-= : 1 : =- IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL APPELLATE JURISDICTION CIVIL APPELLATE JURISDICTION WRIT PETITION NO.4839 OF 2003 WRIT PETITION NO.4839 OF 2003 WRIT PETITION NO.4839 OF 2003 Krishnakant Sakharam Ghag, a Partner ) of M/s.Amit Textile Processors having ) its office at L.B.S. Marg, Vikhroli, ) Mumbai - 400 079. )..Petitioner. V/s. 1. Union of India through the ) Secretary, Ministry of Finance ) Department of Revenue North ) Block, New Delhi - 110 001. ) ) 2. Dy.Commissioner (Preventive), ) Tax Recovery Cell, Mumbai-II ) 7th Floor, Piramal Chambers, ) Jijibhoy Lane, Lalbaug, Parel, ) Mumbai - 400 0012. ) ) 3. Asstt. Commissioner of Central ) Excise, Vikhroli Division, ) Polyshoor Building, 1st Floor, ) L.B.S. Marg, Vikhroli (West), ) Mumbai - 400 083. )..Respondents. Mr.S.Sridharan, Advocate with Mr.Prakash Shah, Mr. Gajendra Jain and Mr.J.H. Motwani i/b. PDS Legal for petitioner. Mr.R.V.Desai, senior Advocate with Mr.P.S.Jetly and Mr. Y.R.Mishra for respondents. CORAM : CORAM : CORAM : DR.S.RADHAKRISHNNAN DR.S.RADHAKRISHNNAN DR.S.RADHAKRISHNNAN & J.P.DEVADHAR, JJ. J.P.DEVADHAR, JJ. J.P.DEVADHAR, JJ. DATED : 3RD MARCH, 2006. DATED : 3RD MARCH, 2006. DATED : 3RD MARCH, 2006. JUDGMENT (PER J.P.DEVADHAR, J.) JUDGMENT (PER J.P.DEVADHAR, J.) JUDGMENT (PER J.P.DEVADHAR, J.) 1. By this petition, the petitioner seeks a declaration to the effect that the Notification No.48/ 97-CE dated 2/9/97 amending Notification No.68/63-CE dated 4/5/63 is ultra vires Section 12 of the Central -= : 2 : =- Excise Act, 1944, that the order in original dated 24/12/1991 to the extent it demands interest on delayed payment of duty is illegal and contrary to law and a declaration that even if interest is recoverable pursuant to an order passed by the Delhi High Court, the revenue cannot seek to recover such interest by initiating recovery procedure prescribed under the Act. Accordingly, the petitioner seeks an order for lifting the attachment levied on the property belonging to the petitioner. 2. The basic contention of the petitioner is that, section 12 of the Excise Act does not empower the Central Government to import the recovery provisions contained in the Customs Act, 1962 and, therefore, Notification No.48/97 issued by the Central Government empowering the excise authorities to invoke the recovery provisions contained in sub-clause (ii) of clause (c) of sub-section (1) of Section 142 of the Customs Act, 1962 in respect of the duties imposed by section 3 is ultra vires section 12 of the Excise Act. It is further contended that at the material time there was no provision under the Excise Act to demand interest on the delayed payment of duty and, therefore, the impugned order in original dated 24/12/91 in so far as it purports to demand interest on delayed payment of duty is illegal and contrary to law. Alternatively, it -= : 3 : =- is contended that assuming the revenue is entitled to recover interest pursuant to an order passed by the Delhi High Court then, such interest levied by the Court has to be recovered as a decree of a Civil Court and not by resorting to the recovery provisions contained in the Excise Act or the Customs Act applied to Excise Act. In other words, the submission is that, where any amount is due to the Government pursuant to an order of the Court and not under the Excise Act or Customs Act, then, that amount ordered by the Court has to be recovered as a decree of a Civil Court in the manner provided in the Code of Civil Procedure and the revenue cannot resort to the machinery prescribed under the Act to recover such amount. 3. The relevant facts are that at the material time the petitioner was a partner in a partnership firm known as M/s.Amit Textile Processors (‘the firm’ for short). The said firm was engaged in the processing of man-made fabrics at its factory at Vikhroli, Bombay. 4. The said firm had filed a Writ Petition bearing No.2523 of 199O in the Delhi High Court to challenge the levy of additional duty of excise on the activity of processing the man-made fabrics. Similar petitions were filed by several other processors of man -made fabrics in the High Court at Delhi. All those -= : 4 : =- petitions were admitted by the Delhi High Court and interim reliefs were granted restraining the respondents from recovering the additional duty of excise on the processing of man-made fabrics. 