ORDER <NAME>, J.

1. This petition is filed for the issue of a writ of certiorari calling for the records of <ORG>, <ORG>, relating to B.P.Rt. 2343(1) and to quash the order dated 20th April, 1967, made therein.

2. The Petitioner applied to the Collector of Dharmapuri for the grant of a no-objection certificate to locate a touring cinema theatre in S. No. 34/1, in Mallapuram Village on 15th February, 1966. On 16th February, 1966 the third respondent applied to the Collector of Dharmapuri for the grant of no-objection certificate for locating a touring cinema theatre in S. No. 154 in Bommidi Village. The two sites were within the prohibited distance of four furlongs. The application of the petitioner was published an 9th March, 1966 in the notice board of <ORG>. On 15th April, 1966 an objection petition was filed by one <NAME> objecting to the grant of a no-objection certificate to the petitioner on the ground that a Harijan colony was very close to the site chosen by the petitioner and that, if a permit was given to locate a touring cinema theatre, it would cause nuisance. Another objection petition was filed by one <NAME> on 24th August, 1966. The Collector made a personal inspection of the sites and on 20th November, 1966 granted a no-objection certificate to the petitioner and rejected the application of the third respondent.

3. The third respondent preferred appeals to <ORG>, one against the other granting a no-objection certificate to the petitioner and another against the order rejecting his application far the grant of a no-abjection certificate. The appeals were heard by <ORG> and it allowed the appeals of the third respondent and granted a no-abjection certificate to him and declined to grant a no-objection certificate to the petitioner. The present petition is filed against that order by the petitioner.

4. Mr. <NAME>, learned Counsel for the petitioner submitted that the order of <ORG> is vitiated by errors apparent on the face of the record. His first contention was that the petitioner's application being earlier in point of time if he could be granted a no-objection certificate it should have been given without any reference to the later application "of the third respondent. Secondly, he submitted that the order of <ORG> is vitiated in that the <ORG> misconceived its duties and proceeded to decide a question of law, which was not open to it. Thirdly, he submitted that the <ORG> was in error in relying on the observations of a Bench of this Court and a single Judge of this Court in dismissing two petitions at the admission stage in support of its view, in preference to a decision of a single Judge of this Court rendered after hearing both sides, it was next submitted that the rejection of a no-objection certificate to the petitioner on the ground that it would be a nuisance to the neighbours because of the noise was not based on evidence but purely on surmises.

5. It is admitted that the petitioner applied to the Collector of Dharmapuri for the grant of a no-objection certificate to locate a touring cinema in S. No. 34/1 in Mallapuram Village on 15th February, 1966, while the third respondent applied only on 16th February, 1966 for a site which is within the prohibited distance. It has been held by a Bench of this Court in <NAME> v. Arumugham I.L.R. (1959) 576 : (1960) M.L.J. (Crl.) 44 (1966) 1 M.L.J. 66 at 73, that there is nothing in the Act or in the rules framed thereunder which casts a duty on the Collector or <ORG> to make a selection among several applicants and that the person who applied earlier could be given a no-objection certificate if the requirements of the Act are satisfied. The learned Judges held that, In such a case it is not unreasonable to reject the application of the respondent who applied later, giving him liberty to file another application for a site which is not within the prohibited distance.

The learned Judges also took an instance of two applications for the issue of no-objection certificates made by two persons on the same date for sites which lie within the prohibited distances from each other and observed that In such a case it may be that the Collector will make a selection, or he may send for both the applicants and ask them to modify their application in respect of situation of the sites.

This decision has been followed by this Court in <NAME> v. <NAME> and two Ors. W.P. No. 3999 of 1965 and <NAME> <CITATION> and two Ors. W.P. No. 650 of 1966 The petitioner's application being the earlier one and as there was no-objection to the site, a no-objection certificate ought to have been granted to the petitioner.

6. The next contention of the learned Counsel for the petitioner is that the <ORG> was in error in arrogating to itself the function of determining a question of law which had been decided by <ORG>, and thereby the order is vitiate d by an error apparent on the face of the record. In paragraph 7 of its order the <ORG> has stated as follows:

I must observe with great respect, that there Can be no parallel or comparison between the Motor Vehicles Act and the Madras Cinemas (Regulation) Act. Motor vehicles and stage carriage and transport veLicles ply oil 'established roads and on authorised routes only'.

The Board proceeded to consider the difference, which according to it, existed between the Motor Vehicles Act and the Madras Cinemas (Regulation) Act. Later, in paragraph 8 of its order the Board referred to the definition of the word 'unisance' in the Madras Public Health Act and expressed its view that a travelling cinema and the type of equipment it used operating in close proximity to the human habitations will be a source of disturbance to the peace and sleep of the neighbourhood almost up to midnight or even later, in the night.

The Board-concluded thus:

As a public authority, I am bound by the interpretation of statutes by <ORG>. But I find it difficult to accept the, proposition that it is open to one public authority in administering a law to act. in such a manner as to create unbridled public nuisance to the area, in. which the gravelling cinema is located. Administration will be exposed to public ridicule if one authority grants a licence for a cinema and another authority promptly starts on injunction proceeding against the cinema on grounds of public nuisance under the Madras Public Health Act, 1939. So far as I am aware the provision of the Madras Cinema (Regulation) Act, 1965 do not supersede the provisions of the Madras Public Health Act, 1939.

