JUDGMENT 1. The instant bunch of writ petitions involves common question of facts and law and is thus being heard and decided together. Facts in brief: 2. The petitioners herein are all registered firms/companies enrolled as contractors with the respondent Irrigation Department, Government of Rajasthan. 3. All the petitioners were assigned separate contracts and work orders by the respondents under the Rajasthan Water Sector Reconstructing Project (hereinafter referred to as "RWSRP") sponsored by the International Development Association and funded by the International Bank for Reconstruction and Development (collectively known as the World Bank). 4. The Central Government issued two notifications (i) Customs notification No. 108/1995 dated 28.08.1995 and (ii) Excise notification No. 85/1999 dated 06.07.1999 setting out inter-alia that all goods falling under the Schedule to the Central Excise Tariff Act, 1985, imported into India for execution of such projects financed by the international bodies, would be exempted from excise duty leviable under Section 3 of the Central Excise Act, 1944 and any additional excise duty leviable under Section 3(1) of the Additional Duties of Excise (Goods of Special Importance) Act, 1957. It was stipulated in the work orders/contracts that for availing the excise duty exemption under these notifications, the contractor concerned would have to obtain a certificate from the Executive Head of the Project Implementing Authority and that such certificate would have to be countersigned by the Principal Secretary or the Secretary, Finance Department of the concerned State verifying that the goods in question would be required for execution of the project, duly approved by the Government of India for implementation by the concerned State Government. 5. The petitioner firms, completed the works allocated to them under the contracts and submitted the requisite declarations for procuring the Excise Exemption Certificates in the prescribed format appending therewith the complete list of material and machinery used in execution of the work. Upon receiving these declarations for grant of exemption from excise duty in regard to subject matter contracts, the competent authority of the Water Resources Department and RWSRP, recommended issuance of the certificate of exemption to the concerned contractor/firm for the specified items viz. cement, mobile/ mechanical plate compactor/Earth Rammer, Tipper/Truck, Hydraulic Excavator, diesel, etc. The certificates were duly countersigned and verified by the Finance Secretary concerned and the benefit of the Excise duty exemption was extended to the petitioners as per their lawful entitlement. cement, mobile/ mechanical plate compactor/Earth Rammer, Tipper/Truck, Hydraulic Excavator, diesel, etc. The certificates were duly countersigned and verified by the Finance Secretary concerned and the benefit of the Excise duty exemption was extended to the petitioners as per their lawful entitlement. Having availed this exemption under the certificate duly issued after verification and countersigned by the competent authority, the respective petitioners claim to have received a communication/letter dated 05.03.2013 issued by the Executive Engineer, Water Resources Department conveying that the exemption from excise duty availed by the respective petitioner on purchase of cement bags was being treated as an irregularity and thus, recoveries were proposed to be effected from the petitioners to that extent. The language of the communication (Annexure-8) dated 05.03.2013 