TMI Blog1996 (2) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... out agents; softeners and other like preparations intended for use in any industrial process" subject to the conditions mentioned in the said Notification. The Petitioners contend that the products mentioned above, namely, "INDOSTAT SF52" and "INDOSTAT SF", are emulsifiers and as such eligible for exemption under the said Notification No. 101 of 1966 as amended by Notification No. 4/68-C.E., dated January 20, 1968. 3.It appears that the Petitioners had earlier filed classification lists in respect of the said products and by letter dated 26th March, 1981 (at Exhibit `B') the Petitioners were informed by the 2nd Respondent that their products were falling under Tariff Item 15AA and were, therefore, exempted by the relevant Notification mentioned against each product, namely, Notification No. 101 of 1966, dated 17th June, 1966. Similar classification list was filed in 1986, being classification list No. 1 of 1986, which was approved by letter dated 25th June, 1986 (at Exhibit `C'). 4.The Petitioners submitted fresh classification lists Nos. 2, 3 and 4 of 1986. Under letter Exhibit `G' dated 9th October 1986, the Superintendent of Central Excise informed the Petitioners that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was granted. Under prayer (c), pending hearing and final disposal of this Petition, the Respondents were restrained from taking any action or steps in furtherance or implementation of the impugned action of Respondent No. 2 treating the approved classification list as not final as stated in the letter Exhibit `H-1' dated 24th/29th December 1986. In the said letter the final approval was made subject to the report of the Deputy Chief Chemist, to which the Petitioners have objected. The Respondents were further restrained from levying and collecting any excise duty or compelling the Petitioners to clear the goods under provisional assessment. However, this wide relief in terms of prayer (c) of the Petition was subsequently varied by order dated 27th August, 1987 in Notice of Motion No. 1775 of 1987. Under the said order dated 24th August, 1987, by consent, it was directed that "the respondents may, if so advised, levy the excise duty but they shall not recover the same from the petitioners". The Court even at that time appears to have made a distinction between the two claims, namely, one for refund of Rs. 7,54,714.70 and the other for refund of Rs. 5,15,559.92. The Respondents wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ai's contention is two-fold. Firstly, he contended that if the surface active agents used as raw material for the manufacture of the emulsifiers have been purchased from "open market" on or after 20th day of January, 1968, then the Petitioners would be entitled to the benefit of the exemption Notification at Exhibit `E'. In support of this contention, reliance is placed on the fact that the Petitioners have purchased the said raw material after January 20, 1968 from the traders named above and, therefore, the Petitioners' case would be covered by the alternative condition of the exemption Notification mentioned in paragraph 7(ii) above. Secondly and in the alternative Mr. Seervai contended that the benefit of exemption is also available under the first clause of the said exemption Notification, namely, that though the Petitioners had purchased the said raw material which was exempt from payment of excise duty, it would be tantamount to payment of excise duty (inclusive of additional duty under Section 2A) in respect of surface active agents used as raw material in the manufacture of emulsifiers as contemplated by the first clause of the exemption Notification mentioned in paragraph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive agents from another Company and, therefore, claimed exemption under the same Notification viz., Exhibit `E'. The relevant part of the amended Notification has been reproduced in paragraph 3 of the Supreme Court judgment at page 614 of the Report. In paragraph 7 of the judgment, the Supreme Court has clarified that the benefit of the exemption would be available in respect of the emulsifiers/wetting out agents provided that either of the following conditions was fulfilled : Excise duty (inclusive of additional duty under Section 2A)(i) should have been already paid in respect of the surface active agents used as raw-material in the manufacture of the emulsifiers, wetting out agents, etc. or The surface active agents used as raw-material for the(ii) manufacture of the emulsifiers/wetting out agents should have been purchased from the open market on or after the 20th day of January, 1968. In paragraph 8 at page 616 of the Report it has been observed by the Supreme Court that in determining the eligibility of a person for the benefit of the exemption conferred by the Notification on the basis of the fulfilment of the second of the aforementioned conditions, it was wholly ir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the two conditions mentioned above was satisfied. On facts there is no dispute before us that the Petitioners have complied with the second condition and, in our view, they would, therefore, be entitled to the benefit of the exemption Notification at Exhibit `E'. 