5. Thereafter, all those Writ Petitions were heard together and by a common Judgment and order dated 9/7/1991 the Delhi High Court dismissed all those Writ Petitions. In the said Judgment dated 9/7/91, the lead matter being in the case of Parekh Prints & Ors. V/s. Parekh Prints & Ors. V/s. Parekh Prints & Ors. V/s. Union of India (62 E.L.T. 253) Union of India (62 E.L.T. 253) Union of India (62 E.L.T. 253), the Delhi High Court while dismissing the petitions with costs and directing the revenue to recover duty with interest at 17.5% inter alia observed in para 42 as follows:- "42. We find that for the petitioners perhaps litigation is business. After getting interim orders they find they are nothing to lose except in the shape of fees payable to counsel. They have collected additional duties of excise from the ultimate consumers but have not repaid the same to the credit of the Central Government and they thus utilised half of the duty so collected for their own purposes. The interim orders which the petitioners have obtained have adversely affected the States who are not parties to these petitions and were entitled to the share of the revenue levied and collected under the Act but would certainly have been deprived of the same all this period because of the stay. Petitioners cannot be permitted to make profit at the cost of public revenue. The petitioners must restore the advantage they had over the respondents because of the stay they enjoyed and consequently deprived the respondents of their lawful revenues during the period stay operated against them. During the course of hearing of these petitions we were informed by the learned Additional General that a sum of Rs.700/- crores has become due from the petitioners towards the additional duties of excise -= : 5 : =- because of the stay. The amount is really staggering. Because of the view we have taken the petitioners were not entitled to withhold this amount after having collected duties of excise and then utilise the same for their own business purposes. We are told that the bank rate of interest is 17% per annum on commercial transactions as it was and we are of the opinion that not only that the respondents should be allowed to encash the bank guarantees forthwith, they should also be entitled to interest on these amounts at the rate of 17.1/2% per annum from the date the duty became payable but was stayed under the orders of this Court. Though when the interim orders were made there was no direction of payment of interest but we find that under writ jurisdiction we have no such powers to bring the parties to the same level once the petitions are dismissed and interim orders vacated. Petitioners must restore the advantage they got to the detriment of the public revenue and to which the advantage they were not entitled as we have held the petitions to be without any merit. Even otherwise we have power to award costs calculated in terms of interest at the rate and on the amounts and for the period above mentioned. We order accordingly. We find no merit in these writ petitions and would dismiss the same with costs as above mentioned. We separately assess counsel fee at the rate of Rs.2,000/- in each of these writ petitions. Rule is discharged." 6. Since the Writ Petition No.2523 of 1990 filed by the firm was inadvertently left out from the group of petitions disposed off on 9/7/91, the Delhi High Court by its order dated 22/1/1992 dismissed the above Writ Petition filed by the firm by holding that the matter is squarely covered by its decision in the case of Parekh Prints & Ors. (supra) delivered on 9/7/1991. 7. Meanwhile, in the light of the Judgment of the Delhi High Court dated 9/7/91, the Assistant -= : 6 : =- Collector of Central Excise, Bombay finalised the assessment in the case of the firm by passing an order in original dated 24/12/1991. By the said order, the Assistant Collector confirmed the demand of duty at Rs.20,40,080.90 and after giving credit for the amount of Rs.1,04.080.95 already paid, held that the firm was liable to pay the balance duty amount of Rs.19,09,999.95 with interest at the rate of 17.5% from the date on which the duty was liable to be paid till the duty was actually paid. 8. It may be noted that the decision of the Delhi High Court dated 9/7/91 has been upheld by the Apex Court. Even the order in original dated 24/12/1991 passed against the firm confirming duty with interest at the rate of 17.5% has attained finality as no appeal has been filed against the said order. 9. During the period from 1992-2001 the revenue could recover the duty but not the interest which was confirmed by the order dated 24/12/1991. Therefore, by a letter dated 22/2/01 the respondents called upon the petitioner as a partner of the firm to pay within seven days interest as per the order dated 24/12/91, failing which the same would be recovered from the petitioner by adopting the procedure prescribed under section 142 (1) (c)(ii) of the Customs Act read with Rule 4 of the -= : 7 : =- Customs Attachment of Property of Defaulters for Recovery of Customs Dues Rules, 1995 (‘1995 Rules’ for short) as made applicable to the Central Excise matters by Notification No.68/63-CE dated 4/5/1963 as amended by Notification No.48/97-CE dated 2/9/97. 