collector has wrongly extended the benefit of the exemption of the petitioner and he has also sanctioned the refund of Rs.21,763.20 paid by the petitioner during the period 1-4-1979 to 30-4-1979.
16. Notification 71/78 of the C.B.E. & C. Bulletin reads as follows :-
“In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts the excisable goods of the description specified in column (3) of the Table hereto annexed (hereinafter referred to as the “specified goods”), and falling under such Item No.(1 of 1944), as is specified in the corresponding entry in column (2) of the said Table, in respect of the first clearances of such excisable goods for home consumption upto an aggregate value not exceeding rupees five lakhs and cleared on or after the 1st day of April in any financial year, by or on behalf of a manufacturer, from one or more factories, from the whole of the duty of excise leviable thereon, subject to the following conditions, namely :-
(a) the exemption contained in this notification shall not be applicable to a manufacturer :
(i) during the financial year 1978-79 if the aggregate value of the specified goods cleared, if any, by him or on his behalf for home consumption, from one or more factories, during the period commencing on the 1st day of April, 1977 and ending on the 28th day of February, 1978, had exceeded Rs.13.75 lakhs; and
(ii) during financial years subsequent to the financial year 1978-79, if such clearances, if any, of the specified goods, during the preceding financial year, had exceeded rupees fifteen lakhs;
(b) the value of clearances made during financial year shall be calculated separately for all the goods specified in column (3) of the said Table against each serial number specified in the corresponding entry in column (1) thereof;
(c) where a factory producing the specified goods is run at different times of any financial year by different manufacturers, the value of the specified goods so cleared from such factory in any such year at nil rate of duty shall not exceed rupees five lakhs.”‘
17. In pursuance of the exemption granted by the Assistant Collector, it is also seen that the petitioner has not paid duty on the clearance made from his factory subsequent to the said order.
18. It is mentioned in the counter affidavit filed in both these petitions that on realising the mistake, Superintendent issued a show cause notice on 6-12-1979 asking as to why duty should not be recovered for the clearance made without payment of duty between 1-4- 1979 and 19- 7-1979 for Rs.99,971.20 and that before the case was adjudicated, the Collector of Central Excise, Madras had taken up the review of the refund of Rs.21,763.20 made erroneously by the Assistant Collector and issued a show cause notice in this regard on 19-1-1980 under Section 35A(b) of the Central Excise Act. After hearing the representation of the petitioner, the Collector of Central Excise, madras has set aside the Assistant Collector’s order sanctioning the refund of Rs.21,763.20 on 17-10-1980. The petitioner has filed a revision petition before the Govt. of India and also requested for the stay of the Collector’s orders but the stay was refused by the Government of India.
19. It is also mentioned on behalf of the petitioners that since the revision is pending before the Govt. coercive steps should not be taken against the petitioners.
20. It is also mentioned in the counter filed on behalf of the respondents in both the petitions that pursuant to the show cause notice dated 6-12-1979 issued to the petitioner, after hearing the petitioner, the Assistant Collector of Central Excise, Coimbatore has decided the case and demanded the duty amount of Rs.99,971.20 show in the show cause notice. The order of the Assistant Collector was passed on 9-1-1981.
21. The petitioner filed an appeal before the Appellate Collector against the orders passed by the Assistant Collector and the Appellate Collector has held that the demand is sustainable under the law subject to the limitations of six months prior to the date of receipt of the show cause notice. The order of the Appellate Authority is dated 8-6- 1981.
22. It is submitted on behalf of the respondents by Mr. T. Somasundaram, Additional Central Government Standing Counsel that in view of the Review orders dated 17-10-1980 passed by the Collector setting aside the refund granted by the Assistant Collector and in view of the Appellate Collector’s order dated 8-6-1981 sustaining the demand but restricting it to the limitation of six months, the petitioner is liable to pay the following amounts :-
(1) Rs.21,763.20 (amount erroneously refunded as per Review order dated 17-10-1980)
(2) Rs.39,249.60 (As per Appellate Collector’s order dated 8-6-1981).
23. It is further submitted on behalf of the respondents that on the basis of the two orders referred to above, the Superintendent of Central Excise, Coimbatore has issued two demand notices directing them to pay the amount under O.C. No.1097/81 and O.C.1096 of 1981 both dated 14-7- 1981 respectively.