The above observations justify the attack on the order that the Member of the Board-entirely misconceived his duties. The wisdom of the <ORG> in making any law cannot be questioned by the authority. Neither can it go into the correctness of the decision of <ORG>. It is in law bound to administer the law as declared and propounded by <ORG>. The passages extracted above clearly show that the Member of the Board took upon himself the function of interpreting the law and coming to a different conclusion from that arrived at by <ORG>. The observation that as a public authority I am bound by the interpretation of a statutes by <ORG>, but I find it difficult to accept the proposition is highly improper and objectionable.

7. Mr. <NAME>, learned Counsel for the respondent, submitted that he could not support the conduct of the Member in arrogating to himself the function, of deciding a proposition of law which had been laid down by <ORG> and. stated that the attitude of the Member of the Board is inexcusable and regrettable. The learned Government Pleader On behalf of the <ORG> submitted that he could not support the procedure adopted by the Member of <ORG>. It is distressing to note that the tribunal which arrogated to itself functions wholly alien-to its jurisdiction happens to be a Member of <ORG>.

8. Mr. <NAME>, learned Counsel for the respondent submitted in extenuation of the error of the Member of <ORG> that the Member was not aware that the observations made by <ORG> while dismissing petitions at the time of admission is not entitled to be followed as precedents. This may be so an& it would have been understandable if the <ORG> merely followed, the observation of the Bench of the single Judge.

9. In support of its view, the <ORG> relied on the observations of a single Judge of this Court in <NAME> v. <NAME> and two Ors. W.P. No. 136 of 1966, and of the Bench in <NAME> v. <NAME> and two Ors. W.A. No. 228 of 1966. W.P. No. 1356 of 1966 was dismissed at the admission stage. In dismissing it the learned Judge observed that the test applied in that case appeared prima facie to be a valid test in connection with the grant of a cinematographic licences. The test referred to is the test relating to the interests of the public. In <NAME> v. <NAME> and two Ors. W.A. No. 228 of 1966 the Bench dismissed the above writ petition, making certain observations. Both these decisions, were rendered at the admission stage and the other side was not heard.

10. In Section 27 at page 155 of Salmond on Jurisprudence (12th Edition) the rule is stated thus:

If one looks at this question merely with the eye of common sense, the answer to it is clear. One of the chief reasons for the doctrine of precedent is that the matter that has once been fully argued and decided should not be allowed to be reopened. Where a judgment is given without the losing party having been represented, there is no assurance that all the relevant considerations have been brought to the notice of the <ORG>, and consequently the decision ought not to be regarded as possessing absolute authority, even if it does not fall within the sub-silentio rule.

In <NAME> v. Charles Leslie Norman L.R. (1924) 2 K.B. 315 at 322, <ORG> was of the view that a decision was not entitled to great weight as "the prisoner was not represented, and no argument whatever was addressed to the <ORG> by Counsel on his behalf. <CITATION> . (1950) 2 K.B. 466 at 472, it is observed that a case which has not been argued on both sides has nothing like the weight of authority of one which has been fully argued. A Full Bench of the Nagpur High <ORG> in <NAME> v. Chief Executive Officer A.I.R. 1955 Nag. 49 at 64 stated the position thus:

No doubt, the petitioner's Counsel did address an argument before the <ORG>, but it must be borne in mind that argument addressed at motion hearing is rarely full particularly when the question is intricate or is an unusual one.... It must therefore be said that the decision on the point was given by the learned Judges per incuriam. When a decision is given by a <ORG> per incuriam, it is not binding on a subsequent <ORG>.

Whatever may be the value of a judgment rendered without hearing arguments in full when parties are present, judgment rendered without notice or in the absence of the contesting party will not be entitled to any weight as a precedent. In cases when petitions are dismissed at the admission stage, the respondent is not present and has no opportunity to put forth his case. Admittedly, whatever observations may be made they will not bind the respondent and the judgment cannot be a precedent, because it is a judgment rendered on hearing only one side. It will be a judgment per incuriam. It may be that the Member of the <ORG> was not aware of this position of law. But the fact that he has relied on the observations in the two decisions, which have no force as precedents is an error apparent on the face of the record. The only decision rendered after hearing both sides which was quoted before the <ORG> was the one in <CITATION> and two Ors. W.P. No. 1848 of 1966 and the <ORG> ought to have followed that decision.

11. The order of the <ORG> is attacked on the ground that its conclusion that the granting of a no objection certificate to the petitioner would be a source of nuisance was based purely on surmises. In Paragraph 8 of its order the <ORG> observed as follows:

Apart from this, it is a public fact that the travelling cinemas operating under thatched roofing or under tents, or under corrugated sheets, or asbestos cement sheets are not sound proof and cannot be sound proof.

This observation is not based on any evidence and whatever impression the Member of the <ORG> might have on the subject, he should not have allowed it to colour the decision in the case. Proceeding the <ORG> observed:

The loud-speakers used in such travelling cinemas are really loud. Any attempt made to reduce the volume of sound below the level at which it would not be an assault on the ear drums of the people in the neighborhood is just not possible because the loud-speaker goes dead long before the level (or tuning down to that level) is achieved.

This again is not based on evidence, but on mere conjecture. The Member proceeded to observe:

To the best of my knowledge and belief, no travelling cinema utilises expensive loud speakers by which the tone may be modulated to just the level and cadence and fidelity of ordinary human speech. This type of loud-speaker is expensive and it will also be not possible to insist on, (because of) their non-availability in sufficient numbers.

