Customs, Excise and Gold Tribunal - Delhi
Surat Cotton Spinning And Weaving Mills ... vs Collector Of Central Excise on 14 December, 1983
Equivalent citations: 1984(16)ELT321(TRI-DEL)
ORDER K.L. Rekhi, Member (T)
1. The appellants seek exemption from (1) additional excise duty in lieu of sales tax and (2) Hand-loom Cess on processed man-made fabrics for the period from 30-4-75 to 31-3-76 on the following two grounds :-
(1) Notification No. 171/70, dated 21-11-70 exempted trade samples of processed man-made fabrics from basic excise duty. There was a lacuna in the Notification as it did not extend the exemption to additional excise duty in lieu of sales tax. The industry took up the matter with the Government. Ultimately, the Government issued another Notification No. 192/76-C.E., dated 19-6-76 granting the exemption from additional excise duty in lieu of sales tax as well. The appellants admitted that the Notification itself was effective only prospectively but they stated that in the wake of this Notification, the Collector of Central Excise, Bombay issued a trade Notice on 26-8-76 saying that the question of exempting trade samples of processed man-made fabrics had been under consideration of the Government and that exemption notification No. 192/76-C.E., dated 19-6-76 had been issued to give a statutory backing to the proposal. The Indian Cotton Mills Federation approached the Central Board of Excise and Customs in August, 1976 to m ke the exemption notification effective retrospectively. The Board replied to them saying that this could not be done but added that the rationale of the exemption notification had been explained to the Collectors who should be contacted by the assessee mills. The appellants' plea is that earlier it was the practice of the Department not to collect the additional excise duty in lieu of sales tax on trade samples and this fact together with the language used in the Bombay Collectorate Trade Notice and the Board's reply to the I.C.M.F amounted to promissory estoppel in favour of the appellants and, consequently, the appellants were not liable to pay the additional excise duty in lieu of sales tax on trade samples. They relied on the Supreme Court judgments in the Cases of Motilal Padampat Sugar Mills (AIR 1979 SC 621) and Anglo Afghan Agencies (AIR 1968 SC 718) and also on the Madras High Court judgment in the case of Shakti Sugars [1983 E.L.T. 484 (Mad.)].
(2) In respect of the Handloom Cess their argument was that such cess was payable only on processed man-made fabrics in running length and that trade samples of such fabrics could not be treated as processed man-made fabrics for the levy of cess.
2. The Department's representative stated that exemption Notification No. 192/76-C.E., dated 19-6-76 was effective only from the date of its issue and the Government had no powers to grant exemption from Central Excise Duty with retrospective effect. He relied on the following case law to say that there was no estoppel in taxation matters :~ (1) 1978 E.L.T J680 (Bombay) in the case of Elphinstone Spinning and Weaving Mills Co. Ltd.
(2) 1983 E.L.T 292 (Delhi) in the case of Khandelwal Metal & Engineering.
(3) 1983 E.L.T. 1566 (SC) in the case of Dunlop India Ltd. & Madras Rubber Factory Ltd.
He added that the Trade Notice relied on by the appellants Was issued by the Collector of Central Excise, Bombay while the appellants fell in the jurisdiction of the Collector of Central Excise, Baroda and, as such, the said trade notice was not applicable to them.
In respect of the handloom cess, he stated that trade samples of processed man-made fabrics did not cease to be processed man-made fabrics and were, therefore, liable to pay the cess.
3. We have carefully considered the matter. The appellants admit that for the material period there was no notification in force granting exemption from the additional excise duty in lieu of sales tax. They also admit that the notification issued on 19-6-76 was effective only from that date and not retrospectively. Their case, so far as this additional duty is concerned, rests on the plea of promissory estoppel. We observe that no evidence has been laid before us to show that the Department held out any promise or assurance to them that the additional duty would not be collected. C.C.E. Bombay's Trade Notice and the correspondence of the I.C.M.F. with the Board only amount to saying that the industry's suggestion to grant exemption in respect of the additional duty had been under consideration of the Government and that the Government had accepted the suggestion by issuing the exemption notification No. 192/76-C.E., dated 19-6-76. The further statement made in the Board's reply to the I.C.M F. also stated that this exemption could not be given with retrospective effect but that rationale of the exemption had been explained to the Collectors. This statement in the Board's reply does not amount to saying that the Board promised to forego collection of the additional duty. We asked both the appellants as well as the Department's representative whether there was anything more than this in the instructions of the Board issued to the Collectors. Both of them stated that they were unaware of any such instructions. So far as the alleged practice of the Department not to collect the additional duty in the past is concerned, there is no evidence before us to support the theory that there was any such general practice in the country. Consequently, if the tax is lawfully payable, omission on the part of the Departmental Authorities to collect the tax would not confer a right on the assessee to plead that it was no longer liable to pay the tax. The appellants' reliance on the case law cited by them is misplaced because, in the absence of any promise or assurance held out to them for not collecting the additional duty, the question of any promissory estoppel just does not arise in their case. We also agree with the Department's representative that it is now settled law that there is no promissory estoppel in the taxation matters. The appellants plea in respect of the additional duty is, therefore, rejected. There is no substance in their plea regarding the handloom cess either. As per the exemption notification No. 171/70-C.E., dated 21-11-70, trade samples of processed rnan-made fabrics exempted from basic customs duty were-
(i) full piece of saree,
(ii) not exceeding 46 Cms. in length by full width for the home market and (iii) not exceeding 92 Cms. in length by full width for overseas market.
4. It cannot be said that a full saree or a 46 Cms. or 92 Cms. long piece with full width cut from processed man-made fabric ceased to be processed man-made fabric. The saree is a complete fabric by itself. The smaller cut pieces were also fabric pieces used for trade sample purposes. The Tariff or the Act does not prescribe any minimum length of the man-made fabric. A piece cut from a running length fabric is still known as fabric in the trade. The appellants are well aware that even much smaller pieces called as rags and chindies are also known in the trade as fabrics and the Central Excise Tariff deals with them accordingly. We, therefore, hold that since handloom cess was payable on processed man-made fabrics, it was also payable on trade samples of such fabrics.
5. Accordingly, we reject this appeal. However, we may observe that our order is based strictly, as it should be, on the evidence laid before us and the legal position in the matter but if as a matter of actual practice the Department adopted a different approach to other art silk mills in the country, we leave it to the Department to see that the present appellants are not singled out for a discriminatory treatment.