Court broadens excise duty exemption interpretation, relies on promissory estoppel. Limitation period bars demands.

The court interpreted the term "already been paid" in excise duty exemptions broadly, applying the doctrine of promissory estoppel to prevent demands for excise duty. The demands were found invalid due to exceeding the limitation period, and alternative remedies were deemed unnecessary. The petitioners were relieved from paying excise duty, demands were quashed, and the respondents were restrained from further demands. The court issued a writ of certiorari and mandamus, with costs awarded to the petitioners. The judgment was delivered by a concurring Division Bench.

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Issues Involved:

1. Interpretation of the term "already been paid" in the context of excise duty exemptions.
2. Applicability of the doctrine of promissory estoppel.
3. Validity of the demands for excise duty in light of the limitation period prescribed u/s 11-A of the Central Excises and Salt Act, 1944.
4. Availability of alternative remedies.

Summary:

1. Interpretation of "Already Been Paid":
The main issue revolves around the interpretation of the term "already been paid" as used in Notification No. 66/73-C.E., dated 1-3-1973. The petitioners argued that this term should be read to mean "required to be paid" or "ought to have been paid" or "contracted to have been paid," and that an assessment to nil duty on the scraps should mean duty already been paid. The court agreed, stating that the expression "paid" can be construed to mean "contracted to be paid" and that it is not necessary for some amount of duty to have been assessed and actually paid. This interpretation was supported by precedents and contemporanea expositio.

2. Doctrine of Promissory Estoppel:
The petitioners contended that the respondents are estopped from making any demand based on the principle of promissory estoppel. The court recognized the rule of promissory estoppel as a principle evolved by equity to avoid injustice. It was noted that the petitioners were allowed to avail the exemption until February 1981, and it would be inequitable to allow the respondents to go back on their representations. The court applied the doctrine of promissory estoppel, preventing the respondents from demanding excise duty from the petitioners.

3. Validity of Demands and Limitation Period:
The court examined whether the demands for excise duty were barred by the limitation period prescribed u/s 11-A of the Act. The court found that no notice to show cause was given to the petitioners within the statutory period of six months for any of the demands, and there was no case of fraud, collusion, wilful mis-statement, or suppression of facts. Therefore, the demands were held to be invalid.

4. Availability of Alternative Remedies:
The respondents argued that the petitioners should avail of alternative remedies. However, the court held that once an application is admitted for hearing, a party should not be asked to seek alternative remedies. Moreover, any action taken without authority of law or jurisdiction can be directly questioned before the court, and no alternative remedy can be found in such cases.

Conclusion:
The court concluded that the petitioners are not liable to pay any excise duty on the ingots manufactured from the scraps, which answered the descriptions in Notification No. 66/73-C.E., and on other articles manufactured from the ingots in terms of Notification No. 152/77. 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) were quashed, and the respondents were restrained from demanding any excise duty from the petitioners. The court issued a writ in the nature of certiorari and consequential mandamus accordingly. The respondents were also ordered to pay the costs of litigation to the petitioners.

Judgment:
The judgment was delivered by a Division Bench, and both judges concurred with the decision.

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