M/S. L.D.L. CHEMICALS LTD. versus UNION OF INDIA AND ORS.

Citation: [1996] SUPP. 3 S.C.R. 881 · Decided: 24-07-1996 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

' 
M/S. l.D.L. CHEMICALS LTD. 
v. 
UNION OF INDIA AND ORS. 
JULY 24, 1996 
[S.P. BHARUCHA AND K.T. THOMAS, JJ.] 
Central Excises and Salt Act, 1944: First Schedule-Tmiff Item 14HH 
and 68. 
Central Etcise Rules, 1944: Chapter X-Ru/es 8 and 192. 
Sale of Goods Act, 1930 : Section 64A. 
A 
B 
c 
Excise duty-Exemption from-Appellant manufactwing C\)Jiosives 
fron1 a1111noni11111 nitrate n1elt 80o/i~A111111onhun nitrate jJrltcitased fron1 Steel 
Auth01ity of India (SAIL)-Amnwniwn Nitrate classified as a fenilizer under D 
Tmiff Item 14HH-Exempli011 from whole of excise duty leviable on am-
moniwn nitrate under Notification No. 164/ 1969 dated 11th June, 1969-Ap-
]Jellant enjoying the benefit of the said exen1ption notification-Subsequently 
said anunonilun nitrate reclassified under Tanff lten1 68 lvith effect fro111 
1.3.1975-<:onsequently excise duty demanded from SAIL-SAIL in tum 
demanding excise duty from appellant-Appellant filed a w1it challenging the 
den1and 111ad~High Cozat refen·ed the ap11ellant to a civil suit to c/ain1 
monies from SAIL under Section 64-A of the Sale of Goods Act-Jn the 
1neantin1e second notification issued whereby an11noniun1 nitrate was ex-
cluded from earlier exemption notification with effect from 21st July, 
1979-Another writ filed by appellant challenging the second notifica-
F 
ti on-Said w1it dLimissed by High Cowt holding that it was nol nnconstin1-
tional-Appea/ before Supreme Cowt-Held as a result of reclassification of 
anunoniunt nitrate appellants suffered adverse civil consequences-Conse-
quently they have locus standi to challenge the reclassification-There was no 
fontm other than the High Cowt under A1ticle 226 to do so-Therefore High 
E 
G 
Coult e1red in not entertaining the writ petition and refening the GjJpellant to 
a civil Cowt-For the same reason the High Cowt should have dealt with the 
contention of the appellants in another writ petition that anunonhan nitrate 
ren1ained exe111pt fron1 excise duty by reason of the Exentption f'.lotiflcation 
until 21st July, 1979, when anunoniran nitrate was ren1oved front the 1nuview 
thereof 
H 
881 
882 
SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R. 
A 
Assistant General Manage1; Central Bank of India & 01'. v. Commis-
B 
sione1; Municipal Corporation for the City of Ahmedabad and 01'·., [1995) 4 
sec 696, referred to. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1589 of 
1991 Etc. 
From the J udgmenl and Order dated 5.2.90 of the Orissa High Court 
in O.J.C. No. 183 of 1981. 
H.N. Salve and Ms. Kum Kum Sen for the Appellants. 
C 
J. Vellapally, R.A. Perumal, P. Parmeswaran and A.S. Bhasme for 
the Respondents. 
The following Order of the Court was delivered : 
The appellants 1nanufacture explosives from ammoniu1n nitrate melt 
D 80% at a plant in Rourkcla, Orissa. The said ammonium nitrate is pur-
chased from SAIL., which also has a plant in Rourkela. 
E 
F 
On 11th June, 1969 an Exemption Notification under the Central 
Excises and Sall Act, 1944, (No. 164/1969) was issued by the Central 
Government exempting amn1oniun1 nitrate from the \Vhole of the excise 
duty leviable thereon if it was intended to be used in the manufacture, inter 
alia, of explosives, provided that the procedure set out in Chapter X of the 
Central Excise Rules, 1944, was followed. The appellants applied for a 
licence under the said Chapter X in respect of the said ammonium nitrate 
for use in the manufacture of explosives. The licence having been granted, 
the appellants enjoined the benefit of the said Exemption Notification. 
At all relevant times, an1monium nitrate \Vas classified as a fertiliser 
under Tariff Item 14HH. ()n 16th April, 1977 a sho\v cause notice was 
issued lo SAIL by the Superintendent in the Office of the Assistant 
G 
Collector of Central Excise, Rourkela, to show cause why ammonium 
nitrate should not be reclassified under Tariff Item No. 68. On 10th August, 
1977, the Assistant Collector, having examined the case, came to the 
conclusion that there was no need to so reclassify ammonium nitrate. 
O.n 6th .T anuary, 1978, the Central Board of Excise and Customs 
H wrote to the Collector, Central Excise, Bhubaneshwar, on the Subject of 
·i 
' 
l.D.L. CHEMICALS LTD. v. U.O.l. 
883 
ammonium nitrate melt 80% used in the manufacture of explosives and its A 
classification as a fertiliser. The letter stated that the matter had been 
examined in consultation with the Ministry of Chemicals and Fertilisers and 
that Ministry had sta

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