10. As the petitioner failed to pay the interest amount, on 9/3/01 the Excise Authorities attached the immovable properties belonging to the petitioner. Thereafter by a letter dated 31/7/01 the respondents quantified the interest payable at Rs.25,85,109.18 ps. and called upon the petitioner to pay the same immediately. Thereupon, the petitioner filed the present petition to challenge the validity of the Notification No.48/97-CE dated 2/9/97, as well as the action initiated by the respondents for recovering the interest. 11. To complete the narration of facts, it may be noted that on 2/9/03 this Court while admitting the petition directed that if the petitioner deposits in Court the entire amount of interest within 4 weeks, the attachment levied on the petitioner’s property shall stand lifted and if the petitioner fails to deposit the amount as directed, then the petition shall stand automatically dismissed without reference to the Court. The petitioner challenged the said order by filing a -= : 8 : =- Special Leave Petition before the Apex Court. However, the Apex Court declined to interfere with the order passed by this Court. Thereupon, the petitioner deposited the entire interest amount of Rs.25,85,109.18 in this Court and the Revenue has been permitted to withdraw the said amount. 12. The principle argument of Mr.Sridharan, learned counsel for the petitioner is that under the Excise Act, the word ‘levy’ and ‘collection’ have different connotations. Referring to section 3 of the Excise Act, he submitted that under the Excise law the word "levy" does not include "recovery" or "collection" and accordingly the word "levy" used in section 12 of the Excise Act would not include "collection". The submission is that the word ‘levy’ in Section 12 of the Excise Act is restricted to the charge and does not include "recovery / collection" and, therefore, the Notification No.48/97 dated 2/9/97 issued by the Central Government empowering the excise authorities to apply the recovery / collection provisions of the Customs Act in respect of the duties imposed under section 3 of the Excise Act, is ultra vires section 12. 13. Mr.Sridharan submits that under section 12 of the Excise Act the Central Government can apply the provisions of the Customs Act only in relation to levy, -= : 9 : =- exemption, drawback, warehouse, offences, penalty and confiscation procedure for offences and appeals. He submits that the categories enumerated in section 12 of the Excise Act are not illustrative but are exhaustive in nature and, therefore, the Central Government cannot import the provisions of the Customs Act in excess of those specifically set out therein. As the words "recovery / collection" do not find place in section 12 of the Excise Act, the Central Government cannot apply the recovery provisions contained in the Customs Act in respect of the duties imposed under section 3 of the Excise Act. He submits that the expression ‘in regard to like matters’ used in section 12 further supports his contention that the power conferred upon the Central Government to borrow the provisions of the Customs Act is restricted to only those categories which are specifically set out in the section. He submits that if it is held that the power of the Central Government under section 12 is not restricted to the categories enumerated therein but it extends to other categories also, then, it would render the categories specifically enumerated in the section redundant or otiose. Such a construction which renders the express words used in the section nugatory / redundant or otiose must be avoided. 14. Mr.Sridharan further submitted that wherever -= : 10 : =- the Parliament intended to apply all the provisions of the Act and specified some of the categories as and by way of illustration, then the legislature has used the word "including". In this connection, counsel for the petitioner referred to section 3(3) of the Additional Duties of Excise (Goods of Specified Importance) Act, 1957 and section 3(3) of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978. In those enactments, it is provided that the provisions of the Central Excise & Salt Act, 1944 and the Rules made thereunder, including those relating to refunds and exemptions from duty shall, so far as may be, applied in relation to the levy and