14.However, Mr. Desai appearing for the Respondents invited our attention to the decision of the Supreme Court in the case of Collector of Central Excise v. Parle Products (P) Ltd., 1988 (38) E.L.T. 741 (S.C.). Reliance was placed on the observations appearing in paragraph 12 at page 748 of the Report to contend that the expressions used in the Tariff Schedules and in the Exemption Notifications should be understood by the language employed therein bearing in mind the context in which the expressions occur, and the words employed in the provision, imposing taxes or granting exemption should be understood in the same way in which those are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal with them. There can be no dispute about the proposition of law laid down by the Supreme Court as above. However, in the same paragraph the Supreme Court has further observed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agents etc. We are of the view that in the facts of the case before us, the Petitioners would also be entitled to succeed on the ground that they have fulfilled the first condition of the amended exemption Notification (Exhibit `E'). Thus on the pleadings before us we are of the view that in the manufacture of their products, the Petitioners have purchased raw material from small-scale units which had enjoyed some exemption from payment of excise duty. All such purchases made by the Petitioners from open market are after the 20th day of January, 1968. Thus the Petitioners would be fully covered by both the alternative conditions mentioned in Column 3 of the exemption Notification in respect of the Petitioners' product mentioned at Serial No. 4 of the said Notification. 16.This brings us to the question of the relief that can be granted to the Petitioners. As indicated earlier, the prayer in the Petition is for refund of an amount of Rs. 12,70,274.62 consisting of two items, namely (i) Rs. 7,54,714.70 and (ii) Rs. 5,15,559.92. As far as the amount of Rs. 7,54,714.70 is concerned, it must be borne in mind that the refund to that extent was already granted to the Petitioners under E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refund of the said amount would be subject to the amended provisions of Section 11B of the said Act. Sub-section (3) of Section 11B says that notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any Court or in any other provision of the said Act or the Rules made thereunder or any other law for the time being in force, no refund shall be made except as provided in sub-section (2) of Section 11B. Sub-section (2) of Section 11B deals with the claim for refund made under sub-section (1) of Section 11B which requires that any person claiming refund of any duty of excise may make an application for refund of such duty to the Assistant Collector of Central Excise before expiry of six months from the relevant date and such an application shall be accompanied by such documentary or other evidence (including the documents referred to in Section 12A) as the applicant may furnish to establish that the amount of duty of excise in relation to which such refund is claimed, was collected from, or paid by, him and the incidence of such duty had not been passed on by him to any other person. Section 12B raises a presumption tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notice of Motion No. 1775 of 1987 that the Petitioners got refund of the said amount of Rs. 5,15,559.92. The amendment having come into force during the pendency of this Petition, we are of the view that the Petitioners' are liable to deposit in this Court the said amount of Rs. 5,15,559.92 together with interest from the date of its withdrawal till the date of deposit. 20.In view of the above, we pass the following order :- Rule is made partly absolute in terms of prayer (a) of the Petition. The Petitioners are directed to deposit in this Court the amount of Rs. 5,15,559.92 within a period of four weeks from today along with interest at the rate of 12% per annum from 1st November, 1987 till 1st March, 1996. In the event of the Petitioners failing to comply with the direction at clause (b) above, it will be open to the Respondents to encash the Bank Guarantees forthwith. The 2nd Respondent, Assistant Commissioner of Central Excise, is directed to consider and decide afresh the question of refund of the said amount of Rs. 5,15,559.92 and interest deposited in this Court pursuant to this order in the light of the amended provisions of the Central Excises and Salt Act, 1944 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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