TMI Blog1986 (9) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of 1981 (R). They received the scraps under an agreement to convert the scraps belonging to the Tisco into steel ingots in which agreement the scraps as well as ingots remain the property of Tisco. The Tisco which obtain the scraps in their main works which is an integrated steel plant and admittedly the scraps fulfil the description of "fresh unused steel melting scrap" (hereinafter referred to as "the scraps") also convert scraps into ingots in one of their subsidiaries and from ingots received from Tayo and ingots produced by them, they manufacture various kinds of products like billets, blooms, etc. Besides receiving scraps from Tisco, Tayo also purchase scraps to make ingots for sale to other parties. 3. It is not in dispute that ingots produced by the petitioners answer the description of goods in item no. 26 of the First Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as "the Act") and excise duty is leviable on the ingots at the rate specified therein. The Central Government exercising its powers conferred by sub-rule (1) of the Central Excise Rules, 1944 (hereinafter to be called as "the Rule") issued Notification No. 66 of 1973-C.E., dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entions "all products falling under sub-item (ia) of item 26-AA (other than rails and sleeper bars specified in serial no. 3." In the proviso thereto it is stated as follows :- "Provided that where the products mentioned in the Table are made from steel ingots, falling under item no. 26 of the aforesaid Schedule, which have been cleared from the factory, prior to the 18th day of June, 1977, on payment of duty at the appropriate rate, the duty specified in the corresponding entries in column (3) of the Table shall be reduced by two hundred rupees per metric tonne : Provided further that where the products mentioned in the Table, other than bars and rods, falling under sub-item (ia) of item No. 26-AA referred to in serial no. 3 of the Table, are made from semi-finished steel on which duty at the appropriate rate has already been paid, or from steel ingots falling under item no. 26 of the aforesaid Schedule which are cleared from the factory on or after the 18th day of June, 1977 on payment of duty, the duty specified in the corresponding entries in column (3) of the Table shall be reduced by three hundred and thirty rupees per metric tonne : Provided also that where the duty pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at understanding the law and knowing that the scraps satisfy the description of the notification of the exemption and the ingots also answer the descriptions fully, treated their steel ingots exempted from the excise duty and continued with that until a letter came from the Central Board of Excise and Customs on 18-8-1980 advising the Collector of Central Excise, Patna that the duty was leviable on ingots. Pursuant to the said advice, on 18-9-1980 the Deputy Collector of Central Excise, Patna issued a letter containing instructions to the officers concerned to levy duty on the ingots and on 9-2-1981 the Superintendent of Excise, Jamshedpur asked the petitioners to pay duty on steel ingots and to move a fresh classification list. The petitioners thereafter represented against the above order on 25-2-1981 but on 5-3-1981 the Superintendent of Excise, Jamshedpur approved the classification list regarding steel ingots without granting exemption, and on 6-3-1981 the Assistant Collector upheld the order dated 9-2-1981 of the Superintendent of Excise on the ground that the clarification issued by the Central Government stating that where the duty on melting scrap is nil the manufacturers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid" or "contracted to have been paid" and that the assessment to nil duty on the scraps must mean duty already been paid; (ii) that the respondents are estopped from making any demand and are precluded by the principle of promissory estoppel from taking any steps or proceedings to recover any excise duty on the basis that their earlier representations were a mistake; and (iii) that the demands are barred by limitation prescribed under Section 11-A of the Act as also for the reason that as prescribed therein the respondents never served any notice calling upon them to show cause within six months of the date when the duty was allegedly short paid. 12. It has to be seen that the clarification in respect of the expression "fresh unused melting scraps" on which duty of excise has been paid, appearing in Notification No. 152/77, dated 18-6-1977 has made no reference to the Notification No. 66/73, dated 1-3-1973, yet one can notice in it the administrative construction for the said expression and by reference to contemporanea expositio apply the same meaning to the words in Notification No. 66/73 also. Before doing so, however, it has to be borne in mind that the petitioners have not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices and it was only when further advice came from Central Board of Excise and Customs to the Collector of Central Excise, Patna on 18-8-1980 that they were asked to pay duty on the ingots. 14. In the letter addressed to the Collector of Central Excise, Patna, dated 18-8-1980 it has been stated that Notification No. 150/76 exempted fresh unused steel melting scraps from the whole of the duty of excise leviable thereon subject to the fulfilment of the conditions specified therein. If ingots were manufactured out of the scraps mentioned under Notification No. 150/77, duty exemption could not be availed of under Notification No. 66/73 as on the fresh unused steel melting scraps appropriate duty of excise had not been paid. It is further stated in the said letter that since no duty had been paid on the fresh unused steel melting scrap, no exemption could be allowed under Notification No. 66/73, dated 1-3-1973 and that the instructions contained in the Board's letter dated 30-8-1977 made it clear that the specified types of scraps which are exempted under Notification No. 150/77, were to be treated for eligibility to duty reduction in terms of fourth proviso to Notification Nos. 152/7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charge levied effective......We do not here have to resort to any equitable rule of construction or to alter the meaning of the language used or to add to or vary it in order to arrive at the conclusion that the provision intended to impose a liability to pay interest........" 