A.M.KHANWILKAR,J. - (1.) This appeal is directed against the judgment and order dated 13.9.2007 passed by the High Court of Judicature at Bombay in Central Excise Appeal No. 237 of 2006. Briefly stated, the appellant is engaged in manufacture of cotton and man-­made fabrics. According to the appellant, the fabric manufactured by the appellant was not amenable to excise duty Signature Not Verified since it was for captive consumption and not to be removed for Digitally signed by CHARANJEET KAUR Date: 2019.12.09 16:37:32 IST Reason: the purposes of sale or for consumption as envisaged under Rule 9 read with Rule 49 of the Central Excise Rules, 1944 (for short, 'the Rules'). On this assertion and relying on the decision of the High Court of Delhi in J.K. Cotton Spinning and Weaving Mills Co. Ltd. and Ors. vs. Union of India and Ors. 1 1981 (8) ELT 887 , the appellant filed two writ petitions under Article 226 of the Constitution of India before the High Court of Delhi being Civil Writ Petition Nos. 1234/1981 and 1235/1981. The reliefs claimed in both petitions are identical except that they pertain to separate periods. We may reproduce the reliefs claimed in Writ Petition No. 1235/1981, for the sake of convenience. The same read thus: -­ "(a) Issue a suitable writ, order or direction declaring that duty of excise is not payable in respect of yarn (Cotton and man made) processed further in the petitioner's composite mills in the manufacture of fabrics: (b) Issue writ of certiorari or any other suitable writ, order or direction in the nature thereof quashing and setting aside the decisions and directives of the Central Board of Excise, respondent No.2, contained in circular letters dated 6.10.1976 (Annexure A), 24.9.1980 (Annexure B) and to quash the notices dated 23.4.1981 (Annexure C) and all similar notices referred to in the statement (Annexure D), dated 7.1.1981 (Annexure G) and dated 9.3.1981 (Annexure H): (c) Issue a writ of mandamus or any other appropriate writ, order or direction in the nature thereof, restraining the respondents from levying or collecting duty of excise in respect of yarn obtained by the petitioner at an intermediary stage in its composite mill for further processing in the manufacture of fabrics and to direct the (Del.) Board, respondent No.2, to cancel and/or withdraw the decisions and directives contained in circular letters dated 6.10.76 (Annexure A) and 24.9.80 (Annexure B) and to direct respondent 3 and 4 to cancel and/or withdraw the notice dated 23.4.1981 (Annexure C), 23.2.81 (Annexure G) and all similar notices referred to in the statement (Annexure D), dated 7.1.1981 (Annexure G) and 9.3.1981 (Annexure H) and to restrain defendants 3 and 4 from taking any steps or/proceedings pursuant to and in accordance with the aforesaid directives and notices. (d) Issue a writ of prohibition or any other appropriate writ, order or direction in the nature therefore, restraining the respondent from collecting duty of excise on yarn obtained by the petitioner in its composite mill which is further processed in the manufacture of fabrics. (e) Issue appropriate writ, order or direction directing the respondent to refund the amount of duty illegally recovered from the petitioner in respect of yarn obtained in the petitioner's composite mills and further processed in the manufacture of fabrics for the period commencing from 15.7.1977 in respect of cellulosic spun yarn and non-­ cellulosic spun yarn and from 17.3.1972 and in respect of cotton yarn and from 15.7.77 upto the date of disposal of the present writ petition and in particular the amounts referred to in statement (annexure E) together with interest at the rate of 12% p.a. and in the alternative to direct Respondents No.3 and 4 to grant the refund as per refund claims dated 13.5.1981 (colly.); (f) In the alternative and without prejudice to the aforesaid prayers, to issue a writ of mandamus or any other writ, order or direction in the nature thereof direction the respondent not to collect duty of excise in respect of yarn upon sizing thereof processed in the manufacture of fabrics. (g) In the alternative and without prejudice to the aforesaid prayers, issue writ of prohibition or any other writ, order or direction in the nature thereof, restraining the respondents from levying or collecting duty of excise in respect of yarn processed within the petitioner's composite mills on the basis of the weight of yarn after sizing thereof. (h) To pass such other and further orders as may be deemed just and proper in the facts and circumstances of this case; and (i) Award costs of the writ petition in favour of the petitioner."
(2.) During the pendency of the aforementioned writ petitions, the appellant filed Civil Miscellaneous Petition Nos. 1698/1981 and 1699/1981 in the concerned writ petitions, praying for interim reliefs. For the sake of convenience, the reliefs claimed in Civil Miscellaneous Petition No. 1699/1981 filed in Writ Petition No. 1235/1981 are reproduced below: -­ "(a) grant order of stay permitting the petitioners forthwith to further process and use cellulose and non-­cellulosic spun yarn, man-­made filament yarn and cotton yarn in its composite mill in the manufacture of man-­made fabric, cotton fabric and woollen fabric at nil rate of duty and to clear cotton fabrics forthwith upon payment of duty in respect of cotton fabric only (without payment of duty on cotton yarn) upon the petitioners undertaking to furnish the requisite bond in Form B-­13 Rule 9B supported by a bank guarantee for an amount equivalent to 25% of the differential duty in respect of such yarn within three weeks hereof and to restrain the respondent 3 to 4 from taking any action or proceedings pursuit to the directives of the Board, respondent No.2 (Annexures A and B to the writ petition) and notices dated 23.4.1981 (Annexure C to the writ petition), and all similar notices referred to in the Statement (Annexure D), dated 7.1.1981 (Annexure G to the Writ Petition) and 9.3.1981 (Annexure H to the Writ Petition): (b) grant exparte ad interim stay in terms of prayer (a) hereinabove : and (c) pass such other and further orders as may be deemed just and proper."
(3.) The High Court of Delhi vide order dated 25.5.1981, while issuing notice on the said miscellaneous petitions, granted interim relief in terms of Prayer clause (a) reproduced above. In furtherance of the said interim relief, the appellant furnished an undertaking dated 2/10.3.1983 in order to secure the payment of differential tax to the Department of Revenue, Ministry of Finance (for short, 'the Department') in the event of dismissal of its writ petitions. The format of that undertaking was in conformity with the prescribed undertaking in Form B-­13 referable to Rule 9B of the Rules, submitted by the assessee in the case of provisional assessment. Later on, the High Court modified the interim relief on 14.5.1985. The relevant portion of the modified interim relief reads thus: -­ ""there will be no stay with regard to future payments. During the pendency of the Writ Petition, where will be stay in respect of 50% of the disputed amount of duties claimed by the respondents as arrears on the condition that the applicant furnish Bank Guarantees or renew the Bank Guarantees already furnished and keep it in force till the disposal of the writ petition. With regard to the balance of 50% of the arrears of duty which is disputed, 25% of it shall be paid within 3 months from today. With regard to the remaining 25%, the parties will pay the same in two equal installments of 12- 1/2% each in every succeeding quarter. The 25% payment which is the first payment shall be made on or before 14th August, 1985, the second installment shall be made on or before 14th November, 1985 and the third and the last installment to complete the 50% will be paid on or before 20th February, 1986. There arrears of disputed duty which are required to be paid is only in respect of unsized yarn. Any duty claimed on sized yarn will not be paid by virtue of this order. There will be no duty payable on the sized yarn even for future till disposal of the writ petition. If any payments have been made through disputed, the same would be adjusted in accordance with what is provided in the order passed by us today""" ;