This is not based on any evidence, but only on conjectures and pure Surmises. The Member has stated that the observations are to the best of his knowledge and belief. The Member's knowledge and belief is not evidence and cannot be taken into account for coming to a conclusion as to whether a loudspeaker in a given case is a nuisance or not. <ORG> has discouraged the tribunals coming to conclusions on surmises. In <NAME> Commissioner at 1251 <ORG> pointed out thus:

The conclusions reached by the <ORG> should not be coloured by any irrelevant considerations of matters of prejudice and if there are any circumstances which required to be explained by the assessee, the assessee should be given an opportunity of doing so. On no account whatever should the <ORG> base its findings on suspicions, conjectures or surmises nor should it act on no evidence at all or on improper rejection of material and relevant evidence, or partly on evidence and partly on suspicions, conjectures or surmises and if it does anything of the sort its findings even though on questions of fact will be liable to be set aside by this <ORG>.

This view was again reiterated by <ORG> in <NAME> v. I.T. Commissioner .

12. The Board did not take into account the rules relating to the use of loud-speakers by the exhibitors of cinemas. By G.O. No. 1403, dated 21st April, 1965, rules were framed which provided that external loud-speakers in, any cinema as a source of attraction shall be prohibited and that the sound inside the theatre shall be kept at the optimum level, i.e., really necessary for comfortable hearing and shall not be loud or noisy. After the framing of this rule if any loud-speaker is kept at a loud tone disturbing others, that will be a breach of a condition of the licence and it will result in cancellation of the licence. If the Member was aware of this-rule he would not have complained that the loud-speakers would be really loud, for if it were so it would result in cancellation of the licence.

13. On the merits also, the conclusion arrived at by the Board cannot be accepted. The two objections that were raised to the grant of a no objection certificate by the public were that the site was very close to a church and that the cinema going public were likely to molest the people in the Harijan Cheri. Both the objections were not accepted by the Collector. <ORG>, apart from referring to the order of the Collector dealing with the likely molestation by the cinema going public, has not given any finding on this aspect. The entire order is based on the ground that the loud-speakers would be really loud and that the neighbours would be disturbed. This conclusion cannot be accepted.

14. It is contended by the learned Counsel for the petitioner that the right to object is given to the public under Rule 106(a) if the objection is preferred within 15 days of the notification, and the ground of objection is non-compliance of the rules framed under the Act. It is submitted that the objection put forward by the pubic was after the expiry of 15 days, and not on the ground of non-compliance of the Rules. I do not think that this point need be considered, as any relevant objection can be taken into consideration by the authority issuing the licence, whether it is brought to his notice by way of objection from the public, or otherwise.

15. Mr. <NAME>, learned Counsel for the respondent submitted that the view taken by this Court that in Section 5(a) of the Madras Cinemas (Regulation) Act the words 'interest of the public generally' should be construed as the interest of the cinema-going public requires reconsideration. Learned Counsel brought to my notice the decision of this Court in <NAME> v. The State I.L.R. (1956) M.L.J. 1272 : (1956) 1 M.L.J. 179 : A.I.R. 1956 M.L.J. 349, where <NAME>, J., took the view that the interest of the public generally as used in Section 47(1) of the Motor Vehicles Act was comprehensive enough to cover the interest of the public generally besides the interest of the travelling public. The decision of <ORG> this Court in <CITATION> (1948) 1 M.L.J. 85 : A.I.R. 1948 Mad. 400, was not brought to the notice of the learned Judge. In this decision <ORG> this Court has held that the expression 'interests of the public' which is found in the Motor Vehicles Act relates to the interests of the travelling public, for whose convenience and heed stage carriages are provided. This decision has been followed by <ORG> in <NAME> v. <ORG> . Agreeing with the view of the Bench of <ORG> <ORG> pointed out that the interest of the public as mentioned in the Act cannot include matters which have nothing to do with the interests of the public which was going to use the motor vehicles in question.

A full Bench of <ORG> in <CITATION> , followed the decision of the, Bench of <ORG> in <CITATION> (1948) 1 M.L.J. 85 : A.I.R. 1948 Mad. 400. <ORG> in <CITATION> , has also taken the same view. Thus the law as laid down by the Bench of <ORG> in <CITATION> (1948) 1 M.L.J. 85 : A.I.R. 1948 Mad. 400, has been accepted and followed by the various Courts mentioned above. In their view, the contention that the words "interests of the public" should be considered as meaning the public at large and not the travelling public alone cannot be upheld. Section 5 of the Madras Cinemas (Regulation) Act is in the same terms as Section 47 of the Motor Vehicles, Act, and Mr. <NAME> has Unable to convince me that the wards the interest of the public generally in Section 5(a) of the Madras Cinemas (Regulation) Act should be given a different meaning from the words interests of the public found in Section 47(1) of the Motor Vehicles Act.

16. Mr. <NAME> referred to two decisions of, <ORG>, in <ORG> v. <NAME>, <ORG>, and in <ORG> v. <ORG>. The passages relied-on by the learned Counsel would indicate that the facts to be taken into consideration were the interests of the public listening to the broadcasts. The decisions do not help the contentions, of the learned Counsel. I see no reason for revising my view that the words 'the interest of the public generally' in Section 5(a) of the Madras Cinemas (Regulation) Act would refer only to the interests of the cinema-going public.

