D.R. KOHLI AND ORS. versus ATUL PRODUCTS LTD.

Citation: [1985] 2 S.C.R. 832 · Decided: 12-02-1985 · Supreme Court of India · Bench: O. CHINNAPPA REDDY · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · cites 5 · see the full citation network in Lexace

Judgment (excerpt)

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S-32 
D.R. KOHL.I AND ORS. 
v. 
ATUL PROl)UCTS LTD. 
February 1!1, 1985 
(0. CHINNAPPA REDDY, E.S. VENKATARAMIAH AND SABYASACHI 
Mn:HARJ\, JJ.] 
Ctntral Ex1lse and Salt Act 19U, First Schtdul• lttm 84D and Jllnlstry 
of1'1nance Notification No. 180/61 dated Nov•mb•r 23, 1961. 
S1nthtti< or1anl1 d1estuffs and s1mbttlc or1anl1 derivati,.• ••d ln d1tlng 
proct1s-Extmption of dyes from •xclst duty if and t>1t/1 if suci d1es had b .. n 
manufactured from other dyes on which excise duty had b .. n patd-Ben•fit of 
exemption whether can bt cla/,,,ed If the d1es wlren ••lilfactured wtr• not 
//obit for excise d•t1. 
Ctntra/ Excise Rules 19U, Rul• 10 and JOA; Rule 52 and 52A-Scope 
of and difference bttw .. n-Calculatlon of period of limitation for recovery of 
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deficit dut:y-Slartlng polnt-Wh•n arises. 
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Indian E•idtnce Act : 
Promissory Estoppel-Doctrine of-Notification regarding 
exemption 
from paym,nt of excise duty in regard to dycstujfs-Manuf•cturer not lfavln, 
done an)•thing prtjudici•l t• his Interest relying upon rtJJrtsentation of dtp.,t-
ment-Voluntary payment •I excise duty-Plea of 11ro111issory estoppel-
Wlretlfer permissible. 
Words O#d nrasts : 
''ald'-M••nlng •f-C1ntral Excise Rules 19U, llul• JO. 
Tbe respondent was tb1 owner of a factory carryin1 on the bu1ineu 
of manufacturina dy11, 1lt1•ieals aRd pharaaceuticals fro• a n1;1mb1r of 
years. 
By the Finance Act of 1961 'synthetic or1anic dyostoll'1 (including 
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pi,mont d7esto11'1) and •rntqetic orsaniq derivatin• Ulld in •111 d7oina pro-
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D.R. KOHLI v. ATllL PRODUCTS 
833 
0111• wero added as Item 140 in tbo First il1h1d11le to tbo Coatral llil•ioo 
and Salt Act, i 944 with effect from Marob !, 1961, and 
1on11~•1ntly tile 
respondent becam1 liable to pay excise duty impose~ by the Act .on two of 
its pro"ucts known as cibagenas and •ibano1~•s which ••r• b~I~J man•· 
facturod. 
On NOl'cmber 23, 1961, the Central Government i11ued a notification 
under Rule 8(!) of the Central Excise Rules, 1944 exempting the dyeo spec!· 
fied in the Sched11le annexed thereto from the whole or the olicise duty 
loviable thereon If and only if such dyes had boon manufactared from any 
other dye on which e1cise duty or countervailing customs duty bad already 
been paid. 
Cib~&0pe1 and cibano,senos which were bejns 
m~nufRcl,l!I"•~. ,biJ' .l\>o 
~1111Poq4~nt belon~d to the class of dyes refo~red. to in t~,e S<;hcl\11le. ~ 
t,o the said notification. 
In pui-suance to the correspondence e•changed between the respon· 
dent and the Superintendent of Central E1ci1e, tho Deputy Saperiatondont 
was instructed to receive duty on such fast colour bases which went into the 
production of ciba1anes or cibanoaeno• (processed dyes) by the re11pondont, 
and tho respondent accordingly paid tho duty and was .. empted from pay· 
ment of duty on cibanQgeocs manufactured by it. 
The departmental audit party, later on noticed that the conce11ion 
shown to the respondent was not in order, since it was onl1 when duty had 
been paid on the basic dyes at the time of th~ir manufacture wh~n they were 
chargeable to duty and they had been purchased by the 
re~on<!Jlllt !bore· 
after, the respondent would get exemption from the duty payable of. the 
products manufactured by it by employing such basic dyes. 
It Was furlher 
of the view that there was short levy of excise dutY on account of the above 
mistake since the respondent had paid e:acise duty on the basic dfes at 30 % 
ad valortm whereas it was liable to pay duty at 30% ad valorem on the 
products manufactured by it which were costlier than the basic dyes. 
In pursuance to the aforesaid objection, the Assistant Collector issued 
five notices under Rule 10-A of the Central Excise Rules to the respondent 
calling upon it to show cause as to why the deficit amount of eaciso duty 
should not be recovered. 
The respondent, denied its liabiJity and contended that it ha• cleared 
the products manufactured by it in accordance with the Rules and pleaded 
that there was no justification to conclude that it was required to pay ea.cisc 
duty on the fast colour bases used by it in manufacturing the said goods 
voluntarily and that Rule lO·A of tho Rules was not applicable to the case 
~pd no demang cogld be rnage. 
The Assistant Collector overrq led the 
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SUPREME COU I! T REPORTS 
(1985] 2 S.C.R, 
objections or the respondt.nt and directe<I it to pay the amounts which had 
been demanded in the notice

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