17. In yet another case the very words with which we are concerned fell for interpretation before the Supreme Court in the case of N.B. Sanjana v. The Elphinstone Spinning and Weaving Mills Co. Ltd. [1978 E.L.T. (J 399) = AIR 1971 S.C. 2039, ECR C 368 S.C.]. A rule which said: "Recovery of duties or charges short-levied, or erroneously refunded — When duties or charges have been short-levied through inadvertence, error, collusion or mis-construction on the part of an officer, or through mis-statement as to the quantity, description or value of such goods on the part of the owner, or when any such duty or charge, after having been levied has been owing to any such cause, erroneously refunded, the person chargeable with the duty or charge, so short-levied, or to whom such refund has been erroneously made, shall pay the deficiency or pay the amount paid to him in excess, as the case may be on written demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with an 'assessment' as well as with the collection of a tax when it held that 'when the payment of tax is enforced, there is a levy'. We think that, although the connotation of the term 'levy' seems wider than that of 'assessment', which it includes, yet, it does not seem to us to extend to 'collection'. Article 265 of the Constitution makes a distinction between 'levy' and 'collection'. Article 265 of the Constitution makes a distinction between 'levy' and 'collection'. We also find that in N.B. Sanjana v. The Elphinstone Spinning Weaving Mills Co. Ltd. [1978 E.L.T. (J 399) = AIR 1971 S.C. 2039 at page 2045 ECR C 368 S.C.] this Court made a distinction between 'levy' and 'collection' as used in the Act and the Rules before us. It said there with reference to Rule 10 : "We are not inclined to accept the contention of Dr. Syed Mohammed that the expression "levy" in Rule 10 means actual collection of some amount. The charging provision Section 3(1) specifically says, "There shall be levied and collected in such a manner as may be prescribed the duty of excise.... "It is to be noted that sub-section (i) uses both the expressions "levied" and "collected" and that clearly shows tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... They do not mean that the excise duty was actually paid at a prior stage." 21. The very same meaning has been extended to the expression "already paid" by the High Court of Gujarat (sic) in the case of Steel Authority of India v. Collector of Central Excise, Calcutta [1984 (18) E.L.T. 555 = 1984 ECR 1336]. Although interpreted in a different context and for the reasons stated in the judgment, Deshpande, J. (as he then was in the Delhi High Court) has noticed the relevance of interpreting the words "already paid" to mean "contracted to be paid" or "ought to have been paid", there is no reason why the same meaning be not given to the words used in Notification No. 66/73 when in the hands of Tayo the scraps were in the capacity of a transferee for the purpose of manufacturing ingots and even in the hands of the Tisco who may have the liability to pay duty on the scraps, since the scraps answered the requirement of the description in the said notification, no duty was payable by them on the ingots. 22. Proceeding further, Notification No. 150/77 has exempted from duty even the scraps and when a duty paid may mean a duty contracted to have been paid on the exemption by Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending: upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective of whether there is any pre-existing relationship between the parties or not. 26. It has been extended to a case of assessment of excise duty by the Supreme Court in the case of Union of India and Others v. Godfrey Philips India Ltd. 1985 (22) E.L.T. 306 (S.C.) : 1986 8 ECC 26 (S.C.) : AIR 1985 S.C. 806 : 1985 ECR 1989 S.C.. The Supreme Court has said that the doctrine of promissory estoppel is applicable against the Government in exercise of its Governmental, public or executive function and the doctrine of executive necessity or freedom of future executive action cannot be invoked to defeat the applicability of the doctrine of promissory estoppel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice : Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect, as if for the words 'six months', the words 'five years' were substituted." It is not in dispute that no notice to show cause was given to the petitioners within the statutory period of six months for any of the demands. 28. The learned Counsel for the State has, however, submitted that in the instant case the words "six months" should be read as "five years" as the duty was not levied upon or paid by the petitioners by reason of fraud, collusion and wilful mis-statement and suppression of facts. He has submitted that even if no case of fraud, collusion, wilful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the jurisdiction of the Court in exercise of its power under Article 226 of the Constitution of India merely because some alternative remedy is suggested by the respondents. 31. Having considered the case in all its aspects, I am of the view that the petitioners are not liable to pay any excise duty on the ingots which have been manufactured from the scraps which answered the descriptions in Notification No. 66/73-C.E. and on other articles manufactured from the ingots by them in terms of Notification No. 152/77. The petitioner - Tisco is exempted from any excise duty on the scraps in terms of Notification No. 150/77-C.E. They have accordingly no liability to pay the demands. 33. In the result the two writ applications are allowed, the demands contained in Annexures 4, 5 and 6 in C.W.J.C. No. 337 of 1981(R) and Annexures 5, 6, 7 and 8 in C.W.J.C. No. 338 of 1981(R) are hereby quashed and the respondents are restrained from demanding any excise duty from the petitioners and treat the scraps, ingots and other articles produced from the ingots exempted so long the above three notifications are in force. Let a writ in the nature of certiorari and consequential mandamus accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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