17. In the result, the writ petition is allowed with costs. Counsel's fee Rs. 100.


<CITATION> )

1. According to the appellants <ORG> they manufacture pilfer proof caps falling under T.I. 12 CET as also aluminium tear-off vial seals and aluminium tear-down vial seals, falling under T.I.-68 CET. In respect of the pilfer proof caps they were claiming exemption under notification 83/83 and in respect of the other aluminium vial seals they were claiming exemption under notification 77/83. In respect of these aluminium vial seals the department had a doubt on the classifiability under TI 68 but, subsequently, the Assistant Collector under order dated 8-10-1980 settled their classification under TI 68 CET.

2. After a visit to their factory on 21-1-1985 during the course of which 3,31,000 pieces of tear-off and tear-down vial seals were seized under the belief that they are classifiable under TI 42 CET and not under TI 68 CET, action was initiated by issue of notice dated 6-6-1985. It was alleged that as these seals had been manufactured and cleared without payment of duty under TI 42 CET the appellants had contravened various rules and had made themselves liable for penalty, confiscation and demand of duty. After the appellants had sent their reply an adjudication was held by the Collector of <ORG> (Now Bombay-Ill on reorganisation) in which he held that the vial seals were classifiable as pilfer proof caps under TI 42 CET and the charges against the appellants were therefore made out. But he restricted the demand to the normal period under Section 11-A of the Central Excises and Salt Act . It is against the said order of the Collector dated 24-12-1985 that the present appeal has been preferred.

3. We have heared <NAME>, Advocate for the appellants and <NAME>, JCDR for the department.

4. Samples drawn of the products in question as manufactured by the appellants as also by another manufacturer were also produced for our perusal during the course of our hearing.

5. The contentions of the appellants stated in short are that :-

(i) The aluminium vial seals in question are not caps at all but only seals and therefore there is no question of these products being pilfer proof caps;

(ii) These seals are not known as pilfer proof caps in the trade;

(ill) Reliance of the Collector on two earlier decisions of this Tribunal is misplaced since in one of them the party was not represented and the other did not deal with a product similar to the product in question;

(iv) the classification of the product having been approved by the Assistant Collector the same cannot in law be disturbed by the Collector except by way of proceeding in review;

(v) the Collector had no jurisdiction to confirm the demand under Section 11-A of the Act as it then stood;

(vi) the confiscation of the goods was in any event not called for; and

(vii) the demand as confirmed was in any event in excess of the period prescribed in Section 11-A of the Act.

6. As mentioned earlier there is no dispute regarding the classifiability under TI 42 CET of the screw down caps manufactured by the appellants which they themselves have classified under TI 42 as pilfer proof caps. The dispute relates to tear-off and tear-down aluminium Seals manufactured by them. The tear-off seals are to be used in injection glass vials, the tear-down seals being used in other glass or plastic bottles meant to contain tablets, powder, capsules etc. Shri <NAME> contended that the function to be performed in case of tear-down seals are (i) to hold the plastic cap in position; (ii) to provide decorative packaging and (iii) to prevent accidental spilling of the contents or cap during handling. In respect of the tear-off seals he claimed that the functions were (i) to hold the rubber plug in position; (ii) to prevent spillage of the contents during handling and (iii) to prevent contamination of the plug or the contents. Therefore in effect he stated that while these tear-off and tear-down seals may contribute towards safety from pilferage, their main function was not that and that these being in the nature of seals only and not caps they could never be classified as pilfer proof caps.

7. The relevant tariff entry reads "pilfer proof cap for packaging, all sorts, with or without washers or other fittings of cork, rubber, polythene, or any other material".

8. Before the Collector as well as before us the appellants have relied on the definition of pilfer proof caps in the Glossary of terms relating to metal containers trade published by <ORG> (IS: 1394-1973). It will be convenient at this stage to extract the definition of not merely pilfer proof caps but other definitions also therein. They are :-

Bung - A fitting used to seal a sheet-metal container, usually a metal plug provided with threads to fit a screwed flange.

Cap - A light gauge metal or plastic cover used to seal the neck or opening of a container.

Inner Seal - Refers to paper, foil or cork used to line the inside of a general line cap closure.

Lid - The detachable closure component defined precisely by qualification, for example, slip lid, screw, cap, etc. Pilfer proof caps - Screwed on closure with integral pilfer proof arrangements.

Plug - A metal stamping fitted into a neckor orifice.

Screw Cap - A screw-on (rolled thread) cap incorporating a sealing wad or liner and used in conjunction with an appropriate screwed neck.

Washer - A disk or cork or other soft material inserted in the cap to ensure leak-proof seal.

9. Thus so far as pilfer proof caps are concerned the <ORG> definition makes it clear that these are screw on closures with integral pilfer proof arrangement. It is explained for the appellants that these are caps that get separated into the bottom and top portions when the caps are opened so that telltale evidence is left behind of the fact of the cap having been opened to get at the contents. Further a cap would be a metal or plastic object to seal the opening of the container and the same would be available for use time and time again for the same purpose, whereas a tear-off or tear-down seal would get destroyed the moment the seal is broken and could not be used again for preserving the contents thereafter. That is to say they would be of one time use only and cannot be reused periodically. This very circumstance, it appears to us, would establish that these seals are not caps much less pilfer proof caps.

10. <NAME> contends that these seals safe-guard and, evidently, provide protection against tampering and they would therefore be pilfer proof caps. This argument overlooks the fact that in order that the product may be described as a pilfer proof cap it must first be a cap. A seal would not be a cap since it cannot be reused after opening. <NAME> contends that in view of the words used in the entry such an argument cannot be accepted. He says that as T.I. 42 is worded the presence or absence of washer and other fittings would not be material and therefore the seal even without the rubber plug beneath the same would still be a pilfer proof cap. We are unable to accept this contention. The washer or other fittings referred to in the entry, in our opinion, refer to the inner seals of paper, foil, or cork used to line the inside of a cap closure. In the case before us the rubber plug beneath the seal would be the cap itself and not the washer or other fitting.

