2008 (9) TMI 390 - HC - Central Excise

High Court sets aside Revenue orders, emphasizes Supreme Court principles. Collector's interpretation overturned, demands invalidated.

The High Court allowed the writ appeals and petitions, setting aside the Single Judge's order and show cause notices/final orders by the Revenue. The ... Writ jurisdiction - Alternative remedy - Whether the countervailing duty paid under the provisions of the Customs Act, is payment of Central Excise duty or additional customs duty? - Held that:- The learned Single Judge, after keeping the cases pending for more than seven years from the date of their filing, i.e. in 1992/1993, on the request of the learned Standing Counsel appearing for the Central Government awaiting the decisions of the Central Government and after the issuance of Central Government Notification No. 104 of 1983, dated 28-12-1993, clarifying on the matter by making amendment to the relevant Notification, it was not desirable for the learned single Judge to ask the appellant-writ petitioner-assessee-Madura Coats Limited, to avail of the alternative remedy of appeal before the CEGAT/CESTAT. The principles enunciated by the Supreme Court in the case of Hyderabad Industries Limited [ 1995 (7) TMI 368 - SUPREME COURT OF INDIA] and [1999 (5) TMI 29 - SUPREME COURT OF INDIA] are applicable to the present cases, having been not disputed by the learned Additional Solicitor General appearing for the Revenue, he having accepted the fact that the classification of the 'goods' of the writ petitioner-assesee-Madura Coats Limited, are covered under Sl. No. 3 (as extracted in the Table in the earlier paragraph of this judgment) and that there is no dispute in the fact that the assessee has already paid the additional customs duty on the same, we are of the view that no useful purpose would be served by remanding the cases to the departmental authorities for considering the same issue which had already been settled by the Supreme Court. W.P Allowed. Issues Involved:1. Alternative remedy of appeal before the CEGAT/CESTAT.2. Interpretation of Notifications regarding exemption from Excise Duty.3. Demand of second incidence of Excise Duty on cotton sewing threads.4. Retrospective application of Notifications.5. Validity of show cause notices issued by the Collector of Central Excise, Madurai.Detailed Analysis:1. Alternative Remedy of Appeal before CEGAT/CESTAT:The learned Single Judge directed the appellant-writ petitioner (Madura Coats Limited) to avail of the alternative remedy of appeal before the Central Excise and Service Tax Appellate Tribunal (CESTAT), without deciding the writ petitions on merits. The High Court, however, noted that the writ petitions had been pending for over seven years and that the principle enunciated by the Supreme Court in similar cases should apply. It was held that remanding the case to the departmental authorities would serve no useful purpose since the issues had already been settled by the Supreme Court.2. Interpretation of Notifications Regarding Exemption from Excise Duty:The appellant argued that the Notifications issued by the Central Government between 1986 and 1993 granted exemptions from Excise Duty for certain goods. The Collector of Central Excise, Madurai, interpreted these Notifications differently, leading to the issuance of show cause notices and demands for additional duty. The High Court found that the interpretation given by the Collector was incorrect and that the Notifications should be read as granting exemptions from the date they were issued.3. Demand of Second Incidence of Excise Duty on Cotton Sewing Threads:The Central Excise Authorities at Madurai sought to impose a second incidence of Excise Duty on cotton sewing threads made from duty-paid yarn, despite the exemption provided in the Notifications. The High Court noted that the Central Government had issued clarifications that should have prevented such demands. The Court held that the second incidence of duty was not applicable and set aside the demands.4. Retrospective Application of Notifications:The issue of whether the Notifications should apply retrospectively was central to the case. The High Court referred to the Supreme Court's decision in Hyderabad Industries Ltd. v. Union of India, which held that amendments intended to rectify mistakes in Notifications should have retrospective effect. The Court concluded that the Notifications issued by the Central Government should be applied retrospectively, invalidating the demands for additional duty.5. Validity of Show Cause Notices Issued by the Collector of Central Excise, Madurai:The show cause notices issued by the Collector of Central Excise, Madurai, were challenged on the grounds that they were based on an incorrect interpretation of the Notifications. The High Court found that the show cause notices were issued without proper jurisdiction and constituted an abuse of process. The Court set aside the show cause notices and the final orders issued by the Collector.Conclusion:The High Court allowed the writ appeals and writ petitions, setting aside the impugned common order passed by the learned Single Judge and the show cause notices/final orders issued by the Revenue. The Court held that the issues had already been settled by the Supreme Court and that no useful purpose would be served by remanding the cases to the departmental authorities. The Court emphasized that the Notifications should be applied retrospectively and that the demands for additional duty were invalid.