is considered relevant for adjudication of the controversy and is thus, reproduced herein below for the sake of ready reference: ^^dk;kZy; vf/k'kklh vfHk;Urk] ty lalk/ku [k.M ikyh Øekad@ys[kk@7929 fnukad 5-3-2013 eSllZ Hkkjr dUlVªD'ku dEiuh ^^,^^ Dykl xoZuesUV dksUVsªDVj f'ko 'kfDr fogkj] 220 ds;w ikoj gkml ds ihNs t;iqj jksM] chdkusjA fo"k;%& vkjŒMCY;wŒ,lŒvkjŒihŒ ds vUrxZr lkexzh Ø; gsrq mRikn 'kqYd esa ÁkIr dh xbZ vfu;fer NwV dh olwyh ds lEcU/k esaA egksn;] mijksDr fo"k;kUrxZr ys[k gS fd iwoZ esa vkidks vkjŒMCY;wŒ,lŒvkjŒihŒ ds vUrxZr bl dk;kZy; ds vuqcU/k la[;k 3 o"kZ 2004&05 ds v/khu gsekokl cka/k dh ugjksa dk iqu:}kj forfjdkvksa dk dk;Z okLrs jkf'k :i;s 2]53]05]601@& gsrq vkoafVr fd;k x;k x;k FkkA mDr dk;Z ds vuqca/k dh fo'ks"k 'krksZ ds vuqlkj l{ke vf/kdkjh dh Lohd`fr ds i'pkr vkids }kjk fuEukuqlkj lkexzh Ø; gsrq mRikn 'kqYd ÁkIr dh xbZ FkhA ØŒlaŒ Lkkexzh dk fooj.k ek=k mRikn 'kqYd esa NwV dh mRikn 'kqYd esa ÁkIr NqV nj dh dqy jkf'k 1 lhesUV csx 57]039 ux :i;s 20@Áfr ux vkjŒ,lŒ 11]40]780@& bl lEcU/k esa vkjŒMCY;wŒ,lŒvkjŒihŒ dh fo'ks"k tkap esa vkids }kjk mRikn 'kqYd gsrw vuqca/k esa vafdr fo'ks"k 'krksZ dk ikyu u djds dkj.k mijksDr vuqlkj ÁkIr dh xbZ] mRikn 'kqYd esa NwV dks vfu;fer ekuk tkdj] mDr jkf'k dks olwy fd;s tkus gsrw funsZf'kr fd;k x;k gSA vr% bl lEcU/k esa vkidks ys[k gS fd mijksDr vuqlkj jkf'k :i;s 11]40]780@& rhu fnol vUnj bl dk;kZy; esa tek djkokus dh O;oLFkk djsaA pwfd jkT; ljdkj ds fu.kZ; vuqlkj vkjŒMCY;wŒ,lŒvkjŒihŒ ifj;kstuk dk ekg 3@2013 esa lekiu fd;k tkuk gSA vr% bl ifj;kstuk ls lEcaf/kr lHkh olwfy;ksa@nsunkfj;ksa ds nkf;Ro dks bl vof/k ls iw.kZ fuLrkfjr fd;k tkuk vko';d gSA vr% okafNr jkf'k vfoyEc bl dk;kZy; esa tek djokuk lqfufpr djsA Hkonh; vf/k'kklh vfHk;Urk tu lalk/ku [k.M ikyhA** (Emphasis supplied) 6. The petitioners claim that on one hand, the letter itself indicates that exemption was granted to the contractors under the valid sanction of the competent authority and on the other hand, the respondents are bent upon to effect recovery of the exempted amount from the respective petitioner after delay of nearly 8 years. 7. The petitioners claim that on one hand, the letter itself indicates that exemption was granted to the contractors under the valid sanction of the competent authority and on the other hand, the respondents are bent upon to effect recovery of the exempted amount from the respective petitioner after delay of nearly 8 years. 7. It may be stated here that full excise duty exemption of the admissible for the imported material/machinery utilized in project was not granted to some contractors/writ petitioners whereupon, they communicated with the Executive Engineer concerned and were apprised that the recovery was being effected pursuant to an audit objection raised by the Comptroller and Auditor General, Jaipur. The petitioners have assailed these recovery notices/communications through this bunch of writ petitions filed under Article 226 of the Constitution of India. 8. The Comptroller and Auditor General, Government of Rajasthan, Jaipur has been impleaded as a party respondent in these writ petitions and notices have been served upon it. But, neither appearance has been put in nor any response filed to the writ petitions on its behalf. Rather, an application was moved on behalf of the CAG to delete its name from the array of the respondents. Nevertheless, such application was not accepted and was deferred to be considered at the time of hearing. The matter was heard finally on 07.08.2018. This Court feels that justification for the audit objection was to be provided