11. <NAME> relies upon two earlier decisions of this <ORG>, both of which have been referred to and relied upon by the Collector also in his order. They are in the case of <ORG> (1983 ELT 2506) and <ORG> (1983 ELT 1163). It is pointed out for the appellants that the assessee went unrepresented in the case of <ORG> and therefore the arguments now advanced were not put before the <ORG> and had therefore not been considered. On the perusal of the judgment we find that this aspect of the case, that seals would not be caps at all, had not been raised by the assessee and had therefore not been considered by the <ORG>. So far as the case of <ORG> it is clear that the product concerned in that case was not the product in issue before us. That case dealt with cap-seals used for sealing of drums and not vial seals. The definition of the cap seal in 1S:1394-1973 is as follows :-

"Capseal (Drums) - A light gauge metal closure component fitted over the primary seal (for example, inner plug, lever cap or cork shives); may be paper lined on the underside, usually applied by rolling-on with special tool".

No doubt reference has been made in that judgment to the definition of pilfer proof caps in 15:1394-1973 but it has been observed that in the absence of any definition of the terms pilfer proof cap in the tariff entry the entry has to be given widest meaning particularly in the context of the qualifying word "all sorts". But in the light of the discussion earlier, especially that relating to the fact that a seal would never be a cap, it appears to us that the ratio of the said decision, which dealt with cap-seals for drums, should not be taken to apply to the facts of the instant case.

12. In the light of the above discussion we are satisfied that the tear-off and tear-down vial seals manufactured by the appellants, and which are the subject matter of the present appeal, would not be pilfer proof caps for the purposes of levy of duty under Tl 42 CET.

13. Shri <NAME> further contended that in any event the order of the Collector must fail on two other grounds. The first was that the Collector had no jurisdiction to go into the matter since the Assistant Collector had already once gone into the matter and given a finding that these seals are to be classified under Tl 68 GET and, in the absence of any further or better material, the Collector was not entitled to come to a different conclusion except by way of review under the provisions of Section 35-A of the Central Excises and Salt Act as it then stood.

From the order of the Collector we find that no other material than was available to the Assistant Collector earlier had been placed before the Collector. The process of manufacture continued to be the same and the use to which the product was being put also continued to be the same. In view of the said circumstances we agree with the learned counsel that the Collector had no jurisdiction to differ from the earlier conclusion of the Assistant Collector except by way of taking proceeding for review of the earlier order under Section 35-A .

14. Shri <NAME> further contends that so far as the demand for payment of duty is concerned the Collector had no jurisdiction under Section 11-A to do so. As pointed out by him, Section 11-A conferred jurisdiction on the Assistant Collector to determine the amount of duty in terms of notice issued earlier by the proper Central Excise Officer. The jurisdiction was thus conferred on the Assistant Collector only as the Section stood at the relevant time. It was only on and after 20-12-1975 (20-12-85 ?) that, under the provisions of Section 3 of Act 79 of 1985, the said power of the Assistant Collector could have been exercised by the Collector also. It is true that under Rule 6 of the Central Excise Rules the Collector may perform all or any of the duties or exercise all or any of the powers assigned to an Officer under the Central Excise Rules. This empowering of the Collector would relate only to powers exercisable by any other Officer under the Rules and not under the Act. <NAME> contends that it is a well recognised principle of administrative law that what a subordinate could do his superior could always do. He therefore contends that what an Assistant Collector could do under the provisions of the Act the Collector as his superior could also do. We are unable to accept this proposition in the absence of any provision in the Act itself, as distinguished from the provision in the Rules, to this effect. Therefore, we are convinced that so far as demand for duty is concerned the Collector had no power in the instant case.

15. <NAME> in this connection refers to the fact that the demand had been raised under Rule 9(2) also. But we are satisfied that no demand could have been raised under Rule 9(2) since the manufacture and clearances were in pursuance of an earlier order of the Assistant Collector in terms of which the goods in question were classifiable under TI 68 CET and under that classification the goods were exempt since the exemption limit of clearances had not been crossed. In the absence of any suppression or mis-statement of facts the demand could not be raised under Rule 9(2).

16. <NAME> contends that the order for confiscation of the seized goods was also not proper. As already seen, the manufacture and clearances were in terms of the earlier order of the Assistant Collector under which the goods were classifiable under TI 68 CET and were exempt in view of the clearances not having crossed the exemption limit. In view of the above circumstances there had been no case made out of wilful infraction of any statutory provision making the goods liable for confiscation. We therefore hold that the order for confiscation was also not proper.

17. In the light of the above discussion we hold that the order of the Collector is liable to be set aside on the several grounds discussed earlier. Accordingly this appeal is allowed and the order of the Collector is set aside with consequential relief, if any.

Sd./-

New Delhi (V.T. Raghavachari) 11-12-1986 Member 11-12-1987 <NAME>, Vice President

18. I have carefully perused the order written by learned brother <NAME>. 1 agree with his conclusion and finding (reference paragraph 12 of his order) that the tear-off and tear-down vial seals manufactured by the appellants would not be pilfer-proof caps for the purpose of levy of excise duty under Item No. 42 of the Central Excise Tariff Schedule.

