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Showing 121 to 140 of 189 Records
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1989 (10) TMI 69
Issues:
1. Imposition of penalty by the Collector of Customs and appeal process before the Customs, Excise & Gold (Control) Appellate Tribunal (CEGAT).
2. Requirement of pre-deposit of an amount for entertaining the appeal.
3. Allegation of violation of principles of natural justice by the Collector of Customs.
4. Availability of alternative remedy of appeal and failure to comply with pre-deposit condition.
5. Application of extraordinary jurisdiction under Articles 226/227 of the Constitution of India.
6. Comparison with other cases where principles of natural justice were not complied with.
Analysis:
1. The judgment involves the imposition of penalties by the Collector of Customs, leading to an appeal process before the CEGAT. The Collector directed to confiscate goods and imposed a penalty of Rs. 10 lakhs under the Customs Act, 1962. The petitioner appealed, but the CEGAT required a pre-deposit of Rs. 2,50,000 as a condition for entertaining the appeal.
2. The CEGAT's requirement of pre-deposit for entertaining the appeal was considered just and proper. The Tribunal insisted on compliance with the law, and failure to deposit the amount led to the rejection of the appeal under Section 129-E of the Customs Act.
3. The petitioner alleged a violation of natural justice by the Collector of Customs, claiming lack of opportunity to be heard. However, the court found no evidence of such violation based on the show cause notices served to all respondents and the proceedings followed by the Collector.
4. The judgment emphasized the availability of an alternative remedy of appeal and the importance of complying with its conditions. The petitioner's failure to deposit the required amount rendered the statutory remedy infructuous, barring the petitioner from invoking the extraordinary jurisdiction of the High Court.
5. Regarding the application of extraordinary jurisdiction under Articles 226/227 of the Constitution of India, the court cited precedents and emphasized that where statutory remedies are available, the High Court should not intervene unless there is a clear violation of rights or principles of natural justice.
6. The judgment compared the petitioner's case with others where principles of natural justice were not complied with. It highlighted that failure to avail of the statutory remedy and fulfill its conditions precludes the petitioner from seeking relief through extraordinary jurisdiction.
In conclusion, the petition was rejected as the court found no substance in the claims made by the petitioner, emphasizing the importance of exhausting statutory remedies before seeking extraordinary relief.
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1989 (10) TMI 68
Issues:
1. Recovery of excise duty and penalty.
2. Legality and validity of the order passed by the Tribunal.
3. Challenge to the order for pre-deposit of amount.
4. Extension of ad interim relief.
5. Calculation and deposit of interest amount.
Analysis:
1. The petitioners, a partnership firm engaged in manufacturing man-made fabrics, were served a show cause notice for recovery of excise duty amounting to Rs. 32,43,576.09 ps. The Collector directed payment of the duty and imposed a penalty of Rs. 15,00,000/-. The petitioners challenged this order before the Tribunal, which directed a pre-deposit of Rs. 20,00,000/- instead of the total amount. The petitioners contested the Tribunal's order, arguing it was unjust. However, the Court found that the Tribunal had considered all relevant facts and circumstances, thus rejecting the petitioners' claim under Article 227 of the Constitution of India.
2. The petitioners also sought an extension of the ad interim relief granted earlier to challenge the Tribunal's order before a superior forum. The Court acknowledged the need to balance granting time for approaching a superior forum with the consequences of fiscal statutes. The Court highlighted the importance of not allowing powerful economic interests to misuse the legal system to the detriment of society. Ultimately, the Court decided to impose conditions on the petitioners, directing them to calculate and deposit interest at the rate of 15% per annum on the amount of Rs. 16 lakhs for two months, with the deposited interest being non-refundable and non-adjustable against any future duty payable.
3. The Court emphasized that granting time without conditions could lead to a situation where the petitioner benefits from interest without any risk, creating an incentive for frivolous litigation. To prevent such misuse, the Court directed the petitioners to deposit the calculated interest amount by a specified date, failing which the ad interim relief would stand vacated automatically. This decision aimed to ensure that the legal process was not exploited for personal gain at the expense of the society.
