D.R. Khanna, J.
1. Appollo Tyres Limited, petitioner, No. 1, is manufacturing automobile tyres and tubes as its factory located in Trichur, Kerala. The other two petitioners are the Bharat Steel Tubes Limited and Shri Raunaq Singh who are stated to be its share-holders. Shri Raunaq Singh, besides is the Chairman and Managing Director of petitioner No. 1.
2. The case of these petitioners in this petition under Article 226 of the Constitution of India, is that though the automobile tyres and tubes industry in India was established several decades ago, there was need to encourage it further in order to meet the growing demands and the economy of the country. As such the Government of India, with a view to developed digamous production and eliminate bottle-necks and difficulties, made a reference to the Bureau of Industrial Costs and Prices to go into the entire economics of the growth of automobile tyres and tubes industry an dto suggest measures calculated to further its growth. A detailed study was then made by that Bureau nd a report was submitted in the year 1973, making several recommendations. As a consequence thereof, teh Central Government issued a notification dated 18.1.1974 bearing No. 8 of 1974, under Rule 8 of the Central Excise Rules, 1944, inter alia, granting exemptions from payment of excise duty to the new industrial units pertaining to aforesaid automobile tyres and tubes industry. By virtue of and under this notification, the said industrial units were granted exemptions so that, inter alia, they became liable to pay only 40% ad valorem excise duty instead of the current 55% ad valorem duty.
3. The petitioners contend that relying upon this policy of the government, the first petitioner sponsored and established its industrial unit for the manufacture of automobile tyres and tubes at Perambra, Trichur District in the State of Kerala, and were duty granted an industrial license under the provisions of the Industry Development and Regulations Act, 1957. The trial production commenced in Decmber, 1976 and commercial production on or about 8-3-1977.
4. In or about July, 1974, the Central Government, it is further stated, directed investigation by a High Powered Committee set up by the Ministry of Industrial Development in consultation with the Finance Ministry as well as the Planning Commission, with a view to examining the need for and recommend appropriate fiscal and other measures for generating required order of investments in new priority industries including the aforesaid tyres and tubes industry. The said Committee, after making a detailed study, submitted its report on 25-11-1975. In this report, the committee noted that the new units were at price disadvantage to the extent of 14% as compared to teh fair price of the existing units. In regard to the industrial units which involved capital outlay in excess of rupees 25.5 crores as the present petitioner No. 1 was, the Committee estimated the price disadvantage to the new units in the order of 18%. The committee, thereforee, submitted various recommendations, one of which was that the the new units having capital outlay in excess of rupees 25.5 crores should be given relief in the excise duty to the extent of 16% ad valorem as compared to the standard rate of 55% ad valorem applicable to all tyres and tubes industires. The period for this relief was recommended to be five years. This relief according to the petitioners, was thus available to petitioner No. 1 as its capital outlay was rupees 27.76 crores. The Central Government, it is next averre, after considering the recommendations made by teh Committee issued notification No. 198 of 1976 inter alias exempting new units from payment of so much excise duty as was in excess of the base clearance subject to conditions mentioned in the said notification.
5. The petitioners state that relying upon this notification, they further incurred diverse expenses and/or streamlined their production with a view to ensure higher production rate so as to qualify for the benefits concerted by the said notification. It is further added that between the period 16-6-1976 and 31.7.1977, investments to the tune of rupees 20 crores approximately were made in connection with the production activities in their factory.
6. However, in spite of the notifications dated 18.1.1974 and 16.6.1976, it is stated that the Central Government issued a press note which was circulated by the Collector of Customs and Central Excise, Cochin by Trade Notice No. 54/77, dated 9.3.1077, directing that the excise authorities should grant exemption available under the letter notification only to such manufacturers as passed on their benefits thereof partly or wholly to their respective consumer. This was pleaded to be an unwarranted interference in the quasi-judicial functions of the excise authorities by administrative directions.
