VISNAGAR YANTRASHAL VANKER SAHAKARI MANDALI LTD Vs. UNION OF INDIA AND ORS

JUDGEMENT

(1.) What is at stake in this petition by a Co-operative Society formed by workers who themselves operate powerlooms is the credibility of high officials of a Government Department (Central Excise Department). To act or not to act in accordance with their directions is no more the question. The question is whether to act according to their directions is a good ground for penalizing them. And this is how the dilemma has arisen.

(2.) Petitioner society was required to pay duty at the rate of Rs. 50 per loom per annum by way of compounded levy permissible under rule 96J read with the relevant notifications. The Society sought guidance from the competent authority on the question as to whether or not there was any ceiling on the number of looms that can be operated under the scheme of compounded levy. The Assistant Collector of Central Excise, Ahmedabad, by his letter dated March 20, 1969 had informed them that excise duty was payable at the rate of Rs. 50 per powerloom per annum, provided that not more than four powerlooms were operated by each member. No other rider was added. It is not in dispute that number of powerlooms does not exceed the ratio of four powerlooms per member specified in the aforesaid communication. The Assistant Collector of Central Excise, having informed them in writing that they were entitled to claim benefit of a compounded levy, the petitioner society continued to work 65 powerlooms owned by them and went on paying excise duty at the aforesaid rate in accordance with the communication received from the Assistant Collector of Central Excise, Ahmedabad. In fact, some time later, another communication was addressed by the petitioner-Society to the Assistant Collector of Central Excise seeking further clarifications. This letter was replied to by the Assistant Collector on April 17, 1969 whereby the made it abundantly clear that the society was entitled to the benefit of the concenssional rate of excise duty by way of compounded levy irrespective of the number of looms owned and worked by the society. That, the Assistant Collector had informed the petitioner society explicitly in the aforesaid terms is not disputed in the sense that the averments made in this behalf in paragraph 8 of the petition have not been specifically controverted by the respondents in the affidavit-in-reply sworn by Mr. K. R. Bhargava Assistant Collector, Customs, Ahmedabad on September 29, 1980. Notwithstanding the aforesaid position, the respondents called upon the petitioner-society to show cause why a sum of Rs. 2,35,659.88 P. should not be recovered from it as the petitioner society was not entitled to the benefit of concenssional notification under which duty at the compounded rate was payable. In the wake of the aforesaid show cause notice dated September 26, 1972 as per Annexure 'F' of the Superintendent Central Excise, Patna, the Assistant Collector of Central Excise, by his impugned order Annexure 'A' confirmed the demand to the tune of Rs. 34,896.41 P. by his order dated Nil August 1975. It appears that the Assistant Collector waived its demand for a sum of Rs. 2,00,762.47 P. but did not accept the contention of the petitioner society in respect of the demand for the sum of Rs. 34,896.41 P. which amount the petitioner society was called upon to pay.

(3.) The petitioner society approached the Appellate Collector of Central Excise by way of an appeal. The Appellate Collector was fair enough to realise that the petitioner society was placed in this embarrassing situation on account of the view taken by the Department itself in the past, which was communicated to the petitioner society in writing by the Assistant Collector, and that is why he was constrained to observe in para 7 of his impugned order to the effect that it was a case of hardship caused to the petitioner society on account of failure on the part of the Department to give appropriate guidance. He however, felt that no relief could be granted to the petitioner society in view of the relevant provisions. Relevant passage from his order may be quoted for the sake of preciseness.