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Wednesday, May 24, 2017

Section 11C of the Central Excise Act, 1944 (hereinafter referred to as the ‘Act’) = Section 11C of the Act reads as under: “11C. Power not to recover duty of excise not levied or short- levied as a result of general practice.- Notwithstanding anything contained in this Act, if the Central Government is satisfied- that a practice was, or is, generally prevalent regarding levy of duty of excise (including non- levy thereof) on any excisable goods; and that such goods were, or are, liable- to duty of excise, in cases where according to the said practice the duty was not, or is not being, levied, or to a higher amount of duty of excise than what was, or is being, levied, according to the said practice, then, the Central Government may, by notification in the Official Gazette, direct that the whole of the duty of excise payable on such goods, or, as the case may be, the duty of excise in excess of that payable on such goods, but for the said practice, shall not be required to be paid in respect of the goods on which the duty of excise was not, or is not being, levied, or was, or is being, short- levied, in accordance with the said practice.] Where any notification under sub- section (1) in respect of any goods has been issued, the whole of the duty of excise paid on such goods or, as the case may be, the duty of excise paid in excess of that payable on such goods, which would not have been paid if the said notification had been in force, shall be dealt with in accordance in force, shall be dealt with in accordance with the provisions of sub- section (2) of section 11B: Provided that the person claiming the refund of such duty or, as the case may be, excess duty, makes an application in this behalf to the Assistant Collector of Central Excise, in the form referred to in sub- section (1) Of section 11B, before the expiry of six months from the date of issue of the said notification."= Once the appellant accepts that in law it was liable to pay the duty, even if some of the units have been able to escape payment of duty for certain reasons, the appellant cannot say that no duty should be recovered from it by invoking Article 14 of the Constitution. It is well established that the equality clause enshrined in Article 14 of the Constitution is a positive concept and cannot be applied in the negative. As a result, this appeal is found to be bereft of any merit and is, accordingly, dismissed.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION


                        CIVIL APPEAL NO. 1338 OF 2017


|M/S. MANGALAM ORGANICS LTD.                    |.....APPELLANT(S)         |
|VERSUS                                         |                          |
|UNION OF INDIA                                 |.....RESPONDENT(S)        |


                               J U D G M E N T
A.K. SIKRI, J.

            This appeal arises  out  of  the  judgment  of  the  High  Court
rendered in the writ petition filed by the appellant, wherein the  appellant
wanted the High Court to exercise  its  powers  under  Article  226  of  the
Constitution  of  India  and  issue  mandamus  to  the  Central   Government
directing the Central Government to issue a notification under  Section  11C
of the Central Excise Act, 1944 (hereinafter referred to as  the  ‘Act’)  to
the effect that duty payable by the appellant on goods manufactured   by  it
shall not be paid.


Section 11C of the Act reads as under:
“11C. Power not to recover duty of excise not levied or short- levied  as  a
result of general practice.-

 Notwithstanding anything contained in this Act, if the  Central  Government
is satisfied-

 that a practice was, or is, generally prevalent regarding levy of  duty  of
excise (including non- levy thereof) on any excisable goods; and

 that such goods were, or are, liable-

to duty of excise, in cases where according to the said  practice  the  duty
was not, or is not being, levied, or

to a higher amount of duty of excise than what was,  or  is  being,  levied,
according to the  said  practice,  then,  the  Central  Government  may,  by
notification in the Official Gazette, direct that the whole of the  duty  of
excise payable on such goods, or, as the case may be, the duty of excise  in
excess of that payable on such goods, but for the said practice,  shall  not
be required to be paid in respect of the goods on which the duty  of  excise
was not, or is not being, levied, or was, or is  being,  short-  levied,  in
accordance with the said practice.]

 Where any notification under sub- section (1) in respect of any  goods  has
been issued, the whole of the duty of excise paid on such goods or,  as  the
case may be, the duty of excise paid in  excess  of  that  payable  on  such
goods, which would not have been paid if the said notification had  been  in
force, shall be dealt with in accordance in force, shall be  dealt  with  in
accordance with the provisions of sub- section (2) of section 11B:

Provided that the person claiming the refund of such duty or,  as  the  case
may be, excess duty, makes an application in this behalf  to  the  Assistant
Collector of Central Excise, in the form referred to in sub- section (1)  Of
section 11B, before the expiry of six months from the date of issue  of  the
said notification."


A bare perusal of the aforesaid provision would  indicate  that  if  certain
conditions mentioned therein  are  satisfied,  the  Central  Government  may
issue a notification directing that whole of the duty of excise  payable  on
such goods, or, as the case may be, the duty of excise  in  excess  of  that
payable on such goods, but for the said practice, shall not be  required  to
be paid.  The condition stipulated  in  the  said  Section  with  which  the
Central Government is to satisfy itself is that  there  is/was  a  generally
prevalent practice according to which the duty was  not,  or  is  not  being
levied, even when such a duty  of  excise  was  otherwise  payable  on  such
excisable goods.

We may point out at this stage itself that  the  High  Court  vide  impugned
judgment has come to the conclusion that Section 11C of  the  Act  grants  a
discretionary power to the Government to  issue  or  not  to  issue  such  a
notification.  The  said  provision  does  not  mandate  the  Government  to
necessarily issue such a notification and in the absence of  any  obligation
on the part of the Government in this behalf, the Courts are precluded  from
giving any mandamus to the Central Government to exercise such a  power  and
issue the notification.