7. The petitioners, it is next averred, submitted to excise authorities their price lists in accordance with the provisions of the Central Excise & Salt Act, 1944, and the Central Excise Rules, being price list No. 3/74 and price list No. 4/74. The Assistant Collector of Central Excise (imp leaded as respondent no. 2), however, settled and/or disposed of those price lists by his orders dated 21.3.1977 and 25.3.1977, in such manner that the first petitioner was denied benefits of the second notification. In doing so, he princippally based his orders on the administrative directions contained in teh said Press Note. In this way he, it si alleged, wrongly declined to the first petitioner the benefits available to it under the said notifications. The permission for provisional assessment was also refused.
8. Against these orders of the Assistant Collector, the first petitioner moved appeals under section 35 of the Act. During their pendency, the first petitioner filed a writ in teh High Court of Kerala, and sought for reliefs arising in its favor under teh second notification and for provisional assessment. This writ was, however, dismissed with the directions to the excsie authorities to permit the first petitioner to at all of the procedure for provisional assessment under teh Act and the Rules. In the meanwhile, a Division Bench judgment of the Delhi High Court in the case of teh Modi Rubber Limited in writ petition No. 411 of 1977, dated 8.2.1978-1978 E.L.T. (J 127) came which struck down the said Press Note. The last petitioner, thereforee, requested the Appellate Collector of Customs & Central Excise (imp leaded as respondent No. 2), to decide the appeals pending before him against the orders of respondent No. 2, in terms of that judgment, but he sought to distinguish the same and held the orders appealed before him as valid.
9. In the present writ, thereforee, the petitioners have assailed these orders made in appeals by the Appellate Collector, of the dated 22.9.1978 and 29.9.1978. As a result of these orders and in pursuance of the coercive and other provisions of the Act and the Rules. It is next alleged, the respondents illegally recovered from the petitioners diverse excessive amount to teh extent the benefit of the aforesaid, notifications was not passed on to the cosumers. Cash security in the aggregate sum of rupees 4.5 lacs deposited in the Post Office Savings Account which was duly pleaded in favor of the President of India, was also obtained by respondent No. 2, and diverse bonds amounting to rupees 18 lacs for the purported purpose of securing the payment of excise duty as might be demanded by the excise authorities, were also obtained. The respondents were not stated to be threatening to withdraw of the said amount of rupees 4.5 lacs from the Post Office Savings Account, and also enforce the said bonds.
10. Alleging next that although under the provisions of the Act a revision could lie from the impugned appellate orders to teh Central Government under section 36 of teh Act, and the same was not being availed as no justice would be accorded to the petitioners by the Central Government in view of the policy declaration made by it, the present writ petitioners has been moved. The notification dated 16.6.1976, issued by the Central Governmnt, it is pointed out, was in the exercise of statutory powers and the first petitioner qualified for certain benefits there under. There was no such condition imposed in that notification that the benefits were available to the manufactures only if that passed them on to the consumers. The excsie authoroties, it is asserted, could not abdicate their quasi-judicial functions in favor of the Central Government and be guided bby the Press Note or the Trade Notice as aforesaid. The impugned orders are, thereforee, assailed on the ground that they partake the inherent vice of the impugned trade notice. The benefits available under the notification dated 16.6.1976, are pleaded to constitute property within the meaning and for the purpose of Article 19 and 31 of the Constitution of India, and the effect of the impugned orders was that they deprived the petitioners of their property in violation of these constitutional provisions. It has also been pleaded that Section 3 of the Act alone and not Section 4, is the charging section. Under section 4, the assessable value has to be determined on the basis of normal wholesale or factory sale prices referable to manufacturing costs. The post-manufacturing costs of expenses of benefits were not relevant considerations and as such the amount of the excise duty payable in respect of the products, was to be exluced. The Trade Notice has also been pleaded to be discriminatory and vocative of Article 14 of the Constitution of India. as it made invidious discrimination between the manufacturers, adn had besides the effect of conversion of excise duty into that of Sales Tax. Particular reference has been made to notification GSR 1089, dated 29.1.1969, in order to show that where certain benefits were required to be passed on to consumers, the notification itself provided so. Plea of promissory estoppel has also been raised on the ground that the petitioners incurred heavy expenses after the notifications of 18.1.1974 and 18.6.1976. As a result of the impugned orders the petitioners, it is stated, have suffered serious economic and financial losses.