by the CAG but the authority not only failed to do so but rather chose not even to file reply so as to lend credence to the disputed audit para. Thus, the matters were heard without reply on behalf of the CAG. The other respondents have filed replies to the writ petition, generally opposing the prayers made in the writ petitions. They have taken recourse of Clause 13.3 of the Tender Document and the Instructions to the Bidders claiming that the petitioners failed to supply the requisite details while submitting the excise duty exemption declaration forms regarding the make, quantity and value of the excisable commodity. The declarations were not submitted in the prescribed format as per Clause 13.3 and that the exemption certificate were inadvertently issued by the competent authority. It is also stated that the CAG has recommended suitable action against the erring departmental officials and that disciplinary action is under contemplation. The declarations were not submitted in the prescribed format as per Clause 13.3 and that the exemption certificate were inadvertently issued by the competent authority. It is also stated that the CAG has recommended suitable action against the erring departmental officials and that disciplinary action is under contemplation. The prayer for quashing of the recovery notices is opposed with a bald assertion that the petitioners are not entitled to the exemption from the payment of excise duty and the exemption wrongly granted under a misconception is rightly being recovered in light of the CAG's objection para 9. I have heard and considered the arguments advanced by the learned counsel representing the parties and have gone through the material available on record. 10. The relevant Clause No. 13.3 of the ITB around which the entire controversy revolves and so also, the objections raised and the recommendations made by the CAG, are reproduced herein below for the sake of ready reference: "Clause 13.3 of the ITB - Bidder may like to ascertain availability of excise/custom duty exemption benefits available in India to the contracts financed under World Bank loan/credits. They are solely responsible for obtaining such benefits, which they have considered in their bid and in case of failure to receive such benefits for reasons whatsoever, the employer will not compensate the bidder (contractor). Where the bidder has quoted taking into account such benefits, he must give all information required for issue of certificates in terms of such notifications as per form attached to the Qualification Information in the bid. The extent the employer determines the quantity indicated therein are reasonable keeping in view of the bill of quantities, construction programme and methodology, the certificates will be issued and no subsequent changes will be permitted. The bids which do not confirm to the above provisions will be treated as non responsive and rejected. Any delay in procurement of the construction equipment/machinery/goods as a result of the above shall not be a cause for granting any extension of time." 11. It is admitted by the respondents in their replies that certificates duly verified and countersigned by all the concerned officers including the Finance Secretary were issued in favour of the concerned contractor whereafter, the excise duty exemption was duly availed. It is admitted by the respondents in their replies that certificates duly verified and countersigned by all the concerned officers including the Finance Secretary were issued in favour of the concerned contractor