Before we answer the questions posed above and comment upon the  correctness
or otherwise of the  view  taken  by  the  High  Court,  those  seminal  and
material facts, which have a bearing on  the  issue,  needs  to  be  stated.
These facts are as follows:
       The  appellant  is  in  the  business  of  manufacturing  Rosin   and
Turpentine.  Rosin is the resinous constituent of the  oleoresin  exuded  by
various species of Pine Tree i.e. Oleo Pine  Resin,  known  in  commerce  as
‘crude turpentine’.  The separation of the oleoresin into the essential  oil
spirit of Turpentine and Rosin is effected by distillation in  large  kettle
stills.  There are two methods of manufacturing Rosin/Turpentine  from  Oleo
Pine Resin.  One method is the vacuum chemical treatment process which  uses
power in almost all the processes.  The second  method,  commonly  known  as
the Bhatti process, is entirely manual  except  for  the  use  of  power  to
operate the pump for lifting up the  water  to  the  storage  tank  for  the
purpose of condensing.  Thus, in the second method, power is  used,  but  is
confined to operating the pump for lifting up the water to the storage  tank
for the purpose of condensing.  The appellant is using  this  second  method
of manufacturing Rosin/Turpentine.

Insofar as the first method of manufacturing Rosin/Turpentine is  concerned,
wherein power is used in all the processes, there is no dispute that  it  is
treated as a manufacturing process with the aid of power and the units  were
manufacturing these products  using  this  methodology  or  covered  by  the
provisions of the Act.  There are about ten units which  are  adopting  this
method and are paying the  excise  duty  under  the  Act  on  the  goods  so
manufactured.

Majority of the units, i.e. about  300  in  number,  are  using  the  Bhatti
method whereby use of power is confined to  lifting  of  water  to  overhead
tanks for condensation of Turpentine vapours collected as liquid  Turpentine
in tanks.  The Rosin which remains in the  kettle  is  removed  in  buckets,
usually cooled and dispatched in drums.  However, this Court has held  in  a
case that even this process would be treated as manufacturing  process  with
the aid of power even when such power is used to  a  limited  extent.   That
judgment is reported in Commissioner of Central Excise, Nagpur v.  Gurukripa
Resins Private Limited[1] which  was  rendered  on  11.07.2011,  which  fact
would again be discussed while dealing with the sequence of  events  leading
to the instant appeal.

What is emphasised at this stage is that it is a common case of the  parties
that excise duty on the goods manufactured by the appellant  is,  otherwise,
payable in law.  Insofar as the history of payment of excise on these  goods
is concerned, record  shows  that  vide  notification  No.  179/77-CE  dated
18.06.1977, the Central Government had exempted  all  goods,  falling  under
Item No.68 of erstwhile First Schedule to the Central Government Excise  and
Salt Act (1 of 1944) in or relation  to  the  manufacturing  of  such  goods
where no process is ordinarily carried on with the aid of  power,  from  the
whole of the duty of excise leviable thereon.   The  Department  of  Revenue
had issued clarification dated 16.01.1978 to the effect that  the  aforesaid
notification  covers  those  units  which  are   manufacturing   Rosin   and
Turpentine oil where no power is used in the manufacture of Rosin but  power
is used for drawing water into the tank through which the  coils  containing
oil vapours pass.  This  notification  was  issued  in  exercise  of  powers
conferred by sub rule (1) of Rule 8  of  the  Central  Excise  Rules,  1944.
However, this notification was  superseded  by  another  notification  dated
01.03.1986 thereby withdrawing the aforesaid exemption.  It was followed  by
the   Circular   dated    27.05.1994    clarifying    that    all    earlier
circulars/instructions/ tariff advices issued prior to  March  1986  in  the
context of old tariff had been withdrawn.

A show cause notice dated 04.10.2004 was issued  to  the  appellant  by  the
Excise Department demanding  duty  of  Rs.10,91,99,456/-  on  the  aforesaid
products manufactured  by  the  appellant  and  cleared  during  the  period
01.04.1999 to 31.08.2003.  It was followed by further notices  to  the  same
effect covering the period September-October, 2003 to  March,  2004;  April,
2004 to November, 2004; and  December,  2004  to  September,  2005  for  the
amount of Rs.50,760/-, Rs.66,44,602/-, Rs.1,01,92,867/-  and  Rs.81,44,105/-
respectively.  One more unit M/s. Gurukripa Resins Pvt.  Ltd.,  Nagpur  (for
short ‘Gurukripa’) was also issued similar show cause notices.  Case of  the
appellant is that out of 300 units  using  Bhatti  method,  only  these  two
units were picked up for raising demand of excise.

Gurukripa had challenged the order of  assessment  passed  in  its  case  by
filing the appeal before  the  Central  Excise  and  Service  Tax  Appellate
Tribunal, Mumbai (for short ‘CESTAT’).  The said  appeal  of  Gurukripa  was
allowed vide judgment dated  14.01.2004.   The  Department   challenged  the
order passed by the CESTAT in the case of Gurukripa, in  which  the  Revenue
succeeded as that appeal was allowed by this Court vide its  judgment  dated
11.07.2011, as pointed out above.

This Court held that the process of lifting of water into the  cooling  tank
was integrally connected with the manufacture of these goods and  hence,  if
the power was used  for  lifting  of  water,  the  exemption  would  not  be
available.  This Court also held that the TRU’s circular  of  1978  was  not
applicable since the same stood withdrawn in 1994.

In view of the aforesaid judgment rendered in the case of  Gurukripa  Resins
Private Limited, appeals filed by the appellant before the  CESTAT  came  to
be dismissed.  However, the Tribunal restricted the  Department  to  recover
the dues falling within the period of limitation only, i.e. for a period  of
one year.  This drastically reduced the demand of  excise  inasmuch  as  the
excise demanded for the period from 01.04.1999  to  31.08.2003  became  time
barred.  Both the Department as well as the appellant  have  challenged  the
said order of the CESTAT before the High Court of Bombay and the  matter  is
still pending there.