11. This writ petition has, thereforee, been moved at Delhi on the ground that the Union of India, respondent No. 1, has its administrative office at Delhi, and the impugned Press Note was also issued from here. Similar was the position of the said two notifications. It is prayed that the Press Note issued in the Central Government in June, 1976, and/or Trade Notice No. 54/77, dated 9-3-1977, be struck down as unconstuttuioal, illegal and inoperative. The impugned orders of the Assistant Collector and the Appellate Collector are also sought to be quashed and the respondents are required by way of mandamus to refund forthwith all amounts unlawfully realised from the petitioners under that Press Note and/or the Trade Notice. The respondents are further sought to be regarded from collecting or Realizing the amount of the security deposit, or enforcing the bonds, and further prohibited from denying the first petitioner the benefits of the aforesaid two notifications.
12. The respondents are also sought to be retrained from giving effect to a letter dated 1.1.1979, calling upon the first petitioner to show cause why a sum of Rs. 6,67,425.41 p. alleged to be short levy of excise duty for the period 14.7.1978 to 31.8.1978 be not recovered.
13. The respondents on their part have challenged the maintainability of this writ. It is pointed out that alternative remedy of revision before the Central Government under section 36 of the Act, was available which had not been availed of Issue of Notifications No. 8/74 and 198/76 dated 16.6.1976, and the Trade Notice 84/77, dated 9.3.1077 are admitted. The benefit of the Notification No. 198/76, it has been asseted, was rightly denied to the first petitioner as it was not passing on the benefits to the buyers. It is, however, denied that the Notification No. 198/76 was issued on the basis of the recommendations of any committee. The government, it is pleaded, is within its rights in definite the purpose for which concession is granted and to impose conditions for availing of the same. As such no exception could be taken to the Press Note quoted in the Trade Notice No. 54/77. No provisional clearance was allowed to the first petitioner by the Assistant Collector as its case did not fall under Rules 173-C (2-B) and 9-B of the Central Excise Rules. The Delhi High Court decision in the Modi Rubber Ltd., it is pleaded is not applicable to the present cae. The orders and teh action proposed by respondents No. 2 and 3 are asserted to be perfectly valid and no unconstitutionality of illegality was involved in them.
14. So far as the claim of the first petitioner for concessional rate of duty under Notification dated 18.6.1974, it has been pointed out that the production was commenced during the later half of 1976-77, and, thereforee, there did not arise any occasion for the clearance of less than rupees two crores worth of tyres during the entire year. As regard the notification dated 16.6.1976, the Press Note had only clarified the purpose for which the concession had been granted. Since this petitioner did not abide by the ame and did not pass on teh benefit of concessional duty to the customer, the same could not be mde, available to it. As regards section 4 of the Act, it has been stated tht teh assessable value for payment of duty is the normal price, i.e., the pirce at which the goods are ordinarily sold by the assessed to a buyer of the course of whole-sale trade for delivery at the time and place of removal of goods from the factory, where the buyer is not a related perosn, and this price is the sole consideration for assessing the excise duty. The duty is charged on this price. Certain deductions are allowed under section 4(4)(d), such as the amount of excise duty, sales tax and other taxes, if payable on such goods.
15. So far as the plea of the petitioners about the estoppel, it is appointed out that the exemption in the payment of excise duty had been granted by Notification No. 47 of 1972. This is available for the first clearance of tyres worth Rs. 50,00,000/-. That figure represented the production of the petitioner for 1 1/2 or 2 months. Thus within 47 days of the starting of the production, the petitioners went out of the purview of notification of 1974.
