TMI Blog2017 (4) TMI 1223X X X X Extracts X X X X X X X X Extracts X X X X ..... ation under Section 11C of the Act is in the nature of subordinate legislation. Directing the Government to issue such a notification would amount to take a policy decision in a particular manner, which is impermissible. In the instant case the appellant has already paid the duty. Section 11C contemplates those situations where duty is not paid. It does not cover the situation where duty is paid and that is to be refunded. It would neither be a case of discrimination nor it can be said that the appellants have any right under Article 14 or Article 19(1)(g) of the Constitution which has been violated by non-issuance of notification under Section 11C of the Act. Once the appellant accepts that in law it was liable to pay the duty, even if some of the units have been able to escape payment of duty for certain reasons, the appellant cannot say that no duty should be recovered from it by invoking Article 14 of the Constitution. It is well established that the equality clause enshrined in Article 14 of the Constitution is a positive concept and cannot be applied in the negative. Appeal dismissed - decided against appellant. - CIVIL APPEAL NO. 1338 OF 2017 - - - Dated:- 24-4-201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 3) A bare perusal of the aforesaid provision would indicate that if certain conditions mentioned therein are satisfied, the Central Government may issue a notification directing that 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. The condition stipulated in the said Section with which the Central Government is to satisfy itself is that there is/was a generally prevalent practice according to which the duty was not, or is not being levied, even when such a duty of excise was otherwise payable on such excisable goods. 4) We may point out at this stage itself that the High Court vide impugned judgment has come to the conclusion that Section 11C of the Act grants a discretionary power to the Government to issue or not to issue such a notification. The said provision does not mandate the G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of power even when such power is used to a limited extent. That judgment is reported in Commissioner of Central Excise, Nagpur v. Gurukripa Resins Private Limited (2011) 13 SCC 180 which was rendered on 11.07.2011, which fact would again be discussed while dealing with the sequence of events leading to the instant appeal. 8) What is emphasised at this stage is that it is a common case of the parties that excise duty on the goods manufactured by the appellant is, otherwise, payable in law. Insofar as the history of payment of excise on these goods is concerned, record shows that vide notification No. 179/77-CE dated 18.06.1977, the Central Government had exempted all goods, falling under Item No.68 of erstwhile First Schedule to the Central Government Excise and Salt Act (1 of 1944) in or relation to the manufacturing of such goods where no process is ordinarily carried on with the aid of power, from the whole of the duty of excise leviable thereon. The Department of Revenue had issued clarification dated 16.01.1978 to the effect that the aforesaid notification covers those units which are manufacturing Rosin and Turpentine oil where no power is used in the manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to recover the dues falling within the period of limitation only, i.e. for a period of one year. This drastically reduced the demand of excise inasmuch as the excise demanded for the period from 01.04.1999 to 31.08.2003 became time barred. Both the Department as well as the appellant have challenged the said order of the CESTAT before the High Court of Bombay and the matter is still pending there. 13) After the judgment of this Court in Gurukripa Resins Private Limited , several trade associations made representations to the Government with a request to grant benefit under Section 11C of the Act. On receiving these representations, the Central Board of Excise and Customs decided to float a survey to ascertain a general practice during the period from 27.05.1994 to 27.02.2006. Consequently, the survey letter was issued on 14.03.2012. On the basis of this survey, the Department came to the conclusion that there was no such practice of non-levying excise duty on these products. Objections were raised to the finding of the said survey on the ground that only ten units in the survey were considered as against the total units of approximately 300. This led to ordering a re-surv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rashant Bhushan, advocate appearing for the appellant, was that it stood established from the re-survey conducted by the Department itself that there was a general practice of not demanding excise duty from Bhatti manufacturers, though, in this survey, only around 125 units could be examined as the Department could not get full details of the remaining industries and moreover, most of them were small scale industries availing benefit under SSI exemption. The learned counsel argued that still this survey indicated that there were at least 39 units whose turnover exceeded SSI limit but no excise duty was demanded from those units as well. The appellant relied upon following noting dated 20.05.2014 of the Commissioner (Central Excise): 11. ...it is clear that majority of the units were not paying duty during this period and that show cause notices were issued in respect of 2 units i.e. M/s. Gurukripa Resins (P) Ltd. and M/s. Dujodwala Industries. In respect of unregistered units no show cause notices have been reportedly