After the judgment of  this  Court  in  Gurukripa  Resins  Private  Limited,
several trade associations made representations to  the  Government  with  a
request to grant benefit under Section 11C of the Act.  On  receiving  these
representations, the Central Board of Excise and Customs decided to float  a
survey to ascertain a general practice during the period from 27.05.1994  to
27.02.2006.  Consequently, the survey letter was issued on  14.03.2012.   On
the basis of this survey, the Department came to the conclusion  that  there
was  no  such  practice  of  non-levying  excise  duty  on  these  products.
Objections were raised to the finding of the said survey on the ground  that
only ten units in the survey were considered as against the total  units  of
approximately 300.  This led to  ordering  a  re-survey  vide  letter  dated
23.01.2013.  According  to  the  appellant,  this  re-survey  revealed  that
though  there  were  many  units  across  the  country  which  had  turnover
exceeding SSI but they  were  also  never  levied  excise  duty  during  the
aforesaid period, and this phenomenon establishes that there was  a  general
practice of not demanding excise duty  from  the  units,  which  were  using
Bhatti method.  Whether this plea of the appellant is factually  correct  or
not would be discussed at an appropriate stage.

Fact of the  matter  is  that  after  thorough  consideration,  the  Finance
Ministry decided on 15.09.2014 not to  issue  any  such  notification  under
Section 11C of the Act as it was going to benefit only two companies,  which
includes the appellant.  This decision was communicated  by  the  Department
of Revenue to the All India Manufacturer  Organisations  vide  letter  dated
30.09.2014.  Challenging the aforesaid decision, the  appellant  filed  writ
petition in the High Court of Delhi with the following prayers:
“(a) Issue a writ of certiorari or any other similar writ or  direction  for
quashing the decision, communicated vide  letter  dated  30.09.2014  of  the
respondent that the notification under Section 11C  of  the  Central  Excise
Act, 1944 cannot be issued for extending the benefits of  not  requiring  to
pay the Central Excise Duty to the units manufacturing Rosin and  Turpentine
without the aid of power, except for the purpose  of  using  electricity  to
pump, for lifting up water  for  condensation  to  overhead  tank,  for  the
period from 27.05.1994 to 28.02.2006, even though the practice  of  non-levy
on these units for the said period has already been established in a  survey
done by the Department;

(b)  Issue a writ of mandamus or any other similar writ or direction to  the
respondent to issue the  notification  under  Section  11C  of  the  Central
Excise Act, 1944 for extending the benefits of not  recovering  the  Central
Excise Duty from the units manufacturing Rosin and  Turpentine  without  the
aid of power, except for the  purpose  of  using  electricity  to  pump  for
lifting up water to  overhead  tank,  for  the  period  from  27.05.1994  to
28.02.2006; and

(c)  Pass any other order or direction  as  the  Court  may  think  fit  and
proper.”

      It is this writ petition which has been dismissed by  the  High  Court
vide impugned judgment dated 16.02.2016.

Submission of Mr. S. Ganesh, senior  advocate,  and  Mr.  Prashant  Bhushan,
advocate appearing for the appellant, was that  it  stood  established  from
the re-survey conducted by the Department itself that there  was  a  general
practice of not demanding excise duty from  Bhatti  manufacturers,   though,
in this survey, only around 125 units could be examined  as  the  Department
could not get full details of the remaining industries  and  moreover,  most
of them were small scale industries availing benefit  under  SSI  exemption.
The learned counsel argued that still this survey indicated that there  were
at least 39 units whose turnover exceeded SSI limit but no excise  duty  was
demanded from those units as well.   The  appellant  relied  upon  following
noting dated 20.05.2014 of the Commissioner (Central Excise):
“11. ...it is clear that majority of the units were not paying  duty  during
this period and that show cause notices were issued in respect  of  2  units
i.e. M/s. Gurukripa Resins (P)  Ltd.  and  M/s.  Dujodwala  Industries.   In
respect of unregistered units no show cause  notices  have  been  reportedly
issued.
......
The reasons for not filing any declaration by  unregistered  units  are  not
clear.  It could be a case of non-payment of duty or alternatively a  belief
by these units that they covered by the TRU clarification of 1978 and  hence
do  not  require  registration.   The  precise  reasons   for   not   filing
declaration can only be explained by field  formations  who  are  reportedly
not having complete records.  However, the fact remains  that  a  number  of
unregistered units did not pay the duty even when they had crossed  the  SSI
limit and the department also did not demand such duty from  them.   ...This
can, therefore, also be considered as a case of non-levy as well as that  of
non-payment...”

The Under Secretary, Central Excise  in  his  noting  dated  22.08.2014  has
stated that:

“ ... The re-survey has indicated that there were at least  39  unregistered
units which had turnover more than SSI exemption limit either once  or  more
than once during 1994-1995 to 2005-06.  ...It could be concluded that  there
was a practice of non levy of duty.”

Finally, the Member Central Excise also in his noting dated  11.09.2014  has
observed;

“ ... the issue was again examined after conducting a fresh survey.  It  was
found that though there was a practice of  non-levy  of  duty,  issuance  of
Section 11 [C] notifications will only benefit two companies,  namely,  M/s.
Gurukripa Resins Pvt. Ltd., Nagpur and M/s.  Dujodwala  Industries,  Mumbai.
Decision was taken with the approval of the then  revenue  secretary  [p/112
N.S.]   That section 11 [C] notification cannot be issued to favour  only  a
few select industries and it was decided to reject the request.”

It was, thus, argued that there was a specific  finding  of  the  Department
itself that there was a prevalent practice of non-levy of  duties  on  units
which manufactured the same products and use power only  to  pump  water  to
the cooling tank.  It was, thus,  argued  that  conditions  mentioned  under
Section 11C of the Act for issuing the notification were clearly fulfilled.