16. As regards notice dated 1.1.1979, in respect of Rs. 6,67,425.41 p., it has been pleaded that hte petitioners could have replied to the same and then availed of the remedies provided under the law. This writ petition is contended to be not maintenable.
17. With this narration of the respective cases of the parties, the question arises whether the respondents were justified to deprive the first petitioner the benefit of notification No. 198.76, dated 16.8.1978, on the ground that it had failed to pass on the benefit acceptable under that notification to the consumers in terms of the Press Note issued by the Central Government which was circulated by the Collector of Customs and Central Excise, Cochin, by Trade Notice NO. 54/77 of 9.3.1977. This Trade Notice had simply given effect to the Press Note issued by the Central Government. Since the latter had amended from New Delhi, the jurisdiction of this Court to entertain this writ clearly exists. Moreover, it was futile to move any revision under section 36 of the Act before it. The writ is, thereforee, maintainable.
18. We further find that the validity of the Central Government Press Note quoted in the said Trade Notice dated 9.3.1977, came up for adjudication before a Division Bench of this Court in the case of Modi Rubber Ltd. v. Board of Central Excise and Customs, reported as L. R. (1978) 11 Delhi 352. 1978 E.L.T. (J 127). It was held that since the earlier notification, dated 16.6.1976, was statutory in nature, being issued under Rule 8 of the Central Excise Rules. Its benefit could not be withheld by the subsequent administrative Press Note or Trade Notice issued. That Press Note, thereforee, was struck down as invalid and inoperative.
19. This is a Division Bench decision of this Court which we respectfully follow. This decision was, in fact, followed by a Single Bench decision of this Court in the case of Madras Rubber Factory Ltd. v. Union of India & Others, reported as 1979 E.L.T. (J 173). It was observed that it is not open to the Board to as administrative capacity to issue directions to various subordinate authorities exercising quasi-judicial functions to interpret excise rebate in a particular manner and to restrict relief there under. Any quasi-judicial order issued on the basis of such direction, was held to be illegal andd void. The learned Judge further observed that when there was no specific condition in teh statutory notification that the benefit of rebate should be passed on the consumer, the manufacturer is eligible for the benefit of the duty on excess production in terms of that notification irrespective of the same being passed on to the consumers or not.
20. it is correct that both the notification under Rule 8 as also the Press Note amended from the Central Government, and the latter purported to elaborate in what circumstances, still the Press Note remained primarily of administrative direction and was not purported to be issued under Rule 8 which would have given it the statutory colour.
21. In so far as the base clearance for the year 1975-76, there could not be any benefit extended to the first petitioner under the exemption contained in Notification No. 8/74, dated 18.1.1974 as its production started only in December, 1976. The factory could not, thereforee, be treated as being in operation during the entire year, much less in the preceding 1975-76 year. The Appellate Collector's order was, thereforee, correct.
22. Once the Press Note incorporated in the Trade Notice No. 54/77 of 9.3.1977, is eliminated, being invalid and inoperative, petitioner No. 1 becomes entitled to the benefit of the notification, dated 16.6.1976, irrespective of whether it has passed on the rebate to the consumers or not.
23. From the side of the respondents was reference made to the computations of the assessable values under Section 4 of the Act, and it was ought to be urged that its implications were not gone into by teh Division Bench in the case of Modi Rubber Ltd. (supra), and that whatever liability was created or the benefit allowed in the levy of excise duty, the same passed on to the consumer, and the manufacturing cast was thereby not affected. We, however, find that in part 21 of the judgment, the learned Division Bench did go into the implications of section 4 of the Act. The following observations were made :-
'21. Mr. Dewan further pointed out in order to determine the excise duty livable on the items produced by the petitioner, it is necessary first to determining the assessable value under section 4 of the Act. It is only after teh assessable value is determined that the excise duty livable thereon is ascertained. It is erroneous to suggest, as is done by teh Government, that assessable vlaue will have to be again determined after taking into consideration the relief and exemption granted under the notification, dated 16th June, 1976. It is neither intended by the notification nor is it practicable that the assessable contemplated under teh said notification. This in effect would be the stand of the Government by its insistence that it is only when the benefit of the rebate in duty is passed on by the manufacturer to the consumers that the manufacturer becomes ceased to the benefit of exemption from duty. In other words, if the price to the customer inclusive of duty remains the same and the duty livable thereon is calculated and thereafter the relief permissible under the notification is rreduced, as the Government intense to do, then according to the suggestion to the sho cause notices, the assessable vlaue would thereafter have to be recalculated and it would be higher than the assessable vlaue on which the excise duty livable was calculated in the first instance. Having arrived at this assessable value, if the duty is then to be calcualted, it would not be the same as before and in this matter the calculation would keep on changing. Such a procedure would lead to an absurd situation.'
