Delhi High Court
Birla Cotton Spg. & Wvg. Mills Limited ... vs Collector Of Central Excise And ... on 7 March, 1986
Equivalent citations: 1988(15)ECC441, 1988(33)ELT41(DEL)
Author: B.N. Kirpal
Bench: B.N. Kirpal
JUDGMENT
1. The challenge in this writ petition is to the validity of the Khadi and Other Handloom Industries Development (Additional Excise Duty on Cloth) Act, 1953 (hereinafter referred to as the "1953 Act").
2. The petitioner owned and operated a Textile Mill at Delhi. There it manufactures cloth and yarn which was subject to the levy of duty under the Central Excises and Salt Act, 1944 (hereinafter referred to as "Excise Act").
3. In the year 1953, the Parliament enacted the Khadi and Other Handloom Industries Development (Additional Excise Duty on Cloth) Act, 1953. Section 3 of this Act provided for the levy of additional duty of excise on cloth. The duty which was to be levied was to be at the rate of 1.9 N.P. per square meters. Section 5 of the Act empowered the Central Government to make rules for the carrying out of the purposes of the Act. It also enabled the Government to make rules providing for the exemption from the whole or any part of the duty of excise levied under the 1953 Act.
3A. In exercise of the powers under Section 5 of the 1953 Act, the Central Government had issued a notification dated 25th July, 1953 whereby all varieties of cloth which were for the time being exempted from the duty of excise levied thereon under the Excise Act was also exempted from the Additional Excise duty under the 1953 Act.
4. On 1st March, 1969 a notification was issued whereby basic duty leviable under Excise Act was exempted on certain types of cloth. It is this notification which was applicable to the petitioner and as a result thereof it was not liable to pay Excise duty under the Excise Act.
5. The petitioner, it appears, during the period 1st March, 1969 to 6th July, 1970, however, continued to pay Additional Excise duty under the 1953 Act. The total amount paid by it was Rs. 2,28,483.69 P.
6. According to the petitioner, the aforesaid amount was paid under protest. The petitioner's contention was that by virtue of the 1953 notification issued under Section 5 of the 1953 Act read with notification dated 1st March, 1969 it became exempted from the payment of additional Excise duty under the 1953 Act.
7. The petitioner filed nine applications before the Assistant Collector of Central Excise, Delhi asking for the refund of the aforesaid amount of Rs. 2,28,483.69 P. which had been paid. The claim of the petitioner was that it was not liable to pay Additional Excise duty as it had been exempted from payment of basic Excise duty under the Excise Act by virtue of the notification of 1st March, 1969.
8. Seven of the applications were dismissed by the Assistant Collector, while two applications were not decided till the filling of the present writ petition. The Assistant Collector held that the words "for the time being" occurring in the notification of 25th of July, 1953 meant that exemption from Additional Excise duty could be obtained only if such an exemption was available on 25th July, 1953, when the aforesaid notification was issued. According to the Assistant Collector on the cloth which was manufactured by the petitioner Excise duty was payable on 25th July, 1953. The petitioner was exempted from payment of basic Excise duty only on 1st March, 1969 and, therefore, he held that the exemption from payment of the said duty was not available to the petitioner.
9. The petitioner, preferred appeals to the Collector, Central Excise, Delhi. While these appeals were pending the Government of India issued a notification dated 7th July, 1970 whereby the earlier notification dated 25th July, 1953 was amended. By the 7th July, 1970 notification the earlier exemption from payment of Additional Excise duty was withdrawn. The notification of the 7th July, 1970 was not retrospective and there is no dispute that thereafter the petitioner became liable to pay addition Excise duty. The appeals of the petitioner were transferred to the Appellate Collector of Central Excise but the same were not taken up for hearing.
10. The petitioner then filed C.W. 985/72, in this Court and in the said case the representative of the Excise Department undertook to decide the cases of the petitioner by 31st January, 1973. In view of this, the writ petition was not pressed.
11. Before the appeals could be taken up for hearing, the; Parliament enacted 1972 Act on 26th November, 1972. The relevant portions of the said Act are as follows :-
"2. Amendment of Section 3.
In Section 3 of the Khadi and Other Handloom Industries Development (Additional Excise Duty on Cloth) Act, 1953 (hereinafter referred to as the principal Act), in sub-section (1), for the proviso, the following proviso shall be substituted, and shall be deemed to have been substituted with effect from the 10th day of January, 1957, namely :-
Provided that no such duty shall be levied on cloth -
(i) Which is exported out of India, or
(ii) Which is used in the manufacture of goods which are exported out of India."