4. In conclusion, the Court rejected the petition but allowed the ad interim relief to remain in operation subject to the petitioners' compliance with the directed conditions. The order highlighted the importance of upholding the integrity of the legal system and preventing its manipulation for individual profit. By imposing conditions on the petitioners, the Court aimed to strike a balance between providing access to justice and safeguarding against potential abuse of legal processes for personal gain.
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1989 (10) TMI 67
Interpretation of Notification Nos. 59/83 and 126/84 - Held that:- Considering the language of the notification the result of reading the First Schedule along with the relevant notifications is that imports of timber into India from most countries is charged to effective basic customs duty as per the tariff in the Schedule whereas in respect of imports from Burma, Nepal, Bhutan and Bangladesh, the rate of effective basic duty is nil. The position, therefore, is that the article in question is liable to two or more different rates of effective basic duty based on the country of origin for the import. It, therefore, follows that the auxiliary duty is to be determined with reference to the higher of the two effective rates of duty. Allow the appeals and restore the orders of the Assistant Collector rejecting the claims of refund filed by the assessees.
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1989 (10) TMI 66
Issues Involved:
1. Validity of the detention order under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974.
2. Non-application of mind by the detaining authority.
3. Legitimacy of the confessional statements and their retraction.
4. Adequacy of evidence and procedural compliance by the authorities.
Issue-wise Analysis:
1. Validity of the Detention Order:
The petitioner, the wife of the detenu, filed a writ of habeas corpus under Article 226 of the Constitution of India to challenge the detention order dated 17-5-1989, served on 29-6-1989, under Sections 3(i) and (iii) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974. The detenu was arrested for alleged complicity in offenses under Section 85 of the Gold Control Act and Section 135 of the Customs Act, 1962. The petitioner argued that the detention order lacked evidence of the detenu's complicity in the alleged offenses and that the order was vague and indefinite.
2. Non-application of Mind by the Detaining Authority:
The petitioner contended that the detaining authority did not apply its mind to the material facts, including the medical report and letters retracting the detenu's statements, which were not placed before the detaining authority. The court emphasized the necessity for the detaining authority to file an affidavit to rebut allegations of non-application of mind. The affidavit filed by Shri Kuldip Singh, Under Secretary, was deemed insufficient as he did not handle or process the case. The court referenced its earlier decision in M.P. No. 829 of 1989, stating that the detention order could not be sustained due to the lack of justification for not filing the detaining authority's affidavit.
3. Legitimacy of the Confessional Statements and Their Retraction:
The detenu's confessional statements under Section 108 of the Customs Act were allegedly obtained under duress and retracted through letters dated 8-4-1989 and 11-4-1989. The court noted that the department's denial of receiving these letters was insufficient without an affidavit from the concerned officer, Shri Jaiswal. The court found that the retraction letters were material documents that should have been placed before the detaining authority, indicating a serious lapse on the part of the department.
4. Adequacy of Evidence and Procedural Compliance by the Authorities:
The court examined the evidence presented, including the statements of the detenu and co-detenu, and found that the detention order was primarily based on the detenu's confessional statements. The court observed that the statements of co-detenu Ramkumar Agrawal and Sagarmal Jain did not implicate the detenu. The court also highlighted procedural lapses, such as the failure to inform the detenu's family about his detention and the non-supply of documents in Hindi, which was the detenu's only known language.
Conclusion:
The court concluded that the detention order was not in accordance with the law due to the non-application of mind by the detaining authority and the failure to place material documents before it. The detention order was quashed, and the detenu was ordered to be released forthwith, provided he was not required to be kept in custody for any other offense. There was no order as to costs.
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1989 (10) TMI 65
Issues Involved:
1. Liability of bituminised water-proof packing paper to excise duty under Tariff Item No. 17.
2. Whether the process of making bituminised water-proof packing paper constitutes "manufacture" under Section 2(f) of the Central Excises and Salt Act, 1944.
3. Applicability of exemption notifications to the classification of the product.
Detailed Analysis:
1. Liability to Excise Duty:
The petitioners, a partnership firm and one of its partners, sought a declaration that bituminised water-proof packing paper should not be subject to excise duty under Tariff Item No. 17 of the Tariff Schedule annexed to the Central Excises and Salt Act, 1944. They also requested an injunction to restrain authorities from levying and recovering excise duty on the said product.