Proceeding on the aforesaid basis, submission of  the  learned  counsel  for
the appellant was that once conditions of a particular  statutory  provision
were fulfilled, the Government was obligated to exercise the power with  the
issuance of a required notification.  It was argued that this  power  rested
in the Central Government under Section 11C of  the  Act  coupled  with  the
duty and, therefore, the Central Government was duty bound to  exercise  the
power once the conditions stipulated therein were  fulfilled.   In  support,
reference was made to the judgment of the Privy Council in  Julius  v.  Lord
Bishop of Oxford & Anr.[2], which was  followed  by  this  Court  in  Ambica
Quarry Works v. State of Gujarat & Ors.[3], where it was explained that  the
very nature of  the  thing  empowered  to  be  done  may  itself  impose  an
obligation to exercise the power in favour of a particular person.   It  was
held that this is especially so where the  non-exercise  of  the  power  may
affect that person’s substantive rights.    Para 13  of  this  judgment  was
specifically relied upon which reads as under:
“13. It was submitted by Shri Gobind Das that the  said  rule  was  in  pari
materia with sub-rule (b) of Rule 18 of Gujarat Minor Mineral  Rules,  1966.
Often when a public authority is vested with  power,  the  expression  “may”
has been construed as “shall”  because  power  if  the  conditions  for  the
exercise are fulfilled is  coupled  with  duty.  As  observed  in Craies  on
Statute Law, 7th Edn., p. 229, the expression “may” and “shall”  have  often
been  subject  of  constant  and  conflicting  interpretation.  “May”  is  a
permissive or enabling expression but there are cases in which  for  various
reasons as soon as the person who is within the statute  is  entrusted  with
the power, it becomes his duty to exercise it. As early as  1880  the  Privy
Council in Julius v. Lord Bishop of Oxford [(1880) 5 AC 214]  explained  the
position. Earl Cairns, Lord Chancellor speaking for the  judicial  committee
observed dealing with the expression “it shall be lawful” that  these  words
confer a faculty or power and they do not of themselves do more than  confer
a faculty  or  power.  But  the  Lord  Chancellor  explained  there  may  be
something in the nature of the thing empowered to be done, something in  the
object for which it is to be done, something in the conditions  under  which
it is to be done, something in the title of the person or persons for  whose
benefit the power is to be exercised, which may  couple  the  power  with  a
duty, and make it the duty of the person in whom the power  is  reposed,  to
exercise that power when called upon to do so.  Whether  the  power  is  one
coupled with a duty must depend upon the facts  and  circumstances  of  each
case and must be so decided by the  courts  in  each  case.  Lord  Blackburn
observed in the said decision that enabling  words  were  always  compulsory
where the words were to effectuate a legal right.”


Learned counsel also drew our attention to  the  judgment  in  the  case  of
Dhampur  Sugar Mills Ltd. v. State of  U.P.  &  Ors.[4]  wherein  the  Privy
Council decision in Julius was again referred to about  enforcement  of  the
obligation to which the power is coupled with duty,  by  issuing  order  for
that purpose.  It was submitted  that  in  the  said  case,  the  Court  had
directed the Government to constitute an Advisory  Council  while  rejecting
the contention of the Government that it was for the Government to  exercise
its discretion.  It was also submitted that  the  same  approach  and  legal
position has been laid down in D.K. Basu v. State of West Bengal  &  Ors.[5]
where it was held that the power of the State  Governments  to  set  up  the
State Human Rights Commissions was not  a  power  simpliciter  but  a  power
coupled with the duty to exercise  such  power,  especially  so  because  it
touched the right of affected  citizens  to  access  justice,  which  was  a
fundamental right covered by  Article  21.   The  said  duty  of  the  State
Government was accordingly enforced by the Court by issuing  a  mandamus  or
direction to set up the Commissions/fill up  the  vacancies  within  a  time
bound period.  Again in Aneesh D. Lawande & Ors. v. State of Goa &  Ors.[6],
this Court gave a direction to enforce the obligation which was held  to  be
annexed to the power conferred on the Government.  Reference was  also  made
to Suresh Chand Gautam v. State of Uttar Pradesh  &  Ors.[7]  on  this  very
aspect.

Another submission of the counsel for the appellant was  that  the  solitary
reason furnished by the respondent  for  not  exercising  its  powers  under
Section 11C of the Act was that such a notification, if  issued,  was  going
to benefit only two assessees.  It was submitted that this could never be  a
valid or tenable ground for the Government to refuse  such  a  notification,
more so, in a  situation  where  the  demand  notices  were  issued  to  two
assessees only and other similarly situated  persons  were  spared.  Learned
counsel also submitted that the Central Government in the past had issued  a
notification under Section 11C of the Act in  individual  cases  i.e.  where
the benefit of the Court is to only one identified assessee.  On  this  very
premise, another submission developed by the appellant was that issuance  of
notification under the said provision became  all  the  more  necessary  and
imperative in order to remove discrimination, which  situation  was  created
by the Department by roping in only two  assessees  and  not  demanding  the
excise duty from other assessees though identically  placed.   According  to
the appellant, non-issuance of the notification  resulted  in  violation  of
appellant’s fundamental rights under Article 14 as well as Article  19(1)(g)
of the Constitution.  It was, thus, argued that  the  Government  could  not
take shelter under the plea that the power under Section 11C of the Act  was
a discretionary power and it was amenable to judicial review  under  Article
226 of the Constitution.  Submission was that mandamus of  this  nature  had
been issued earlier.  Example of cases titled Choksi Tube  Company  Ltd.  v.
Union of India & Ors.[8] and Union  of  India  &  Ors.  v.  N.S.  Rathnam  &
Sons[9] were given.