issued. ...... The reasons for not filing any declaration by unregistered units are not clear. It could be a case of non-payment of duty or alternatively ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade to the judgment of the Privy Council in Julius v. Lord Bishop of Oxford Anr. 1880 (5) A.C. 214, which was followed by this Court in Ambica Quarry Works v. State of Gujarat Ors. (1987) 1 SCC 213, where it was explained that the very nature of the thing empowered to be done may itself impose an obligation to exercise the power in favour of a particular person. It was held that this is especially so where the non-exercise of the power may affect that person s substantive rights. Para 13 of this judgment was specifically relied upon which reads as under: 13. It was submitted by Shri Gobind Das that the said rule was in pari materia with sub-rule ( b ) of Rule 18 of Gujarat Minor Mineral Rules, 1966. Often when a public authority is vested with power, the expression may has been construed as shall because power if the conditions for the exercise are fulfilled is coupled with duty. As observed in Craies on Statute Law , 7th Edn., p. 229, the expression may and shall have often been subject of constant and conflicting interpretation. May is a permissive or enabling expression but there are cases in which for various reasons as soon as the person who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime bound period. Again in Aneesh D. Lawande Ors. v. State of Goa Ors. (2014) 1 SCC 554, this Court gave a direction to enforce the obligation which was held to be annexed to the power conferred on the Government. Reference was also made to Suresh Chand Gautam v. State of Uttar Pradesh Ors. (2016) 11 SCC 113 on this very aspect. 19) Another submission of the counsel for the appellant was that the solitary reason furnished by the respondent for not exercising its powers under Section 11C of the Act was that such a notification, if issued, was going to benefit only two assessees. It was submitted that this could never be a valid or tenable ground for the Government to refuse such a notification, more so, in a situation where the demand notices were issued to two assessees only and other similarly situated persons were spared. Learned counsel also submitted that the Central Government in the past had issued a notification under Section 11C of the Act in individual cases i.e. where the benefit of the Court is to only one identified assessee. On this very premise, another submission developed by the appellant was that issuance of notification under the said pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discretionary in nature. His further submission was that since waiver of the duty can be by issuance of a notification in the Official Gazette, such a power was in the nature of subordinate legislation and as per the settled law, courts refrain from issuing any mandamus to exercise a statutory function. He further submitted that the Central Government had, for valid reasons, decided not to issue any such notification. According to him, reason for not issuing the notification, namely, that it was to benefit only two parties, was a valid reason and such a policy decision taken for not exercising power under Section 11C of the Act was not open to judicial review. Without prejudice to this argument, his another plea was that the exercise carried out by the Government, culminating into the aforesaid decision of not exercising the power, was based on valid and justified grounds, which was rested on valid considerations and the Court would not substitute its own decision for that arrived at by the Government. 22) Dilating on the aforesaid argument, Mr. Sanghi submitted that the most important events which had to be kept in mind were that the show cause notices were issued to the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank for the purpose of condensing) are concerned, whether this process would amount to manufacturing process or not, was unclear. Moreover, most of these units which were resorting to Bhatti method were small scale units and were enjoying the exemption from payment of excise duty on that ground. Therefore, they were not within the net of revenue in any case. Five registered units were paying the excise duty. The Department issued show cause notices to the two units which were registered with it but not paying the duty, as according to the Revenue, even the use of power for lifting of water to overhead tanks for condensation of Turpentine vapours collected as liquid Turpentine in tanks would be manufacturing process and, therefore, excise duty payable. Others were not registered and were SSI Units. It so happened that at some point of time, few of them had ceased to be SSI units. However, the Department remained unaware of that. It was for this reason that notices could not be issued to the others. When the matter is looked from the aforesaid angle, it cannot be said that there was a conscious practice which was generally prevalent not to recover duty of excise. 