19. In the above view of the matter, it does not appear to be necessary, in my opinion, to consider the other contentions raised by <NAME>, Counsel for the appellants (and discussed in para 13 and 14 of <NAME>'s order) and I do not propose to go into them.

20. I also agree that Rule 9(2) has, in any event, no application to the facts of the present case. Further, the confiscation ordered by the Collector was not proper in the instant case.

21. I, therefore, agree that the appeal should be allowed setting aside the order of the Collector with consequential relief, if any.

Sd./-

New Delhi (G. <NAME>) 11-12-1986 Vice-President <NAME>, Member (T) 22. I agree with brother <NAME>. 23. Appeal be allowed with consequential relief. Sd./- (<NAME>) Dated : 26-3-1987 Member FINAL ORDER

"The Order bearing No. 954/86-D, dated 11-12-1986 issued by the <ORG> as disposing of this appeal had been recalled vide Misc. Order No. 93/1987-D, dated 26-3-1987. Thereafter, the present order is being issued by the Bench disposing of the appeal."


ORDER <NAME>, J.

1. This petition under Article 226 of the Constitution of India presents yet another dimension of the doctrine of estoppel -- which as the judicial decisions demonstrate, has many facets.

2. The petitioner, the owner of <ORG>, Cannanore, approved by <ORG> of the Government, seeks to compel the respondents to pay Rs. 5.03 lakhs of subsidy under the Central Investment Subsidy Scheme, promised under the letter No. FC.F3/32598/89 dated 28-9-1989 (Ext. P2) written on behalf of the respondents 1 and 2, who are respectively, the State of Kerala, and the General Manager of <ORG>. The respondent No. 3 is the Union of India. The facts are set out in paragraphs 3 to 6 below.

3. According to the petitioner, the respondents 1 and 2 .by their letter No. FC.F3/ 32598/89 dated 28-9-1989 (Ext. P2) and acting under the Scheme promised that the amount of Rs. 5.03 lakhs will be released to the petitioner through <ORG>, Cannanore, towards the aforesaid subsidy.

4. The 10-15% Central Investment Subsidy Scheme of 1991 (Ext. R3(c)) -- the Scheme -- came into force on 26th August, 1971 and the valid during the period of the Fourth Five-Year plan. Thereafter it was extended from time to time. The last such extension of its duration was from 1st April, 1988 to 30th Sept. 1988. (Ext. R3(b) Notification). The scheme ceased to exist from 1st October, 1988. The object of the scheme was to encourage development of industries in certain backward areas.

The substance of the scheme in so far as is relevant to this case is as under:

The industrial units duly registered with the concerned department of the <ORG>, may apply for grant of subsidy based on their project reports, submission of the details of the project, assets required, letter of sanction from the financial institution, sanctioning the loan and so on.

<ORG> constitutes a committee known as <ORG> -- <ORG> for short -- consisting of the Secretaries to <ORG> in <ORG> and <ORG> and other officers. The authority to decide whether the industrial unit qualifies for the grant of subsidy belongs to the <ORG> It is the <ORG> that determines the quantum of the subsidy. The limit of the authority of the <ORG> to determine the quantum is 15% of the value of investment up to a maximum of Fifteen lakhs rupees. The <ORG> has the over all authority over the disbursing agencies, like the respondent No. 2, who disburse the amount of subsidy sanctioned by the <ORG> After disbursing the amount of subsidy, the agency prefers a claim with the <ORG> for reimbursement of the amount disbursed. The respondent No. 2 is such a disbursing agency.

It is the Central Government that finally disburses the amount of subsidy to the S.L.C.

The <ORG> sanctions and the disbursing agency pays the amount of subsidy to the industrial unit. It is only, thereafter, that <ORG> disburses to the agency the amount paid by it.

5. The petitioner applied for grant of central subsidy under the scheme. The application was made before 30th Sept. 1988 while the scheme was in force. It was scrutinised by <ORG>. But the <ORG> did not sanction the subsidy while the scheme was in force. The "sanction" was accorded by the letter No. FC.F3/32598/89 dated 28-9-1989, when the scheme was not in force. The <ORG> who "sanctioned" the central subsidy, was a creature of the scheme. When the scheme ceased to be in force on 1st October, 1988, the <ORG> too ceased to exist.

6. Counsel for the petitioner based his case on the "promise" contained in the letter No.FC.F332598/89 dated 28th Sept. 1989, written by the <ORG> By this letter the <ORG> informed the petitioner that the <ORG> at its IVth meeting of 1989 held on 27-9-1989 sanctioned a subsidy of Rs. 5.03 lakhs payable through <ORG>, Cannanore.

The only point urged by learned counsel for the petitioner is that the respondents 1 and 2 and their agency, the <ORG>, on whose promise, the petitioner acted, are estopped from withholding or denying to the petitioner of the amount of subsidy.

7. The undisputed facts are these:

(i) The petitioner relied upon the scheme and expected that he would be granted the subsidy.

(ii) Acting on the letter dated 28-9-1989 (Ext. P2) the petitioner executed the requisite agreements and deposited Rs. 25,000=00 in <ORG> account as required by the respondents Nos. 1 and 2.

The arguments proceeded on the assumption that the petitioner, acting on the aforesaid letter, altered his position.