It was also argued that there was no delay whatsoever on  the  part  of  the
appellant in filing the writ petition and objection  of  the  respondent  to
this effect was untenable.  The rejection order of the  Minister  came  only
in September, 2014 and the writ petition was filed shortly thereafter.   The
only reason why the appellant was compelled to pay excise duty was  that  it
could not obtain an interim stay in the writ petition filed by it.   It  is,
thus, submitted that in  the  event  of  the  appellant  succeeding  in  the
present case, there should be an order for refund of the amount paid by  the
appellant, along with interest thereon at a rate which this Court  considers
reasonable.

Countering the aforesaid submissions with equal vehemence and also  adopting
the reasoning given by the High Court in the impugned  judgment  in  support
of its conclusion, Mr. A.K. Sanghi, learned  senior  counsel  appearing  for
the respondent, submitted that Section  11C  of  the  Act  was  an  enabling
provision which empowered the Central Government to issue a notification  in
the Official Gazette for not recovering whole of the excise duty payable  on
certain goods or recovering the excise duty  lesser  than  the  normal  duty
payable.  He emphasized the opening words of Section 11C,  i.e.  ‘power  not
to recover duty of excise...’.   His  argument,  thus,  was  that  it  is  a
provision which empowers the Government to issue such  a  notification  and,
therefore, this power was discretionary in nature.  His  further  submission
was that since waiver of the duty can be by issuance of  a  notification  in
the Official Gazette,  such  a  power  was  in  the  nature  of  subordinate
legislation and as per the settled law,  courts  refrain  from  issuing  any
mandamus to exercise a statutory function.  He further  submitted  that  the
Central Government had, for valid reasons, decided not  to  issue  any  such
notification.  According to him, reason for not  issuing  the  notification,
namely, that it was to benefit only two parties,  was  a  valid  reason  and
such a policy decision taken for not exercising power under Section  11C  of
the Act was  not  open  to  judicial  review.   Without  prejudice  to  this
argument, his another  plea  was  that  the  exercise  carried  out  by  the
Government, culminating into the aforesaid decision of  not  exercising  the
power, was based on valid and justified grounds, which was rested  on  valid
considerations and the Court would not substitute its own decision for  that
arrived at by the Government.

Dilating on the aforesaid argument,  Mr.  Sanghi  submitted  that  the  most
important events which had to be kept in  mind  were  that  the  show  cause
notices were issued to the appellant as well as Gurukripa and  in  the  case
of Gurukripa the legal position was finally determined by  this  Court  vide
judgment dated 11.07.2011 holding that the process of lifting of water  into
cooling tank was integrally connected with  the  manufacture  of  the  goods
and, hence, if power is used for lifting of water, the exemption  would  not
be available.  The argument of Mr. Sanghi was that once  this  position  was
legally settled, it was not open to the appellant to nullify the  effect  of
the said judgment  by  seeking  a  direction  to  issue  notification  under
Section 11C of the Act.

The  aforesaid  narration  makes  it  clear  that  three  issues  arise  for
consideration – the first question is as to  whether  these  conditions  are
satisfied in the instant case?  Secondly, if it  is  found  that  the  goods
which are excisable goods liable for levy of duty under the Act,  but  there
has been generally prevalent practice not to demand duty or levy  the  duty,
or demand lesser duty on such goods, whether it is mandatory on the part  of
the Central Government to issue a notification under Section 11C of the  Act
requiring that no such duty  shall  be  payable  or  lesser  duty  shall  be
payable on such goods? Thirdly, if the Government chooses  not  to  exercise
this ‘power’, whether  the  Court  can  issue  a  mandamus  to  the  Central
Government to pass such a notification exercising its  power  under  Section
11C of the Act?

      We have bestowed our serious consideration that this case deserves  to
the issues involved.

QUESTION NO. 1

It may be remarked in the first instance that, undoubtedly, as far  as  duty
under the Excise Act on the goods manufactured and cleared for sale  by  the
appellant is concerned, the same is payable  under  the  provisions  of  the
Excise Act.  It is the appellant’s own case that the legal position in  this
behalf, before the judgment  dated  11.07.2011  in  the  case  of  Gurukripa
Resins Private Limited, was  somewhat  fluid  and  uncertain.   Those  units
manufacturing Rosin and Turpentine by  using  power  in  all  processes  are
concerned, i.e. vacuum chemical treatment process,  were  admittedly  liable
to pay the excise duty and were paying also.  However, insofar as the  units
adopting Bhatti  process  (to  which  category  the  appellant  belongs  and
wherein the whole of the process is manual, except  for  one  process,  viz.
use of power to operate the pump for lifting up the water  to  storage  tank
for the purpose of condensing) are concerned,  whether  this  process  would
amount to manufacturing process or not,  was  unclear.   Moreover,  most  of
these units which were resorting to Bhatti method  were  small  scale  units
and were enjoying the exemption from payment of excise duty on that  ground.
Therefore, they were not within the  net  of  revenue  in  any  case.   Five
registered units were paying the excise duty.  The  Department  issued  show
cause notices to the two units which were registered with it but not  paying
the duty, as according to the Revenue, even the use of power for lifting  of
water to overhead tanks for condensation of Turpentine vapours collected  as
liquid Turpentine in tanks would be manufacturing  process  and,  therefore,
excise duty payable.  Others were not registered and were SSI Units.  It  so
happened that at some point of time, few  of  them  had  ceased  to  be  SSI
units.  However, the Department remained unaware of that. It  was  for  this
reason that notices could not be issued to the others. When  the  matter  is
looked from the aforesaid  angle,  it  cannot  be  said  that  there  was  a
conscious practice which was generally prevalent  not  to  recover  duty  of
excise.