24. It is under these circumstances, the petitioners filed the present two writ petitions, namely W.P.No.6072/81 challenging the Superintendent’s notice O.C. No.1096/81 dated 14-7-1981 with respect to the amount demanded at Rs.21,763.20 and W.P. No.6030 of 1981 challenging the notice in O.C. No.1097/81 dated 14-7-1981 with respect to the amount demanded namely Rs.39,249.60.
25. It is stressed by the learned Additional Central Government Standing Counsel, Mr. T. Somasundaram that the petitioners are not challenging the order of adjudication of the Collector dated 8-6-1981 confirming the order of the Assistant Collector dated 9-1-1981 in W.P. No.6030/81. Similarly the petitioner is not challenging the order in Review dated 17-10-1980, but the petitioner in both the writ petitions is challenging only the consequential notice dated 14-7-1981 and therefore the petitioner is not entitled to any relief in the writ petitions.
26. It is further submitted on behalf of the respondents that the petitioners are manufacturing only one item (i.e.) Electric Motors, mentioned in the Notification No. 71/78, and that they are entitled to the exemption only when the clearance from the factory does not exceed Rs.15 lakhs in the preceding financial year, but by mistake the Assistant Collector has extended the exemption from 1-4-1979 even though their clearances in the preceding financial year (i.e. 1978-79) was more than Rs.15 lakhs and also granted the refund of duty paid from 1-4-1979 to 30-4-1979 to the tune of Rs.21,763.20.
27. On review, in terms of Section 35A(2), the Collector of Central Excise, Madras set aside the order of the Assistant Collector granting refund. Though the Assistant Collector has included the amount in question in his order, the Appellate Collector (3rd respondent herein) has specifically stated that this amount was included in the Assistant Collector’s order and therefore restricted demand to the six months time. Therefore, the Appellate Collector has neither excluded this amount under dispute nor specified the amount to be disallowed. There the allegation that the said sum of Rs.21,763.20 is time barred cannot be upheld.
28. It is stressed by Mr. V. Natarajan, learned Counsel for the petitioners that the petitioners had preferred a revision petition against the order in review of the Collector of Central Excise, Madras setting aside the order of the Assistant Collector granting refund, and that the Revisional authorities have not yet disposed of the said petition which is still pending. This aspect is not disputed by the respondents. The revisional authorities had refused to grant stay of recovery of the sum under dispute. Therefore it cannot be successfully contended that the Superintendent’s action is illegal and the petitioners are not bound to pay the amount.
29. The amount of Rs. 21,763.20 is covered by the order of the fourth respondent. So the first respondent is correct in issuing the notice. The 4th respondent herein has adjudicated the case and the liability has been established beyond doubt. The 3rd respondent has also held that the exemption has been wrongly extended to the petitioners and confirmed the demand, but restricted it within the time limit allotted in the Central Excise Rules.
30. The Superintendent of Central Excise, Coimbatore has directed the petitioners to pay the said amount as per the orders of the 4th respondent read with that of 5th respondent, rejecting the request of the petitioners for stay of 4th respondent. Therefore, we find that the Superintendent of Central Excise has acted legally.
31. To sum up we can find that as the petitioners are manufacturing only one item of the goods mentioned in Notification No. 71/78, they are entitled to the exemption only when the clearance from the factory does not exceed Rs.15 lakhs in the preceding financial year. But the petitioners had applied for and availed the exemption. The Assistant Collector, has therefore issued the show cause notice for the recovery of Rs.99,971.20 and the same was confirmed by the order dated 9-1- 1981. The petitioner preferred an appeal to Appellate Collector, who had upheld the decision of the assistant Collector, but restricted the demands within the time limit specified in the Central Excise Rules. Aggrieved against this order, the petitioners had preferred a revision petition, which as already stated is still pending disposal before the revisional authorities. as no stay has been obtained by the petitioners, the Superintendent, Central Excise has directed the petitioner to pay the duty (i.e.) Rs.39,249.60 due as per the Appellate Collector’s order. As the petitioners had failed in their appeal and no stay had been granted by the Revisional authorities,the assessees are bound to pay the amount and since the petitioners failed to pay the duty required to be paid, the petitioners were directed to pay the said amount, by the impugned notices. Under the circumstances, the relief prayed for in the two writ petitions by the petitioners cannot be granted. There is no merit in both the writ petitions. Hence they are dismissed. There is no order as to costs.