whereafter, the excise duty exemption was duly availed. The thrust of the respondents RWSRP and the Water Resources Department in their reply was that the concerned officials issued the exemption certificates wrongly and irregularly. Nevertheless, the precise nature of the so-called irregularity in issuance of the exemption certificates has neither been mentioned in the relevant clause of the CAG's report nor have the respondents discussed/elaborated the same in their pleading. Nevertheless, the precise nature of the so-called irregularity in issuance of the exemption certificates has neither been mentioned in the relevant clause of the CAG's report nor have the respondents discussed/elaborated the same in their pleading. The so called objection raised from the office of the CAG on the strength whereof, the recovery notices were issued and the response of the Water Resources Department, is reproduced herein-below for ready reference:- ^^dk;kZy; vf/k'kklh vfHk;Urk ty lalk/ku [k.M f}rh; guqekux<+ egkys[kkdkj fujh{k.k Áfrosnu vof/k 4@05 ls 3@06 ds vuqŒ la[;k 1 Hkkx&2 ^^v^* dh vuqikyuk vuqPNsn dk laf{kIr fooj.k dk;kZy; }kjk ÁLrqr vuqikyuk v/khu eqŒvŒ ys[kk vfHkŒ dh dh ijh{kk dh fVIi.kh fVIi.kh fVIi.kh mRikn 'kqYd NwV dk Áek.k ¼1½ DykWt 13-3 esa ftu djksa vkSj i= vfu;fer :i ls tkjh ÁHkkjksa dk mYys[k fd;k x;k gS] djus esa foQy jgus ls ftudks lfEefyr djrs gq, nj ifj;kstuk dh ykxr esa deh ÁLrkfor dh tkuh Fkh ds dj ,oa dk vHkko jkf'k :i;s 70-09 ÁHkkj lkekU;r% fuekZ.k dk;ksZ ij tks ys[kkA fuft QeksZ@laosndksa ls djok;s tkrs vkjŒMCY;wŒ,lŒvkjŒihŒ ls gSA mu ij yxus okys dj ,oa ÁHkkj gS lEcfU/kr dk;ksZ chds&6 o u fd mRikn 'kqYd dh NwVA chds&7 dh vfHkys[kksa dh tkap ¼2½ 13-3 ds uhps vafdr uksV ds esa ik;k fd fcM ds Hkkx lh ds vuq:i ftl NwV dk mYys[k fd;k vkbVe 13-3 esa vafdr x;k gS] og dj ds :i esa ÁkfIr u mYys[kkuqlkj fcMj }kjk gksdj dsUnz }kjk jkT; dks nh tkuh ÁLrqr dh tkus okyh njksa esa okyh NwV gS] tks vÁR;{k :i ls ÁkIr lHkh VsDl] M~;wVht ,oe~ dh tk ldrh gS rFkk ;g NwV fo'o ysoht lfEefyr ekuh tkosxhA cSad ds ØsfMV@_.k ls gksus okys] blh vuqlkj ,LVhesV cuk, leLr dk;ksZ ij Lor% ykxw gSA ;g NwV bl dk;Z fo'ks"k ds fy, ugha blds vfrfjDr vkbVe 13-3 gS rFkk bl NwV dh fujarj miyC/krk ds uhps fn;s x;s uksV esa Hkh fuf'pr ugha gS D;ksafd uksV esa mYys[k fd;k x;k Fkk fd laosnd dks ;g funsZ'k fn;k x;k gS fd ;ksX;rk lwpuk ds lkFk layXu og ,slh miyC/k NwV ij fopkj dj Ái= esa] fcM ds lkFk gh lHkh ldsxk ,oa NwV ugha miyC/k gksus ij oLrqvksa dk uke o ek=k dk jkT; ljdkj {kfriwfrZ ugha djsxh rFkk mYys[k fcMj }kjk fd;k og O;fDrxr :i ls mRrjnk;h gksxkA tkosxk] ftu oLrqvksa ij fcMj vr% NwV dk ykHk vÁR;{k :i ls }kjk NwV dk ykHk ÁkIr fd;k fy;k tkuk Fkk tks fd fy;k x;k gS] tkuk gksA ysfdu nksuksa dk;ksZ D;ksafd nj Lohd`r gksrs gh QeZ }kjk ds fcMj }kjk bl fooj.k ds Áek.k i= gsrq vkosnu fd;k x;kA fcuk gh fufonk vfHkys[k mYys[kuh; gS fd dsUnz ljdkj dk ;g foHkkx dks ÁLrqr fd,A ftlls uksfVfQds'ku la[;k 108@95 lhŒbZŒ fl) gksrk gS fd laosndksa }kjk fnukad 28-05-95] ftlds vuqlkj fo'o lHkh VsDl ,oe M~;wVh dks cSad ls foRr iksf"kr ifj;kstukvksa esa lfEefyr djrs gq, njsa fuekZ.k ds dke vkus okyh oLrqvksa] tks ÁLrkfor dh xbZ vkSj mRikn fd dsUnzh; mRikn VsjhQ dh ch lwph 'kqYd dk ykHk ugha ysuk pkgrs esa lfEefyr gS] bu oLrqvksa dks mRikn FksA ysfdu fufonk Lohd`fr 'kqYd ls eqDr fd;k x;kA ;g mijkUr lhesaV o LVhy ij uksfVfQds'ku loZfofnr ,oa Ádkf'kr gS mRikn NwV ÁkIr djus ds fy, ftldk fd bl Js.kh ds vkosnu ÁLrqr fd;k x;k] QeksZ@laosndks dks fuf'pr :i ls ftl ij funs'kd ¼rduhdh½ bldk Kku gksxkA O;; vksŒ,lŒMhŒ flapkbZ pwafd fuekZ.k dk;Z ewY; ls jktLFkku t;iqj }kjk