collection of the additional duties of excise. By using the word ‘including’ in those enactments, the legislature has made it amply clear that the categories enumerated therein are only by way of illustration. However, in section 12 of the Excise Act neither the word "collection / recovery" nor the word ‘including’ are used. Therefore, the categories specified in section 12 of the Excise Act cannot be said to be illustrative and in the absence of specific empowerment, the Central Government could not import the provisions of the Customs Act relating to recovery / collection in respect of the duties imposed under section 3 of the Excise Act. He submitted that if the contention of the revenue is accepted it would mean rewriting the section -= : 11 : =- which is not permissible in law. 15. Relying upon the decisions of the Apex Court in the case of N.B.Sanjana V/s. Elphinstone Spinning & N.B.Sanjana V/s. Elphinstone Spinning & N.B.Sanjana V/s. Elphinstone Spinning & Weaving Mills Co. Ltd. Weaving Mills Co. Ltd. Weaving Mills Co. Ltd. reported in 1971 (1) SCC 337, 1971 (1) SCC 337, 1971 (1) SCC 337, the Assistant Collector of Central Excise, Calcutta Vs. the Assistant Collector of Central Excise, Calcutta Vs. the Assistant Collector of Central Excise, Calcutta Vs. National Tobacco Co. of India Ltd National Tobacco Co. of India Ltd National Tobacco Co. of India Ltd., reported in (1972) (1972) (1972) 2 SCC 560 2 SCC 560 2 SCC 560 and the decision in the case of Somaiya Somaiya Somaiya Organics V/s. State of U.P. Organics V/s. State of U.P. Organics V/s. State of U.P. reported in 2001 (5) SCC 2001 (5) SCC 2001 (5) SCC 519 at 533 519 at 533 519 at 533, Mr.Sridharan submitted that it is now well settled in the context of the Excise Act that the term ‘levy’ does not include ‘collection’ within its scope. Therefore, the word ‘levy’ used in section 12 of the Excise Act does not include ‘collection’. Accordingly, Mr.Sridharan submitted that Notification No.48/97 issued by the Central Government is in excess of the powers vested in the Central Government under section 12 of the Excise Act and hence the said Notification is liable to be quashed and set aside. 16. Mr.Sridharan further submitted that the order in original dated 24/12/91 to the extent it demands interest on delayed payment of duty is illegal because, at the relevant time there was no provision under the Excise Act to demand interest on delayed payment of duty. He submitted that the liability to pay interest on delayed payment of duty was introduced -= : 12 : =- in the Excise Act for the first time in the year 1996 by enacting section 11AB. Therefore, in the order in original passed on 24/12/1991, which is prior to the introduction of section 11AB, interest could not be demanded on the delayed payment of duty. Since the demand for interest contained in the order in original dated 24/12/1991 was not authorised under the Excise Act, the said order as well as the follow-up actions taken to recover the amount of interest are liable to be declared as illegal and contrary to law. 17. Mr.Sridharan further submitted that the adjudicating authority was in error in holding that the interest was payable pursuant to the Delhi High Court decision dated 9/7/91, as the said decision was not rendered in the Writ Petition filed by the firm in which the petitioner was a partner. The Writ Petition filed by the firm was dismissed by the Delhi High Court on 22/1/92, wherein the court has referred to the order dated 9/7/91, but refrained from directing the firm to pay duty with interest. Therefore, in the absence of any specific order for payment of interest passed by the Delhi High Court in the Writ Petition filed by the firm, the Assistant Collector of Central Excise could not have demanded interest. 18. Alternatively, Mr.Sridharan submitted that, -= : 13 : =- assuming the revenue was entitled to recover interest on delayed payment of duty based on the order passed by the Delhi High Court on 9/7/91, even then, to recover such interest the proper course was to adopt the recovery proceedings contained in the Code of Civil Procedure and it was not open to the respondents to initiate proceedings under the Act and the rules made thereunder. The submission is that the recovery procedure prescribed under the Act and the Rules made thereunder are applicable to the recovery of the amounts due under the Act. Since the interest sought to be recovered was not authorised under the Excise Act, the respondents could not have initiated the recovery proceedings prescribed under the Act or the Rules made thereunder. 