Susanta Chatterji, J. - (1.) The present rule was issued on 11-7-1977 at the instance of the writ petitioner, Seth Chemical Works Private Ltd. praying, inter alia, to strike down the assessment orders levying duty on ultramarine blue form 1962-63 till 1976-77 for the sum of Rs. 26,84,539/- and subsequent amounts and further praying to restrain the respondents from assessing any duty on ultramarine blue produced by the petitioner in its factory and for refund of the excise duty so illegally realised.
(2.) It is stated that the petitioner has been carrying on manufacturing operation of the product of ultramarine blue and marketing the same through its customers and/or stockists or dealers. According to the petitioner the trade in ultramarine blue has various brand names and are used in the market as Robin ultramarine blue, Crown blue, Atlantic blue and Robin super. It is placed on record that the end product of ultramarine blue is a compound of sodium, aluminium, silicon, sulphur and oxygen and is ordinarily and predominantly used as an agent for temporarily brightening the whiteness of things particularly textiles. In the common parlance in the industry and trade it is known as Dhobi blue. It is elaborated by placing on record that this manufactured item if put in water does not dissolve but due to fineness of its constituent particles it disappears in the water and settles down in the bottom. In that process the water is only temporarily made blue because only of dispersions and no ablusions of the particles. It is strenuously asserted that the product is never ordinarily commercially used for dying, colouring or painting and it is not known in the commercial parlance or in the industry or trade dealing in the product as a dye in any manner whatsoever. Elaborating all these points in details the petitioner has come to this court on the ground that the respondents Central Excise authorities have no power and/or jurisdiction under Section 3 and/or other provisions of the Central Excises and Salt Act, 1944 to assess and/or levy and/or collect duty on any product unless the same is excisable goods within the meaning of the said Act. It is highlighted that the power, authority and/or jurisdiction of the respondent Central Excise authorities are circumscribed by the provisions of the said Act and/or rules framed thereunder. The said authorities have no power to assess and/or collect any money as duty on any non-excisable goods and retain any sum so collected without any authority of law. The main thurst and/or grievance of the petitioner is that ultramarine blue produced by the petitioner in its factory can only be assessed to duty under Tariff Item No. 14.1(5) if the product is known to the commercial community and/or is brought to the market for sale and purchase as pigment or colours or paints or enamels and not otherwise. The purported demand of the Central Excise authorities that the ultramarine blue produced by the petitioner is an excisable goods have been made without jurisdiction and/or in excess of jurisdiction and/or is a nullity. They have made a specific allegation that the assessment and collection of excise duty on ultramarine blue from 1962-63 till 1976-77 is illegal, without jurisdiction and/or is ultra vires the Act and/or have been made in contravention of Section 3 of the said Act and/or Articles 31(1) and 265 of the Constitution of India and as such all purported assessment orders on ultramarine blue for the period 1962-63 to 1976-77 and thereafter are liable to be set aside and/or quashed. Much emphasis has been laid that inasmuch as the Central Excise duty has been purportedly assessed on ultramarine blue although the same is not an excisable goods and the respondent Central Excise authorities have no right and/or authority to retain the money illegally collected as duty for unjust enrichment and the petitioner is entitled to refund of the amount so illegally realised and/or collected from the petitioner.
(3.) The writ petition is contested by the respondent Central Excise authorities by filing an A/O. It is placed on record that Seth Chemical Works, a partnership firm, carried on business of manufacturing and dealing in, inter alia, ultramarine blue having its factory at Lilooah, Howrah. The said ultramarine blue falls under Item No. 14(1)(5) of the First Schedule to the Central Excises and Salt Act as pigments colours, paints, enamels not otherwise specified and after obtaining necessary Central Excise Licence paying the Central Excise duty leviable on the product at the appropriate rate. It is also stated that in 1972 M/s. Seth Chemical Works by a letter requested the Collector of Central Excise to exempt their products from payment of excise duty and to direct refund of the duties so far paid by them. In reply to the said letter the Deputy Collector informed that the petitioner's representation had been forwarded to the Assistant Collector of Central Excise, Calcutta VIII Division with direction to pass necessary orders after observing principles of natural justice. They were further informed to prefer an appeal if they became aggrieved by such orders. The Assistant Collector of Central Excise passed orders on such representation by holding that the said product would be deemed as pigments and colours not otherwise specified and classified under the Central Excise Tariff Item 14(1)(5). Sometimes in August 1976 the petitioners disclosed that they have acquired the entire goodwill and the business and undertaking of the aforesaid partner-ship firm M/s. Seth Chemical Works and by a letter dated 24-6-1977 and 29-6-1977 the petitioner requested the respondents to recall, revoke, vacate all proceedings or orders resulting in assessment demand levy and collection of Central Excise duty on the petitioners' product ultramarine blue pigments and colours classified under Central Excise Tariff Item 14(1)(5) and to refund the same collected as duty. The petitioners without waiting for the reply to the letters and without availing remedies provided under the statute by preferring appeal against the orders of assessmemts and demands raised, filed a petition under Article 226 of the Constitution and obtained the above rule.;