1979 (10) TMI 94 - HC - Central Excise

Summary

Issues:
Challenge to Excise duty on alleged losses of Benzene purchased by a rubber factory. Dispute over duty payable on quantity received or despatched. Determination of evaporation losses and duty rates.

Analysis:
The writ petition filed by a rubber factory challenges the Excise duty imposed on alleged losses of Benzene purchased by them. The factory requires Benzene as an ingredient in rubber manufacturing, and the duty is levied on the quantity produced by the manufacturers. The handling of Benzene involves careful transportation to avoid losses by evaporation or spillage. The Excise Act mandates inspection during filling and emptying of railway wagons to account for losses beyond the factory's control.

The duty is payable on the quantity manufactured, not received, as per the Central Excises and Salt Act. Concessions in duty are granted for specified industrial processes, with duty rates set in the First Schedule of the Act. Losses beyond industrial causes are subject to duty without concession. In this case, losses increased significantly, leading to demands for duty payment on the lost quantity.

Judicial precedents establish that Excise duty is on production or manufacture, collectible at a convenient stage without losing its essence. The duty can be levied on the amount despatched by producers and realized from the purchasers. The fixation of evaporation losses at 7.5% was deemed reasonable, with authorities considering the genuineness of losses and making informed decisions.

The duty payable depends on the goods consumed in the specified industrial process, entitling remitted duty only on the quantity used for manufacturing. As the factory did not utilize the disputed quantity in the industrial process, the duty payable remains the tariff duty. The orders passed by the Excise authorities were found to be correct, leading to the dismissal of the writ petition with costs.

In conclusion, the judgment upholds the duty imposition on Benzene losses, clarifies duty payment on manufactured quantity, and justifies the determination of evaporation losses and duty rates based on established legal principles and precedents.