nksuksa djok;s tk jgs gSA vr% fuekZ.k lkexzh iSdstksa ds fy,] NwV ÁkIr djus foHkkx }kjk vkiwfrZ ugha dh tkrh gSA gsrq Áek.k i= tkjh fd, x,A bl fLFkfr esa mRikn 'kqYd ÁR;{k :i bl NwV dk ykHk jkT; ljdkj ls dVkSrh laHko ugha gS] D;ksafd QeZ ¼dks LFkkukarfjr ugha fd;k½ fuekZ.k lkexzh [kqys cktkj ls Ø; x;kA tkjh Áek.k&i= vuqlkj dh tkosxh vko';d ugha gS fd mlesa nksuksa dk;ksZ ds fu"iknu gsrq bldks NwV ÁkIr gqbZ gks ,slh fLFkfr esa 17180 eSfVªd Vu ¼3]43]606 foHkkx lkexzh dh xq.koRrk dh tkap cSx½ lhesaV dh vko';drk dj ldrk gS] u fd mRikn 'kqYd dh FkhA ftl ij 400@& :i;s NwV dhA vr% ,slh fLFkfr esa lkexzh Áfr eSfVªd Vu mRikn 'kqYd] ij mRikn 'kqYd dh NwV dh ÁkfIr bl ij 2 Áfr'kr dh nj ls lqfuf'pr djuk laHko ugha gSA f'k{kk vf/kHkkj ls dqy jkf'k vr% ,slh fLFkfr esa DykWt 13-3 ds 70]09]440@& :i;s dk ykHk mn~ns'; ds vuq:i QeksZ }kjk nj bl nksuksa QeksZ dks ÁkIr gksxkA NwV dk fopkjkFkZ j[krsa gq, gh dh xbZ foHkkx }kjk bl Áek.k&i= dks Fkh] ftldk vÁR;{k :i ls dk;Z dh vuko';d tkjh djus ,oa NwV ykxr ij ÁHkko iM+k gSA ds ykHk dks jkT; ljdkj dks fcM MkD;wesaV ds Ák:i esa] laosnd ¼LFkkukarfjr ugha djus dk½ lkexzh dh ek=k dk mYys[k ugha Áko/kku vuqc/ak esa lfEefyr fd;k x;k tks fd NwV ugha ÁkIr djus ugha fd;k x;kA dk Áek.k ugha gS] blds vfrfjDr ek=k bl Ádkj Vs.Mj Lohd`fr ds dk vfUre fu/kkZj.k ,Eiyks;j }kjk gh ckn ÁkIr vkosnu ds vk/kkj fd;k tkuk Fkk rFkk uksV ds ij NwV dk Áek.k&i= ÁkIr funsZ'kkuqlkj ,slh ek=k dk mYys[k] nj djus ls laosndksa dks jkf'k 70 ÁLrkoksa ds lkFk@le; djus dk 09 yk[k :i;s dk vns; ykHk mYys[k u gksdj ;g funsZf'kr fd;k nsdj] jkT; dks"k dks gkfu x;k gS fd vko';d Áek.k i= tkjh igqapkbZA djokus gsrq fu/kkZfjr Ái= esa lwpuk,a ÁLrqr djsxkA rn~ukuqlkj laosnd@QeZ }kjk i`Fkd ls fn;s x;s vkosnu ij jkT; ljdkj }kjk NwV dk Áek.k i= tkjh fd;k x;k gSA tks fd mfpr ,oa oS/k gSA uksV ds vuq:i mDr DykWt dh vuqikyuk lqfuf'pr ugha gksus dh fLFkfr esa ^^nj ÁLrko djrs gq, jn~n dj fn;k tkosxk^^ tcfd mPp Lrjh; lfefr }kjk bl Ádj.kksa dks Lohd`r fd;k x;k gSaA vr% ;g ekuuk mfpr gS fd NwV ij fopkj djus ds mijkUr gh njsa ÁkIr gqbZ gSa rFkk rnukuqlkj NwV ds fy, Áek.k&i= Hkh mPp Lrjh; lfefr }kjk tkjh fd;k x;k gSA blh ifjis{; esa fu;ekuqlkj gh Bsdsnkj }kjk mRikn 'kqYd dh NwV yh xbZ gSA vr% iSjk fujLr djus dk Je djkosaA** 12. Apparently, the certificates issued in favour of the respective petitioner under Clause 13.3 of the Tender conditions bear signatures of the Secretary, Irrigation Department and Director (Technical) cum OSD, Irrigation, Rajasthan and were countersigned by the Finance Secretary as well. The CAG, whilst drawing up the questioned audit para, cast a grave stigma against the erring officials of the department who were responsible for causing loss to the State Government and undue gain to the contractors. Manifestly, these officials would include the Additional Chief Engineer and all other members of the High Level Committee and so also, the Finance Secretary concerned who countersigned the same. 13. On the previous date of hearing, a pertinent query was put to the learned AGC Shri Rajpurohit to apprise the Court regarding the details of the departmental or other action if any ever initiated against the officials who while issuing the requisite certificates committed the alleged irregularities as per the CAG's report. However, Shri Rajpurohit candidly conceded that no such action was ever taken nor is contemplated. Manifestly thus, the very foundation of the audit para under which, the recoveries were proposed from the petitioners has been rendered redundant. Furthermore, the highlighted portion of the audit para gives an indication