8. The basic principles of the doctrine of estoppel may be summarised.

Where a promise is made with the intention that the other party should act upon it, the promisor can be compelled to keep his word, if the promisee has acted upon the promise. The promise need not prove that, acting on the promise, he suffered prejudice, detriment or damage, <CITATION> .,  : (AIR 1979 SC 621). However, the indispensable requirement of the rule of estoppel is that the promise altered his position <CITATION> , AIR 1987 SC 2414. The doctrine applies to all public authorities including public corporations. Such corporation can be compelled to perform their obligations arising from a promise made by them. <CITATION> ., AIR 1983 SC 848.

In the application of the doctrine of estoppel the limitations of its application cannot be lost sight of. The doctrine is not applicable irrespective of the circumstances in which the promise was made and the situations which it was intended to meet. In public law the most obvious limitation on the doctrine of estoppel is that it cannot be invoked so as to give an authority powers which it does not, in law, possess. In other words, no estoppel can legitimise action which is ultra vires Administrative Law --<NAME>, Fifth Edition, Page 233. For instance, where an electricity authority, by misreading a meter, undercharged its customer, it was held that the accounts it delivered did not estop it from demanding payment in full. The reason is that the authority had statutory duty to collect the full amount and had no power to release the customer, expressly or otherwise. Administrative Law -- <NAME>, Fifth Edition, page 233. Secondly, the promisor cannot be compelled to perform his promise if it is inequitable to do so. <CITATION> ., (1979)2 SCC 409 : (AIR 1979 SC 621). Since the doctrine is an equitable doctrine the promisor will not be bound to fulfil the promise if it is shown that equity lies in his favour <CITATION> .,  : (AIR 1979 SC 621). Thirdly, promisory estoppel cannot be used to compel the Government or a public authority to carry out a representation or promise which is prohibited by law or which was devoid of the authority or power in the officer of the Government or the public authority to make <CITATION> .,  : (AIR 1979 SC 621); (b) Vasanat kumar <CITATION> , AIR 1991 SC 14).

A fifth limitation arises where Government's policy is concerned. Where Government changes its policy resulting in refusal to fulfil the promise, no estoppel arises. Many people may be victims of such reversal of policy. But estoppel cannot be allowed to hinder the formation of policy, <ORG> v. <ORG>, (1977 QB 643, <ORG>).

9. In considering whether the respondents 1 and 2 are estoppel from denying the payment of subsidy, two striking facts about the promise contained in the letter by the <ORG> dated 28-9-1989 (Ext. P2) must be borne in mind:

(i) The scheme under which the <ORG> derived its authority to sanction subsidies to Hotel Industry ceased to exist on 1st October, 1988. Consequently, the <ORG> a creature of the Scheme ceased to exist with effect from 1 st October, 1988.

(ii) As a corollary, it follows that the sanction of the subsidy -- the promise -- was made by a body which had no authority to make it.

10. In view of the two facts set out in paragraph 9 above, the promise by the <ORG> becomes without authority and estoppel cannot be invoked to legitimate action which is ultra vires. Realising that the <ORG> had no legal existence after 1st October, 1988 making its promise unauthorised, learned counsel for the petitioner called in aid the judgment in <NAME> v. Minister of Pensions (1949) 1 KB 227. The circumstances in which the doctrine of estoppel was applied explain the rationale of the judgment. <NAME>, a colonel in the <ORG> suffered a permanent physical disability during the war in 1940. Two departments of the <ORG>, <ORG> and <ORG>, were concerned with the grant of pension to <NAME>. <NAME> based his claim on the certificate of disability issued by the <ORG> Medical Board. The Director of <ORG> of <ORG>, on 8th April, 1941 wrote to <NAME> that "your case has been duly considered and your disability has been accepted as attributable to military service." The acceptance of attribut-ability of the disability to military service entitled <NAME> to pension. But the letter dated 8th April, 1941 was written without even consulting the Department of Pensions who declined to pay. If the war office were to hold that the disability was not attributable to war service, <NAME> would have obtained independent medical opinion which he did not do. He thus altered his position, acting on the letter from the Director of <ORG>. <ORG> made these findings:

(i) <NAME>, an officer in the <ORG> who naturally dealt with the war office was entitled to assume that the war office had issued the letter after consulting <NAME>.

(ii) The war office assumed authority over the matter and made the assurance contained in the letter dated 8th April, 1941, which, in the circumstances, was authoritative decision intended to be binding and intended to be acted upon.

(iii) The citizen is not expected to know the limits of the authority to make the promise.

(iv) If <ORG> in its dealings with a subject takes upon itself to assume authority upon a matter with which he is concerned, he is entitled to rely upon it.

(v) The war office is an agent of the <ORG>. Its letter binds the <ORG> through whom it also binds <NAME>.

11. There are clear features which distinguish <NAME>'s case with the case which I am called upon to decide. The assurance by the war office was held authoritative, as <NAME>, an officer in <ORG> naturally looked to the war office to whom he was subordinate. The relation was of employer and employee. In the present case, there is no such relationship between the petitioner and the <ORG> Secondly, the <ORG> was held bound by the promise by the Director of Personnel Services, irrespective of whether the latter acted within his authority. In this case <ORG> which provides the funds for disbursement of the subsidy is not bound by the sanction by the <ORG> unless it acts within the scheme. Thirdly, it has not been held in <NAME> that a promise by a department who lacks the authority to certify attributability to military service, by itself estops the <ORG>. <NAME>, <NAME> construed the circumstances such as the relationship between the Minister of War, and the Minister of Pensions or. the one hand, and the <ORG> on the other, and read in the letter an authority in the war office to make the promise. A fourth distinguishing feature is that whether the Ministry of Pension had authorised it or not, the <ORG> was held bound by what the war office promised.