"3. Amendment of Section 5.
In sub-section (2) of Section 5 of the principal Act -
(i) in Clause (e), after the words "exempt from", the words "the whole or any part of" shall be inserted and shall be deemed to have been inserted with effect from the 1st day of March, 1960.
(ii) the following proviso shall be inserted, and shall be deemed always to have been inserted, namely :-
Provided that any rule under Clause (e) may be made so as to have retrospective effect from any date not earlier than two years before the date of publication thereof."
"4. Validation of duty of excise levied and collected under the principal Act in respect of certain period.
(1) Notwithstanding anything contained in the principal Act, or in the rules made there under, the duty of excise levied and collected or purporting to have been levied and collected under the principal Act during the period beginning on the 1st day of March, 1969 and ending with the 6th day of July, 1970, on the cotton fabrics manufactured by a manufacturer, shall be deemed to have been validly levied and collected in accordance with the rules published with the notification of the Government of India in the former Ministry of Commerce and Industry No. S.R.O. 1479, dated the 25th July, 1953, as subsequently amended by the notification of the Government of India in the Ministry of Foreign Trade No. S.O. 2369, dated the 7th July, 1970, as if those rules as so amended were in force at all material times when such duty was levied and collected and accordingly -
(i) no suit or other proceedings shall be maintained or continued in any Court for the refund of any such duty so levied and collected;
(ii) no Court shall enforce a decree or order directing the refund of any such duty so levied and collected; and
(iii) any such duty levied or assessed under the Principal Act in respect of the aforesaid period, but not collected, may be recovered in the manner provided under the principal Act.
Explanation. - In this sub-section "manufacturer" means a person who is engaged in the business of -
(i) spinning of cotton twist, yarn or thread; or
(ii) weaving of cotton fabrics; or
(iii) processing of cotton fabrics, with the aid of power and who has a proprietary interest in at least two of the aforesaid business. (2) The cotton fabrics referred to in sub-section (1), are -
(i) medium a fabric, unprocessed;
(ii) medium B and coarse fabrics, being -
(a) unprocessed; or
(b) bleached; or
(c) dyed; or
(d) if bleached and dyed, not printed; or
(e) "dhoti", "Sari", "Long Cloth", "Shirting" or "Drill" within the meaning of the Explanation to the notification of the Textile Commissioner No. S.O. 3656, dated the 13th October, 1964 issued under Clause 22 of the Cotton Textiles (Control) Order, 1948."
12. Relying on the aforesaid amendment the Appellate Collector of Excise passed an order dated 22nd January, 1973 rejecting the appeals passed by the Assistant Collector of Central Excise rejecting the claims of refund made by the two of the applications which had not been disposed of so far.
13. The petitioner then approached this Court by filing the present writ petition under the Article 226 of the Constitution whereby the validity of the 1972 Act had been challenged.
14. The learned counsel for the petitioner had raised four contentions before me. She firstly contended that the 1972 Act was bad because it nullifies the effect of an earlier exemption from Excise duty which was available to the petitioner. The second contention was that the Amending Act was ultra vires as it imposed an unreasonable restriction because it was retrospective. The third contention was that the said Act was discriminatory and it offended the provisions of Article 14 of the Constitution. Lastly she urged that the principle of equitable estoppel are attracted to this case and the respondents could not, therefore, deprive the petitioner of the exemption from the payment of Excise duty.
15. In order to appreciate these contentions, it is first necessary to mention the effect of the various enactments. Basic Excise duty was leviable under the Excise Act. By notification dated 1st March, 1969, however, levy of this duty was exempted on the type of cloth which was being manufactured by the petitioner. There is no dispute with regard to this. Section 3 of the 1953 Act provided for the levy of additional Excise duty. At the same time Section 5 of the said Act entitled the Government to make rules by a notification which could, inter alia, grant exemption from the levy of Additional Excise duty under 1953 Act. Such a rule was framed by the issuance of the notification in 1953. The benefit available to the petitioner has however been taken away by the Government once again framing a rule under Section 5 on 7th July, 1970. According to the petitioner it was entitled to the exemption of payment of Additional Excise duty between 1st March, 1969 and 7th July, 1970.