25) No doubt, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mained under the impression that those units which were unregistered and because of SSI status exempted from payment of excise duty were not liable to pay the duty and, therefore, did not issue any notices to them. Even when 37 unregistered units had crossed the SSI exemption limit at least once, the Excise Department could not catch them either because of its negligence or it remained under the bona fide belief that they were still enjoying the exemption. It is only during the second survey these facts came to be noticed by the Department. It has come on record that by that time recovery of duty from them was too late as these cases had become time barred, meaning thereby, had these cases been within the limitation period, the Department would have taken action of recovery even qua them. From this, it cannot be said that there was a general practice. No doubt, some of the officers have formed an opinion to the contrary by treating the aforesaid as a case of non-levy of duty. However, as pointed out above, such a view was termed as debatable. It is only because of this reason that the matter took a different turn and was processed on the premise that there was such a practice b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tenanced. QUESTION NOS. 2 3 In view of our answer to Question No.1, it may not even be necessary to deal with these two questions. However, since the Department itself proceeded on the basis that there was a general practice, we would like to discuss these issues as well on merits. These can be taken together for discussion. 30) Insofar as the argument based on obligation of the Government to issue such a notification is concerned, a clear distinction is to be made between the duty to act in an administrative capacity and the power to exercise statutory function. If a public authority is foisted with any duty to do an act and fails to discharge that function, mandamus can be issued to the said authority to perform its duty. However, that is done while exercising the power of judicial review of an administrative action. It is entirely different from judicial review of a legislative action. 31) According to de Smith Judicial Review of Administrative Action , the following legal consequences flow from the aforesaid distinction: (i) If an order is legislative in character, it has to be published in a certain manner, but it is not necessary if it is of an ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitution. But when the Notification was not under assail and the same is in consonance with the Act, it is really unfathomable how the High Court could issue directions as to the manner in which a census would be carried out by adding certain aspects. It is, in fact, issuance of a direction for framing a policy in a specific manner. 26. In this context, we may refer to a three-Judge Bench decision in Suresh Seth v. Commr., Indore Municipal Corporation : (2005) 13 SCC 287 wherein a prayer was made before this Court to issue directions for appropriate amendment in the M.P. Municipal Corporation Act, 1956 so that a person may be debarred from simultaneously holding two elected offices, namely, that of a Member of the Legislative Assembly and also of a Mayor of a Municipal Corporation. Repelling the said submission, the Court held: In our opinion, this is a matter of policy for the elected representatives of people to decide and no direction in this regard can be issued by the Court. That apart this Court cannot issue any direction to the legislature to make any particular kind of enactment. Under out constitutional scheme Parliament and Legislative Assemblies exercise sov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proving the said decision in the aforesaid judgment, the Court referred to various earlier judgments on the subject. It was held that not only Parliament is empowered to give such a power to the executive to decide when the Act is to be brought into force, but also held that mandamus cannot be issued to the Government to notify the amendments. In the process, the Court also made the following observations which are relevant in the present context: 27. From the facts placed before us it cannot be said that Government is not alive to the problem or is desirous of ignoring the will of the Parliament. When the legislature itself had vested the power in the Central Government to notify the date from which the Act would come into force, then, the Central Government is entitled to take into consideration various facts including the facts set out above while considering when the Act should be brought into force or not. No mandamus can be issued to the Central Government to issue the notification contemplated under Section 1(3) of the Act to bring the Act into force, keeping in view the facts brought on record and the consistent view of this Court. 35) Various judgements cited by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Etc. Etc. v. Union of India and others Etc. Etc. (2004) 4 SCC 311, this Court noted that the legislature came up with the said legislation as a matter of policy to have speedier legal method to recover the dues. It was held that such a policy decision of the legislature could not be faulted with nor was it a matter to be gone into by the courts to test the legitimacy of such a measure relating to financial policy. As already pointed out above, it is impermissible for this Court to tinker with such policy decision more particularly when it is found that the decision is not irrational and is founded on valid considerations. It has also to be borne in mind that in the instant case the appellant has already paid the duty. Section 11C contemplates those situations where duty is not paid. It does not cover the situation where duty is paid and that is to be refunded. 38) Examination of the matter in the aforesaid perspective would provide an answer to most of the arguments of the appellants. It would neither be a case of discrimination nor it can be said that the appellants have any right under Article 14 or Article 19(1)(g) of the Constitution which has been violated by non-issu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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