No doubt, at the instance of and on the request made by the  Association,  a
survey was got conducted to find out as to whether  there  was  any  general
practice in this behalf  or  not.   The  result  of  the  first  survey  was
unfavourable to the appellant inasmuch as in respect  of  registered  units,
the survey revealed that the general practice of such units not paying  duty
was not established.  It was noticed that five registered units were  paying
duty throughout the period.  Two units had not  paid  duty  and  show  cause
notices were issued to them (these are the appellant  and  Gurukripa).   The
Association of which the appellant was a member, had  sent  a  list  of  250
units obtained by it under the Right to Information Act.  However, what  was
found was that these units were unregistered and presumed to  be  under  SSI
and, therefore, for these reasons, the excise duty  was  not  demanded  from
them. From this, it is difficult to draw  an  inference  that  there  was  a
general practice not to demand duty.  The Association demanded fresh  survey
and request in this behalf was received with the backing of a Minister.

As per the appellant, in the second  survey,  this  general  practice  stood
established.  For this  purpose,  the  appellant  is  relying  upon  certain
extracts from the Noting  dated  20.05.2014  of  the  Commissioner  (Central
Excise).  The said Noting, when read in  entirety,  does  not  categorically
admit of any such practice.  What it reveals is that in  the  second  survey
it was found that 37 unregistered units had crossed SSI exemption  limit  at
least once, but they were not paying duty during  the  period  in  question.
From this the Director in his note had observed that there was  practice  of
not paying the duty.  However, what is significant is that the  Commissioner
(Central Excise) in his Note dated 20.05.2014 specifically  stated  that  he
was not in agreement  with  the  aforesaid  conclusion  arrived  at  by  the
Director,  which  was  highly  debatable.   He  remarked  that  despite  the
judgment of this Court in Collector of Central Excise, Jaipur  v.  Rajasthan
State Chemical Works, Deedwana, Rajasthan[10], relevant question was  as  to
whether there was a practice  and  non-levy  of  duty  during  the  relevant
period.  This is because Section 11C of the Act comes into  play  only  when
legally the duty is levied but still there is  a  practice  of  non-levy  of
duty.

What appears to us is that the  Department  remained  under  the  impression
that those units which were unregistered and because of SSI status  exempted
from payment of excise duty were not liable to pay the duty and,  therefore,
did not issue any notices to them.  Even  when  37  unregistered  units  had
crossed the SSI exemption limit at least once, the Excise  Department  could
not catch them either because of its negligence or  it  remained  under  the
bona fide belief that they were still enjoying the exemption.   It  is  only
during the second survey these facts came to be noticed by  the  Department.
It has come on record that by that time recovery of duty from them  was  too
late as these cases had become  time  barred,  meaning  thereby,  had  these
cases been within the limitation period, the  Department  would  have  taken
action of recovery even qua them.   From this, it cannot be said that  there
was a general practice.  No doubt, some  of  the  officers  have  formed  an
opinion to the contrary by treating the aforesaid as a case of  non-levy  of
duty.  However, as pointed out above, such a view was termed  as  debatable.
It is only because of this reason that the matter took a different turn  and
was processed on the premise that there was such a practice  but  still  the
benefit  of  the  notification  under  Section  11C,  if  issued,  would  be
available only to two units.  This can be seen  from  paragraph  13  of  the
following Noting dated 20.05.2014 of the Commissioner (Central Excise):
“13.  In this regard, as pointed out by U.S. at page 97/NS, the  benefit  of
any 11C Notification will be available only  to  2  units.   No  show  cause
notice can be issued to the unregistered units for the period  1994-2006  as
the same is already time barred.  Thus, the trade at large is not  affected.
 In F.No. 52/2/2008-CX.1, a view has earlier been taken that the  provisions
of Section 11C are  exceptional  and  are  generally  applied  in  an  issue
affecting the trade at large.  Section 11C is not applied  for  one  or  two
individual units to  override  the  judicial  decision  of  the  Apex  Court
rendered against the individual units.”

When the matter is examined taking  into  consideration  all  the  facts  in
totality, we are of the view that there is no clinching evidence to  suggest
the existence of a general practice not to  levy  excise  duty.   Under  the
impression that it was to be demanded from registered units  and  five  such
registered units were, in fact, paying the duty,  show  cause  notices  were
issued to the remaining two units,  namely,  the  appellant  and  Gurukripa.
That itself negates the argument of existence of  general  practice  of  not
levying the duty of excise.  It is stated at the  cost  of  repetition  that
merely because some unregistered firms which were initially getting the  SSI
exemption, but omitted to be covered under the Act  on  their  crossing  the
SSI limits, would not, in our opinion, establish any such practice.

In this behalf, it  also  needs  to  be  highlighted  that  as  far  as  the
Department is concerned, it had taken a categorical stand  that  even  those
units which are using Bhatti method for manufacture of Turpentine and  Rosin
were covered by the Act and that was the reason for issuing  of  show  cause
notices to the two units.  This view,  which  the  Department  had  nurtured
while issuing the notices, has been vindicated in view of  the  judgment  of
this Court in Gurukripa Resins Private Limited.   Interestingly,  after  the
said judgment, even the appellant paid  the  duty  of  excise.   The  entire
effort now is to recover back  the  said  duty  by  seeking  issuance  of  a
notification under Section 11C of the Act.  Such a situation, to  our  mind,
cannot be countenanced.

QUESTION NOS. 2 & 3
      In view of our answer to Question No.1, it may not even  be  necessary
to deal with these two questions.   However,  since  the  Department  itself
proceeded on the basis that there was a general practice, we would  like  to
discuss these issues as well on merits.  These can  be  taken  together  for
discussion.

Insofar as the argument based on obligation of the Government to issue  such
a notification is concerned, a clear distinction is to be made  between  the
duty to act  in  an  administrative  capacity  and  the  power  to  exercise
statutory function.  If a public authority is foisted with any  duty  to  do
an act and fails to discharge that function, mandamus can be issued  to  the
said authority to perform its duty.  However, that is done while  exercising
the power of judicial review of an administrative action.   It  is  entirely
different from judicial review of a legislative action.

