Texel Industries Ltd. vs Collector

Akil Kureshi, J.—The petitioner-manufacturer of excisable goods has filed this petition primarily praying for a direction to the State Government for issuing certificate showing that petitioner has manufactured goods namely, Tarpaulin for relief and rehabilitation work in earthquake affected areas in Gujarat through approved agency. The petitioner having manufactured the said goods, claimed to have supplied the same to the approved agency for the purpose of relief and rehabilitation work in the earthquake affected areas of the State. The petitioner in terms of Exemption Notification No. 2/2001, dated 27-1-2001 desired to avail exemption from payment of excise duty, for which purpose, the petitioner needed to obtain a certificate from the Competent Authority. The petitioner applied for such certificate. However, the concerned authority, namely the District Magistrate refused to issue the certificate as prayed for. Notification No. 2/2001, dated 27-1-2001 reads as follows :

Donations for relief and rehabilitation of the people affected by the Earthquake in the State of Gujarat - Exemption from excise duty.

In exercise of powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944(1 of 1944), read with sub-section(3) of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all goods falling under the First and Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) donated or purchased out of cash donations, for the relief and rehabilitation of the people affected by the earthquake in the State of Gujarat from the whole of the duty of excise leviable thereon under both the above mentioned Acts, subject to the following conditions, namely :-

(i) that it is certified by the manufacturer of such goods on the relevant clearance documents that the goods are intended to be donated for the relief and rehabilitation of the people affected by the earthquake in the said State without making any change therefore,

(ii) that the goods are sent directly from the factory of the manufacturer or warehouse to the Central Government, the Government of Gujarat; or as the case may be, the relief agencies of the Central Government, the Government of Gujarat including the relief agencies duly approved by the Government; and

(iii) that the manufacturer produces before the jurisdictional Deputy Commissioner or the Assistant Commissioner of Central Excise, as the case may be, within three months from the date of removal of the goods or within such extended period as the said officer may allow, a certificate from the District Magistrate of the affected area in the State of Gujarat that the said goods have been donated for use for the aforesaid purpose.

This notification shall remain in force upto and inclusive of the 31st day of July, 2001.

In the meantime, Excise Department in absence of such certificate instituted and completed the adjudicating proceedings and raised the duty demand. It appears that the petitioner''s appeal against such order of the competent authority was pending before the appellate authority. At that stage, the petitioner approached this Court.

By interim order dated 21-10-2003, this Court had protected the petitioner by staying the order of the Adjudicating Authority i.e. Deputy Commissioner, Central Excise.

In response to the notice issued, State Government has appeared and filed reply. Primarily stand of the Government is that the petitioner failed to demonstrate that Tarpaulin manufactured was donated by the petitioner. It is the case of the petitioner that such Tarpaulin was purchased by the agricultural department and thereafter in turn supplied to the earthquake affected people. According to the department, this would not fulfill the requirement of exemption notification.

We are of the view that approach of the State Authority is wholly unjustified. What the District Magistrate had to do was to verify whether Tarpaulin supplied by the petitioner had been donated for use of the earthquake affected persons. On the basis of such certificate, Excise department had to process request of the petitioner for exemption as per Exemption notification. If stand of the Excise Department is that despite such certificate, the petitioner is not eligible for exemption, surely it would be open for the Excise department to take other view. Whether the petitioner had to donate goods itself or could sell the goods for the purpose of donation and can still claim exemption are issues not germane for the State Authority to decide. Prima facie it cannot be the intention of the Union Government that manufacturer himself must be the donor to be able to avoid exemption. It would be sufficient if the goods are donated for the use of earthquake affected persons. However, this is not a matter for us to decide. In any case, implementation and interpretation of the Exemption Notification is within the purview of the Excise Department and not the District Magistrate. It is slated on behalf of the petitioner that in other Districts, in case of this very petitioner, no such stand is taken by the State Authority.

In the result, respondents and in particular, respondent District Magistrate, Palanpur, is directed to examine the factual aspects and issue necessary certificate in favour of the petitioner bearing in mind the observations made here-in-above, which shall be done within four weeks from today.

Interim relief granted earlier shall continue till decision as directed above is taken by the District Magistrate. Petition is disposed of. Rule made absolute to above extent.