19. In this connection, Mr.Sridharan referred to sub-rule (ii) and (vi) of Rule 2 of the 1995 Rules which read as under :- "2(ii) ‘Government dues’ means any duty or drawback to be recovered from any person or any interest or penalty payable by any person under the Act and has not been paid." "2(vi) ‘defaulter’ means any a person from whom Government dues are recoverable under the Act." In the light of the aforesaid provisions, Mr.Sridharan submitted that the 1995 Rules could be -= : 14 : =- pressed into service only in respect of the government dues recoverable under the Excise Act. In the present case, admittedly the interest demand is not based on the provisions of the Excise Act but based on the order of the Court and therefore, to recover the interest ordered by the Court, the revenue could not have initiated proceedings under the 1995 Rules. 20. Relying upon the decision of the Apex Court in the case of State of U.P. V/s. Vijay Anand Maharaj State of U.P. V/s. Vijay Anand Maharaj State of U.P. V/s. Vijay Anand Maharaj reported in A.I.R. 1963 SC 946 A.I.R. 1963 SC 946 A.I.R. 1963 SC 946, Mr.Sridharan submitted that the proceedings under Article 226 is neither a proceeding under the Act nor it is a continuation of the proceedings under the Act and, therefore, interest if any, payable pursuant to the order of the Delhi High Court could not be said to be amount due ‘under the Act’. Consequently, to recover the amount which is not due under the Act, recovery proceedings under the 1995 Rules could not be initiated. 21. Mr.Sridharan referred to Rule 21 of the Bombay High Court Appellate Side Rules, 1960 which provides that every order passed on Civil Applications under Article 226 of the Constitution including any order as to costs, shall be drawn up as if it were a decree and shall be executable as a decree in the manner provided in the Code of Civil Procedure. By the -= : 15 : =- same analogy, interest, if any, payable pursuant to the Delhi High Court’s order has to be recovered by initiating proceedings under the Code of Civil Procedure and the revenue could not have resorted to the recovery proceedings under the Act. Accordingly, Mr.Sridharan submitted that in the present case neither the demand for interest nor the procedure adopted for recovery of such interest are authorised by law and, therefore, the demand as well as the action initiated by the revenue are liable to be quashed and set aside. 22. Mr.R.V.Desai, learned senior counsel appearing on behalf of the respondents on the other hand, submitted that section 12 of the Excise Act empowers the Central Government to apply the recovery provisions contained in the Customs Act in respect of the duties imposed under section 3 of the Excise Act. The written arguments submitted by Mr.Desai in this context reads as under:- " Notification No.48/97 dated 2/09/1997 issued by the Central Government in exercise of powers conferred by Section 12 of the Central Excise Act, 1944 which in turn includes Section 3 inter alia makes the provisions of Section 142 of the Customs Act, 1962 applicable whereby the Officers are empowered to collect / recover duty etc. " 23. With reference to the demand for interest, Mr.Desai submitted that while disposing of a group of -= : 16 : =- petitions on 9/7/91 the Delhi High Court had directed that the duty be recovered with interest. Though the said order was not passed in the petition filed by the firm, it is not in dispute that the writ petition filed by the firm was dismissed on 22/1/92 in terms of the earlier order dated 9/7/91. Since the order dated 9/7/91 contained a direction to collect duty with interest, the assessing officer was justified in demanding interest on the delayed payment of duty. Mr.Desai further submitted that the order in original dated 24/12/91 has attained finality long ago and the present Writ Petition filed belatedly in the year 2003 to challenge the said order suffers from gross delay and laches and hence no relief can be granted in favour of the petitioner. 24. As regards the initiation of recovery proceedings under the 1995 Rules, Mr.Desai submitted that once the liability to pay interest is confirmed by an order of adjudication passed under the Excise Act and the said order has attained finality, then the amount of interest payable would be the amount due to the government under the Act and hence recoverable by initiating proceedings under the Act. Accordingly, Mr. Desai submitted that there is no merit in the contentions raised on behalf of the petitioner and the petition is liable to be dismissed with costs. -= : 17 : =- 25. We have carefully considered the oral as well as the written submissions made by the counsel on both sides. 26. The arguments