24. We are inn respectable agreement with these observations.
25. The result, tehrefore, is that we allow this writ petition to the extent that so far as notices, directions of orders or the respsondents which go to deprive the first petitioner from the benefits accruing to it under notification hearing No. 3, dated 18.1.1971, and 198, dated 16.6.1976, are quashed. The respondents cannot act upon the Press Note as incorporated in Trade Notice No. 54 of 1977, dated 9.3.1977, as thy are struck down as invalid and inoperative. The respondents are further directed to refund to teh first petitioner the amounts realised in implementation of the said Press Note and the Trade Notice. No further recoveries arising on the basis of the Press Note and the Trade Notice he besides effected from the first petitioner. We are, howver, unable to grant any interest to this petitioner for the amount which the respondents have realised under this Press Note and Trade Notice.
26. Looking at the circumstances, the parties are left to bera their own costs.
S. Ranganathan, J.
27. The petitioner has sought to have quashed : (a) thee orders of respsondents Nos. 2 & 3 dated 21.3.1977 and 22.9.1978 respectively, (b) their orders dated 25.3.1978 and 29.9.1978, and (c) a letter dated 14.7.1978, a notice dated 29.12.1978 and a letter dated 1.1.1979.
28. So far as prayer (a) is concerned, the respsondents by their order in question had denied the exercises petitioner the benefits of a notification dated 18.1.1974. Under this notification exemption from excsie duty was granted in respect of tyres for motor vehicles (except certain specified itmes) if the total value of tyres for motor vehicles cleared by the manufacturer during the preceding financial yar for whole consumption did not exceed Rs. 2 lacs. The petitioner started manufacture in December, 1976 and its commercial production stated only on to about 8.3.1977. If, however, claimed the benefit of the above notification for the financial year 1976-77 on the ground that since in the preceding financial year 1975- 76 its production was nitl, it aws entitled to the exemption under the notification has been rejected by the Assistant and Appellate Collector of Excise on the ground that the notification contemplated an exemption only in cases where a factory really did exist during the previous financial yer and actually had clearance of some gods during last period. In the present case the petitoner did not exist in the financial year 1975-76 at all not was there any clearance for the whole consumption during the preceding financial year. The petitioner, was, thereforee, held and eligible for the said exemption. As pointed out by my learned brother in paragraph 21 of his judgment the interpretation placed by the department is correct and does not call for any interference.
29. So far as item (b) and (c) are concerned, they raise the question whether on a proper interpretation of the notification No. 198/76 the assessed is entitled to the exemption there under notwithstanding the fact that the benefit of the reduction in excise duty is not passed on by it to the custmers. This aspect has also come up in certain other writ petitions and the matter has been discussed at same length in my judgment delivered on behalf of the Bench in C. W. 86p/79 (M/s. Ceat Tyres India Ltd. v. Union of India). For the reasons discussed in the said judgment and also in view of the Division Bench decision of this Court to Modi Rubber case, referred to by my learned brother, the notices and direction and orders of the respondents which go to deprive the first petitioner or the benefits accruing to it under these notifications in pursuance of certain departmental instructions and the trade notice No. 54/77 have to be quashed.