that the CAG was even not satisfied with the nonintroduction of a suitable condition in the contracts that the benefit of the excise duty exemption should go to the State Government. Manifestly, as no such condition was incorporated in the contracts, then the bidders would definitely be entitled to claim exemption on basis of the Central Government's notifications. The highlighted portion of the CAG report indicates that the auditors were trying to tweak/modify the conditions of the contracts to the prejudice of the bidders and that too after the works under the contracts had been concluded. Manifestly, this recommendation, apart from being absolutely illegal, unjust and arbitrary, reflects of total lack of application of mind on part of the CAG. Furthermore, as stated above, the CAG shrugged its hands off the controversy and filed an application for deleting its name from the array of the respondents. The other respondents in their reply, have not been able to pin-point or elaborate the nature of the irregularity/misconduct if any, committed by the officials concerned while issuing the excise duty exemption certificates to the respective petitioners in accordance with Clause 13.3 of the Contract. The other respondents in their reply, have not been able to pin-point or elaborate the nature of the irregularity/misconduct if any, committed by the officials concerned while issuing the excise duty exemption certificates to the respective petitioners in accordance with Clause 13.3 of the Contract. In absence of the alleged irregularity being demonstrated/highlighted, this Court is persuaded to pose a serious question mark on the objectivity/sustainability of the CAG's audit para and the recovery proposed thereunder. Furthermore, manifestly, if the objection was to be carried out to its logical conclusion then, the requisite follow up action was required to be taken against the delinquent officials who issued the exemption certificates. However, as has been stated above, the department seems to have washed its hand off the CAG's objection and no action is proposed to be taken against the officials who issued the certificates and the Secretary/Additional Secretary of the Finance Department who countersigned the same. In addition to the above fatal infirmities and shortcomings in the impugned action, it is further evident that before proceeding to undertake the questioned recovery of the excise duty exemption which had been sanctioned long back, manifestly no notice or opportunity of hearing was ever provided to the affected parties i.e. the petitioners herein. Thus, the impugned action suffers from gross violation of the principles of natural justice as well and hence, cannot be sustained. 14. In this background, the endeavour of the department to effect recovery from the petitioners who were rightfully granted excise duty exemption under Clause 13.3 of the terms of contract, Instructions to Bidders and the Central Government circulars referred to supra, can be termed as nothing short of an exercise in arbitrariness and highhandedness and deserves to be deprecated and struck down. 15. Hence, these writ petitions deserve to be and are hereby allowed. The impugned action of recoveries proposed to be made from the petitioners towards the excise exemption claimed by them against the subject works is hereby quashed and struck down. The pending bills of the petitioners, if any, with the admissible excise exemption shall be cleared by the respondents within a period of four weeks from today. Stay applications are disposed of.