While these distinguishing features are sufficient to make, <NAME>, <NAME> v. Minister of Pensions, (1949) 1 KB 227 inapplicable to the facts of the case before me they do not end the matter. The question of authority of the promisor continues to raise its head and demands an answer. The assumption of authority by the Director of Personnel Services of the war office, was the dominant feature of the case. By analogy, it has been urged that <ORG> too assumed such authority when it sanctioned the subsidy. But this argument is not tenable. The war office has continued authority to deal with cases of the members of the armed forces. Its authority did not flow from a temporary scheme nor was It limited by time, as in this case. Secondly, the war office was not altogether without authority to determine the cases of pensions of the army personnel. Its letter would have been authoritative if <ORG> had concurred with it. In <NAME>, the question of authority arose because the letter was written without the concurrence of or consultation with <ORG> who was concerned with the payment of pensions. In the case of <ORG>, it cannot be said that it would have acquired the authority to sanction the subsidy, if it had consulted any other department of the <ORG>. A close scrutiny of the case of <NAME> and this original petition shows that the rule laid down in <NAME> is not applicable, to the circumstances of this case.

12. I will now examine the validity of the principle laid down in <NAME>, <NAME> v. Minister of Pensions, (1949) 1 KB 227. For this purpose I will examine whether the principle is accepted in England. The basic postulate of <NAME> was that where <ORG> wrongfully assumes authority to perform some legal act, the citizen is entitled to assume that it has that authority Adminsitrative Law -- <NAME>, Fifth Edition Page 342. The British judicial decisions have not accepted this proposition. When the same proposition was repeated by <ORG> in a later case, <ORG> repudiated it in these words:

"..... I know of no such principle in our law nor was any authority for it cited. The illegality of an act is the same whether, or not the actor has been misled by an assumption of authority on the part of the Government officer however high or low in the hierarchy"

<NAME> v. <ORG>,(1951 AC 837).

If the promise by an official who has no legal power is given the force of law, ultra vires acts will gain legitimacy which is a negation of the fundamental canons of administrative law Administrative Law -- <NAME>, Fifth Edition, Page 345. Where a public authority without having real or ostensible authority sold the property of the <ORG>, it was held that the <ORG> was not bound by the sale. The burden of ascertaining whether the officer has such authority is on the purchaser A.G. For Ceylon v. <NAME>, (1953 AC 461 at page 480).

In <ORG>, <ORG> Ltd. v. <ORG>, ((1981) 2 All ER 204), the planning officer without having the authority, stated that <ORG> had the existing user right in respect of the site in question and that the District council who had the statutory authority would grant planning permission. Acting on the planning officer's statement <ORG> proceeded to renovate and rebuild the old buildings. <ORG> in exercise of its statutory authority rejected the applications for established use certificates and issued stop notices. It was held that since there was nothing apart from the position held by the Planning Officer on which the <ORG> could have assumed that the officer could bind the council, the council was not estopped by anything the planning officer had said, from refusing the applications by <ORG>.

13. The analysis of the law in England made in the last paragraph may be summed up.

<ORG> in <NAME>, <NAME> v. <ORG>, 1951 AC 837, expressly and emphatically rejected the proposition laid down in <NAME>, <NAME> v. Minister of Pensions, (1949) 1 KB 227. In A.G. for Ceylon, A.G. For Ceylon v. <NAME>, 1953 AC 461 at page 480, the sale of <ORG>'s property by an officer having no authority was held not binding on the <ORG>. This judgment is a rejection of the claim of legitimacy by ultra vires acts. <ORG>, <ORG> Ltd. v. <NAME> D.C., (1981) 2 All ER 204 also demonstrates that unauthorised promises do not create estoppel.

<NAME>, J. assumed that the citizen is not expected to know the limits of the authority to make promises. Considerations of hardship to the citizen led him to this conclusion. But in A.G. for Ceylon, A.G. For Ceylon v. <NAME>, 1953 AC 461 at page 480 this very proposition was rejected.

I therefore conclude that <NAME>, <NAME> v. Minister of Pensions, (1949) I KB 227 which has been rejected in England does not lay down the correct law. Its assumption that an unauthorised promise creates estoppel is contrary to the fundamental principle of administrative law that estoppel cannot be invoked to legitimise ultra vires actions. Again the proposition that a citizen is not expected to know the limits of the authority of an officer to make the promise tends to legitimise unauthorised promises. To hold that a citizen, acting on an unauthorised promise without enquiring into the limits of such authority, can bind a public authority, is to create a power which does not exist.

14. In the present case the <ORG> wrote the letter dated 28-9-1989 (Ext. P2) at a time when the scheme which created the <ORG> was not in force. The termination of the scheme with effect from 1-10-1988, automatically terminated the <ORG> The "promise" or "sanction" contained in the letter dated 28-9-1989 (Ext. P2) was therefore an assurance by a non-existent body. Even if the existence of the <ORG> is assumed, the letter dated 28-9-1989 (Ext. P2) was without the authority of the scheme. The "sanction" or "promise" was ultra vires of the authority of the <ORG> and therefore no estoppel arises out of such a promise. The submission of the petitioner that the respondents are estpped from denying the payment of the subsidy is without merit.

15. In view of my conclusions recorded above it is not necessary to consider whether equity lies in favour of either of the parties.

16. The petition is dismissed.