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Mangalam Organics Limited Versus Union of India

2016 (2) TMI 529 - DELHI HIGH COURT

Manufacture of rosin and turpentine without aid of power - seeking retrospective exemption - writ of mandamus for directing the respondent to issue a Notification under Section 11C of the Act extending the benefit of not requiring the Central Excise Duty for the units manufacturing rosin and turpentine without the aid of power, except for the purpose of using electricity to pump, for lifting up water to overhead tanks; for the period from 27.05.1994 to 28.02.2006. - Held that:- The categoric .....

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. Ltd., which manufacturing unit was admittedly identically situated as that of the petitioner’s unit, the petitioner cannot, thus, seek the benefit of quashing of the decision communicated by the Ministry of Finance by letter dated 30.09.2014. - The power under Section 11C is discretionary and it is not mandatory for the Government to issue a notification under Section 11C under all circumstances. As emerges from the counter affidavit, the policy of the Government is to issue such a notific .....

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ion, in our view, does not require any interference. - Writ petition dismissed - Decided against the assessee. - WP (C) 2885/2015 & CM No. 5176/2015 (stay) - Dated:- 16-2-2016 - Badar Durrez Ahmed And Sanjeev Sachdeva, JJ. For the Petitioner : Mr Prashant Bhushan and Mr Rohit Kumar Singh, Advocates For the Respondent : Mr Kirtiman Singh and Ms Prerna Shah Deo, Advocate JUDGMENT Sanjeev Sachdeva, J 1. The petitioner has filed the present petition seeking quashing of the decision of the respondent .....

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ndamus for directing the respondent to issue a Notification under Section 11C of the Act extending the benefit of not requiring the Central Excise Duty for the units manufacturing rosin and turpentine without the aid of power, except for the purpose of using electricity to pump, for lifting up water to overhead tanks; for the period from 27.05.1994 to 28.02.2006. 2. As per the petitioner, there are two methods of manufacturing rosin and turpentine from Oleo Pine Resin. One method is the vacuum c .....

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condensation of turpentine vapours collected as liquid turpentine in tanks. 4. It is contended that rosin and turpentine oil manufactured without the aid of power were exempted from Central Excise Duty vide Notification No.179/77-CE dated 18.06.1977. The Tax Research Unit, Department of Revenue, Ministry of Finance, Government of India vide its letter dated 16.01.1978, in the context of Notification No.179/77-CE had clarified that if use of power is limited to drawing water into the cooling tank .....

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lar No.38/38/94 - CX dated 27.05.1994, all circulars/instructions/tariff advises issued prior to March 1986 were withdrawn. It is contended by the petitioner that despite withdrawal of the earlier circulars/instructions/tariff advises, all manufacturers using Bhatti process, including the respondents, remained under the impression that the clarification of 1978 was still in operation. As no excise duty was levied on any of the Bhatti units till 2003/2004, when for the first time show cause notic .....

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ated 01.03.2006, the exemption was completely withdrawn. 9. As per the petitioner, the petitioner as well as the respondents were under the impression that no excise duty had to be levied on all Bhatti units during the said period. Various show cause notices had been issued to the petitioner demanding duty on the clearances made during the said period. 10. On representations made by the trade organizations, survey and resurvey were conducted in respect of the contentions of the manufacturer orga .....

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the decision communicated by the letter dated 30.09.2014 that the case has not been found fit for issuance of Notification under Section 11C and, further, for a mandamus for directing the respondents to issue the Notification under Section 11C of the Central Excise Act, 1944 for extending the benefits of not recovering the Central Excise Duty from the units manufacturing rosin and turpentine without the aid of power, except for the purpose of using electricity to pump water to overhead tank, fo .....

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here according to the said practice the duty was not, or is not being, levied, or (ii) to a higher amount of duty of excise than what was, or is being, levied, according to the said practice, then, the Central Government may, by notification in the Official Gazette, direct that the whole of the duty of excise payable on such goods, or, as the case may be, the duty of excise in excess of that payable on such goods, but for the said practice, shall not be required to be paid in respect of the good .....

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f sub- section (2) of section 11B: Provided that the person claiming the refund of such duty or, as the case may be, excess duty, makes an application in this behalf to the Assistant Collector of Central Excise, in the form referred to in sub-section (1) of section 11B, before the expiry of six months from the date of issue of the said notification." 12. A reading of Section 11C shows that the Central Government is empowered not to recover duty of excise where a practice was generally preva .....

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all not be required to be paid in respect of the goods on which the duty of excise is not or was not being levied or was, or is being, short levied in accordance with the said practice. 13. We may note that the petitioners in the writ petition themselves have mentioned that show cause notices were issued to the petitioners as well as to one M/s Gurukripa Resins Pvt. Ltd., Nagpur. 14. M/s Gurukripa Resins Pvt. Ltd. had challenged the show cause notice but the Deputy Commissioner as well as the Co .....

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tanks does not amount to manufacture with the aid of power, hence, M/s Gurukripa Resins Pvt. Ltd. was entitled to the benefit of the exemption. 16. The petitioners likewise had challenged the show cause notices issued to the petitioners. The Commissioner, Central Excise, Raigad following the judgment of the Tribunal in M/s Gurukripa Resins Pvt. Ltd. held that it would be incorrect to hold that the circular dated 27.05.1994 had withdrawn the clarification issued vide letter dated 16.01.1978 and, .....

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Tribunal kept the appeal of the Department in the petitioner s case pending to await the decision of the Supreme Court in M/s Gurukripa Resins Pvt. Ltd.. 18. The Supreme Court by its judgment dated 11.07.2011 in the case of M/s Gurukripa Resins Pvt. Ltd., (2011) 13 SCC 180), held that the process of lifting of water into cooling tank was integrally connected with the manufacture of its goods and, hence, if power is used for lifting of water, the exemption would not be available. The Supreme Cou .....

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ted that the appeals are pending. 20. The above narration of facts clearly establish that the Supreme Court in identical circumstances in the case of M/s Gurukripa Resins Pvt. Ltd. has already held that the benefit of Notification would not be available. Accordingly, the petitioner cannot claim the said relief in these proceedings. The categorical finding in the case of M/s Gurukripa Resins Pvt. Ltd. (supra) is that the use of pump for lifting water would amount to manufacturing with the aid of .....

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by the Ministry of Finance by letter dated 30.09.2014. 22. Furthermore, as is evident from reading of Section 11C of the Act, the said Section grants a discretionary power to the Government to issue or not to issue such a notification. The said provision does not mandate the Government to issue such a notification. The said provision only empowers the Government to issue such a notification. It is not obligatory on the Government to issue such a notification in all circumstances. In facts and ci .....

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would benefit then the notification is not issued. Discretion of the Government is justifiably used only when larger public interest is involved otherwise the decision would appear to favour a selected few. It is further contended in the counter affidavit that issuance of such a notification would lead to overriding the decision of the Supreme Court in M/s Gurukripa Resins Pvt. Ltd., which was one of the parties involved. 24. The decision of the Central Government has been taken on the basis of .....

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