16. Being conscious of the fact that such an exemption would be available, it appears that the 1972 Act was passed, which included therein a validation clause viz. Section 4. Section 4 is a non obstructive clause and is applicable notwithstanding anything contained in 1953 Act or the rules framed there under. The effect of this would be that the Section 4 of the 1972 Act would override the rules contained in 1953 notification. Furthermore, Section 4 of 1972 Act provided that any Additional Excise duty levied or collected under the 1953 Act would be deemed to have been validly levied or collected in accordance with the rules which had been published. Lastly, Section 4 provided that the notification of 7th July, 1970 must also be deemed to have been in force at all material times. The material time being 1st March, 1969 to 6th July, 1970. To put it differently, the effect of the Section 4 of the amending Act is to give retrospective operation to the 1970 notification, the retrospectivity being for the period 1st March, 1969 to 6th July, 1970. Admittedly under the notification of 6th July, 1970 no exemption could have been obtained from payment of Additional Excise duty on the type of cloth which was being manufactured by the petitioner. Therefore, as a result of this retrospective operation Additional Excise duty under the 1953 Act was payable.
17. It is no doubt true that the Amending Act of 1972 does nullify the effect of the exemption from payment of Additional Excise duty which had been earlier granted to manufacturers like the petitioner. This by itself would not make an amendment bad in law. As long as the Parliament has legislative competence to enact an Act and such an Act is not violative of any provision of the Constitution, then the same cannot be challenged merely on the ground that the impugned Act has the effect of nullifying an exemption. The Parliament is free to make laws which may have the effect of taking away a right or benefit which was being enjoyed by a person and unless that law is shown to be contrary to the constitutional provisions the same cannot be held to be invalid.
18. It is also now too late in the day for the learned counsel for the petitioner to contend that the 1972 Act is bad, as it imposed an unreasonable restriction because it is retrospective in operation. It is now well settled that the Parliament can enact law which has the effect of validating and/or levying taxes, duties, including, Excise duty with retrospective effect. Any law so enacted cannot be challenged merely on the ground that it is unreasonable. Such a question was raised before this Court that Section 51 of the Finance Act of 1982 had the effect of making rules operative with retrospective effect from 1945. The vires of such a provision was upheld by this Court in the case of J.K. Cotton and Weaving Mills and Another v. Union of India and Others - [1983 (12) E.L.T. 239]. In view of the aforesaid decision, it must follow that there is no merit in this contention of the learned counsel for the petitioner.
19. It was then contended that the provisions of the amending Act are discriminatory. The submission of the learned counsel was that the effect of the 1972 Act would be that all those manufacturers, on whom Excise duty has been levied and/or collected, would be liable to pay the Excise duty but other manufactures on whom such a levy may not have been imposed would be exempt from payment thereof. Assuming that such a construction to the amending Act is possible, nevertheless in the absence of better particulars, the petitioner cannot be allowed to urge this ground. In order to plead discrimination, it is incumbent upon the petitioner to make necessary, proper and full averments. Instances of discrimination must be given. A mere bald proposition that discrimination is possible is not enough. The petitioner in the present case has not given a single instance of a manufacturer of cloth like the petitioner who had not been assessed or on whom levy had not been imposed of the Additional Excise duty during the period 1st March, 1969 to 7th July, 1970. In any case the 1970 notification has been made retrospective by Section 4 of the amending Act and, therefore, even if there has been no levy or collection, then by applying the provisions of the 1953 Act it may be possible to realise the Additional Excise duty.
20. It was lastly contended that the principles of promissory estoppel are applicable to the present case. The learned counsel for the petitioner submitted that a promise was held out to the petitioner in the form of notification of 1953 that if cloth was manufactured on which Excise duty was not payable under the Excise Act, then Additional Excise duty under the 1953 Act would also not be payable. I am afraid on the facts of this case this plea is not open to the petitioner. Firstly, the petitioner has failed to show that as a result of any promise held out to the petitioner, it altered its position. In fact, in the present case Excise duty was paid by the petitioner. In any case, it is now well settled that it is not permissible to plead promissory estoppel against a statute (See Khandelwal Metal and Engineering v. Union of India and Others - [1983 (12) E.L.T. 292]. In view of the enactment of the enactment of the 1972 Act the petitioner cannot raise a contention of promissory estoppel.
21. No other contention was raised by the petitioner.
22. For the aforesaid reasons the writ petition is dismissed but in the circumstances of the case, there will be no orders as to costs.