According to de Smith[11], the following legal consequences  flow  from  the
aforesaid distinction:
(i)   If an order is legislative in character, it has to be published  in  a
certain manner, but it is not  necessary  if  it  is  of  an  administrative
nature.
(ii)  If an order is legislative in character, the court will  not  issue  a
writ of certiorari to quash it, but if an order is an  administrative  order
and the authority was required to act judicially, the court can quash it  by
issuing a writ of certiorari.
(iii)  Generally,  subordinate  legislation  cannot  be  held  invalid   for
unreasonableness, unless its unreasonableness is evidence of  mala  fide  or
otherwise  shows  the  abuse  of  power.   But  in  case   of   unreasonable
administrative order, the aggrieved party is entitled to a legal remedy.
(iv)  Only in most exceptional circumstances can legislative powers be  sub-
delegated, but administrative powers can be sub-delegated.
(v)   Duty to give reasons applies  to  administrative  orders  but  not  to
legislate orders.

Issuance of a notification under Section 11C of the Act is in the nature  of
subordinate  legislation.   Directing  the  Government  to  issue   such   a
notification would amount to take a policy decision in a particular  manner,
which is impermissible.  This Court dealt with this aspect recently  in  the
case of Census Commissioner and Ors. Vs.  R.  Krishnamurthy[12].   Following
discussion from the said judgment is useful and worth a quote:
“25. Interference with the policy decision and issue of a mandamus to  frame
a policy in a particular  manner  are  absolutely  different.  The  Act  has
conferred power on the Central Government to  issue  Notification  regarding
the manner in which the census  has  to  be  carried  out  and  the  Central
Government has issued Notifications, and the competent authority has  issued
directions. It is not within the domain  of  the  Court  to  legislate.  The
courts do interpret the law and  in  such  interpretation  certain  creative
process is involved. The courts have the jurisdiction to declare the law  as
unconstitutional. That too, where it is called for. The court may also  fill
up the gaps in certain  spheres  applying  the  doctrine  of  constitutional
silence or abeyance. But, the courts are not to plunge  into  policy  making
by adding something to the policy by way of  issuing  a  writ  of  mandamus.
There the judicial restraint is called for remembering what we  have  stated
in  the  beginning.  The  courts  are  required  to  understand  the  policy
decisions framed by the Executive. If a policy decision  or  a  Notification
is arbitrary, it may invite the frown of  Article  14 of  the  Constitution.
But when  the  Notification  was  not  under  assail  and  the  same  is  in
consonance with the Act, it is really unfathomable how the High Court  could
issue directions as to the manner in which a census would be carried out  by
adding certain aspects. It is, in fact, issuance of a direction for  framing
a policy in a specific manner.

26. In this context, we may refer to a three-Judge Bench decision  in Suresh
Seth v. Commr., Indore Municipal Corporation : (2005) 13 SCC 287  wherein  a
prayer was made before  this  Court  to  issue  directions  for  appropriate
amendment in the M.P. Municipal Corporation Act, 1956 so that a  person  may
be debarred from simultaneously holding two elected  offices,  namely,  that
of a Member of the Legislative Assembly and also of a Mayor of  a  Municipal
Corporation. Repelling the said submission, the Court held:

“In our opinion, this is a matter of policy for the elected  representatives
of people to decide and no direction in this regard can  be  issued  by  the
Court. That apart this Court cannot issue any direction to  the  legislature
to make any particular kind of enactment. Under  out  constitutional  scheme
Parliament and Legislative Assemblies  exercise  sovereign  power  to  enact
laws and no outside power or authority can issue  a  direction  to  enact  a
particular piece of legislation. In Supreme Court Employees'  Welfare  Assn.
v. Union of India MANU/SC/0582/1989:(1989) 4 SCC 187 (SCC para  51)  it  has
been held that no court can direct a legislature to enact a particular  law.
Similarly, when an executive authority exercises a legislative power by  way
of a subordinate legislation  pursuant  to  the  delegated  authority  of  a
legislature, such executive authority cannot be asked to enact a  law  which
it has been empowered to do under the delegated legislative authority.  This
view  has  been   reiterated   in State   of   J   &   K   v.   A.R.   Zakki
MANU/SC/0293/1992 : 1992 Supp (1) SCC 548. In A.K. Roy  v.  Union  of  India
MANU/SC.0051/1981 : (1982) 1 SCC 271 it was held that  no  mandamus  can  be
issued to enforce an Act which has been passed by the legislature.”

29.   In this context, it is fruitful to refer  to  the  authority  in Rusom
Cavasiee Cooper v. Union of India  MANU/SC/0011/1970 :  (1970)  1  SCC  248,
wherein it has been expressed thus:

“It is again not for this Court to  consider  the  relative  merits  of  the
different political theories or economic  policies...  This  Court  has  the
power to strike down a law on the ground  of  want  of  authority,  but  the
Court will not sit in appeal over the policy of  Parliament  in  enacting  a
law".”

As can be seen from the extracted portion of the said judgment,  in  Supreme
Court  Employees  Welfare  Association  v.  Union  of  India[13],   it   was
categorically held that no  court  can  direct  a  legislature  to  enact  a
particular  law.   Similarly  when  an  executive  authority   exercises   a
legislative  power  by  way  of  subordinate  legislation  pursuant  to  the
delegated authority of a legislature, such  executive  authority  cannot  be
asked to enact the  law  which  it  has  been  empowered  to  do  under  the
delegated legislative authority.

We may also refer to the judgment of this Court in the case of Common  Cause
v. Union of India and Others[14].
In that case, though the legislature had made amendments in the  Delhi  Rent
Act, it was left to the Government to notify the date of coming  into  force
the said amendments.  Government did not notify any date.  A writ was  filed
seeking issuance of mandamus to the Government to  notify  the  date,  which
was dismissed by the High Court.  While approving the said decision  in  the
aforesaid judgment, the Court referred to various earlier judgments  on  the
subject.  It was held that not only Parliament is empowered to give  such  a
power to the executive to decide when the Act is to be brought  into  force,
but also held that mandamus cannot be issued to  the  Government  to  notify
the  amendments.   In  the  process,  the  Court  also  made  the  following
observations which are relevant in the present context:
“27.  From the facts placed before us it cannot be said that  Government  is
not alive to the problem  or  is  desirous  of  ignoring  the  will  of  the
Parliament. When the legislature itself had vested the power in the  Central
Government to notify the date from which the  Act  would  come  into  force,
then, the Central Government is entitled to take into consideration  various
facts including the facts set out  above  while  considering  when  the  Act
should be brought into force or not.  No  mandamus  can  be  issued  to  the
Central  Government   to   issue   the   notification   contemplated   under
Section 1(3) of the Act to bring the Act into force,  keeping  in  view  the
facts brought on record and the consistent view of this Court.”

Various judgements cited by the appellant would have no application  in  the
instant  case  as  all  these  judgments  pertain  to  judicial  review   of
administrative action.  In such cases power of the Court to  issue  mandamus
certainly exists when it is found that a public authority/executive  is  not
discharging its statutory duty.

The matter can be looked into from another angle as well.  When  ‘power’  is
given to the Central Government to issue a notification to  the  effect  not
to recover duty of excise or recover  lesser  duty  than  what  is  normally
payable under the Act, for deciding whether to issue such a Notification  or
not, there may be various considerations in  the  mind  of  the  Government.
Merely because conditions laid in the said provisions are  satisfied,  would
not be a reason to necessarily issue such a notification.  It  is  purely  a
policy matter. No  doubt,  the  principle  against  arbitrariness  has  been
extended  to  subordinate  legislation  as  well  (See  :   Indian   Express
Newspapers, Bombay v. Union of India[15]).  At the same time, the  scope  of
judicial review in such cases is very limited.  Where the  statute  vests  a
discretionary power in an administrative  authority,  the  Court  would  not
interfere with the exercise of  such  discretion  unless  it  is  made  with
oblique end or extraneous purposes or  upon  extraneous  considerations,  or
arbitrarily, without applying its mind to the  relevant  considerations,  or
where it is not guided by any norms which are relevant to the object  to  be
achieved.

In the counter affidavit  filed  by  the  respondent,  it  is  categorically
mentioned  that  the  policy  of  the  Government  is  not  to   issue   the
notification under Section 11C of the  Act  when  it  benefits  only  a  few
assesses.  It is mentioned that the specific policy  of  the  Government  is
that when a large section of trade is affected and any  relief  is  proposed
to be given, a notification under Section11C of the Act is issued. When  the
reasons furnished by the Government in not exercising  its  power  to  issue
notification under Section 11C of the Act  are  seen  in  this  perspective,
namely, such a notification, if issued, is going to benefit only two  units,
we find them to be valid and justified.  While dealing  with  the  challenge
to the constitutional validity of the Securitisation and  Reconstruction  of
Financial Assets and Enforcement of Security Interest  Act,  2002,   in  the
case of Madria Chemicals Ltd.  Etc. Etc. v. Union of India and  others  Etc.
Etc.[16], this Court noted that  the  legislature  came  up  with  the  said
legislation as a matter of policy to have speedier legal method  to  recover
the dues.  It was held that such a policy decision of the legislature  could
not be faulted with nor was it a matter to be gone into  by  the  courts  to
test the legitimacy of such a  measure  relating  to  financial  policy.  As
already pointed out above, it is impermissible  for  this  Court  to  tinker
with such policy decision more  particularly  when  it  is  found  that  the
decision is not irrational and is founded on valid considerations.   It  has
also to be borne in mind that in the instant case the appellant has  already
paid the duty.  Section 11C contemplates those situations where duty is  not
paid.  It does not cover the situation where duty is paid and that is to  be
refunded.

Examination of the matter in the  aforesaid  perspective  would  provide  an
answer to most of the arguments of the appellants.  It would  neither  be  a
case of discrimination nor it can be  said  that  the  appellants  have  any
right under Article 14 or Article 19(1)(g) of  the  Constitution  which  has
been violated by non-issuance of notification under Section 11C of the  Act.
 Once the appellant accepts that in law it was liable to pay the duty,  even
if some of the units have been able to escape payment of  duty  for  certain
reasons, the appellant cannot say that no duty should be recovered  from  it
by invoking Article 14 of the Constitution.  It  is  well  established  that
the equality clause enshrined  in  Article  14  of  the  Constitution  is  a
positive concept and cannot be applied in the negative.

As a result, this appeal is  found  to  be  bereft  of  any  merit  and  is,
accordingly, dismissed.

                             .............................................J.
                                                                (A.K. SIKRI)



                             .............................................J.
                                                             (ASHOK BHUSHAN)

NEW DELHI;
APRIL 24, 2017.
-----------------------
[1]
         (2011) 13 SCC 180
[2]      1880 (5) A.C. 214
[3]      (1987) 1 SCC 213
[4]      (2007) 8 SCC 338
[5]      (2015) 8 SCC 744
[6]    (2014) 1 SCC 554
[7]      (2016) 11 SCC 113
[8]   (1997) 11 SCC 179
[9]         Civil Appeal No. 1795 of 2005, decided on 29.07.2015
[10]        (1991) 4 SCC 473
[11]  Judicial Review of Administrative Action
[12]        (2015) 2 SCC 796
[13]  (1989) 4 SCC 187
[14]  (2003) 8 SCC 250
[15]  (1985) 1 SCC 641
[16]    (2004) 4 SCC 311

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