2. Manufacturing Process and Definition of Manufacture:
The core issue was whether the process of creating bituminised water-proof packing paper constitutes "manufacture." The petitioners described the process as bonding two layers of kraft paper using bitumen, arguing that this did not change the paper's character or quality. However, the respondents contended that the process resulted in a new product with distinct characteristics, uses, and a higher market value.
The court examined the definition of "manufacture" under Section 2(f) of the Central Excises and Salt Act, 1944, which includes any process incidental or ancillary to the completion of a manufactured product. The court referred to various precedents, including the Supreme Court's rulings in *Empire Industries Ltd. v. Union of India* and *M/s. Name Tulaman Manufacturers Pvt. Ltd. v. Collector of Central Excise*, which established that "manufacture" involves transforming raw materials into a new product with a distinct name, character, or use.
3. Applicability of Exemption Notifications:
The petitioners argued that Notification No. 184 of 1976, which granted certain exemptions, should influence the classification of the product. However, the court, relying on the Supreme Court's decision in *J.K. Steel Ltd. v. Union of India*, held that notifications could be considered for determining a fiscal statute's entry. Nevertheless, the court concluded that the process of converting kraft paper into bituminised water-proof paper constituted manufacture, making the product liable to excise duty, irrespective of the exemption notification.
Conclusion:
The court found that the process of creating bituminised water-proof packing paper constituted "manufacture" under Section 2(f) of the Central Excises and Salt Act, 1944. The resultant product was distinct from kraft paper in terms of name, character, and use, making it liable to excise duty under Tariff Item No. 17. Consequently, the petition was rejected, and the rule was discharged with no order as to costs. The request for a Certificate for leave to appeal to the Supreme Court was also refused, as no substantial question of law was involved.
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1989 (10) TMI 64
The Supreme Court granted special leave in a case where an appeal was dismissed in default by the Customs, Excise and Gold Control Appellate Tribunal. The Court set aside the Tribunal's order and restored the appeals before it. No costs were awarded. (Citation: 1989 (10) TMI 64 - SC)
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1989 (10) TMI 63
Issues:
1. Quashing of show cause notice dated 27/29.6.1989 issued by Assistant Collector.
2. Confiscation of goods under Section 113(d) of the Customs Act, 1962.
3. Amendment of petition to challenge the adjudication order.
4. Interpretation of provisions related to export of goods under the Customs Act.
5. Application of Import and Export Policy, 1988-91 to the case.
6. Re-exportation of photographic films (colour) imported under Open General Licence.
7. Security for payment of any amount of duty or charges due to respondents.
8. Direction for re-exportation of goods without payment of duty.
Analysis:
1. The petitioner sought to quash a show cause notice issued by the Assistant Collector regarding the attempted export of photographic films imported under Open General Licence, which was alleged to be in violation of the Export (Control) Order, 1977.
2. An adjudication order was made confiscating the goods under Section 113(d) of the Customs Act, 1962, but allowing the exporter to clear the goods for export on payment of redemption fine and customs duty, along with imposing personal penalties under Section 114 of the Act.
3. The petitioner sought to challenge the adjudication order based on a letter from the Chief Controller of Imports & Exports stating that re-export of goods imported under Open General Licence was prohibited, while citing instances where similar goods were re-exported without duty payment by Bombay Customs.
4. The judgment analyzed provisions of the Customs Act related to entry of goods for export, clearance for exportation, and conditions for export without payment of import duty, emphasizing the requirements for re-exportation of goods not classified as prohibited.
5. The court examined the applicability of the Import and Export Policy, 1988-91 to the case, concluding that the Export (Control) Order, 1988 did not apply to the photographic films in question, which were allowed for import by all persons for actual use, stock, and sale.
6. Regarding the re-exportation of the goods, the court noted that there were no provisions restricting the sale of imported goods within the country and questioned the validity of the clarification from the Chief Controller of Imports & Exports, highlighting safeguards under the Foreign Exchange Regulation Act, 1973.
7. The court accepted an undertaking from the petitioner's directors to secure the interests of the respondents by not disposing of certain property without court permission, ensuring that the property could be used as security for any duty or charges found due in the petition.
8. Ultimately, the court directed that the petitioner be allowed to re-export the goods without payment of duty, subject to the provisions of the Customs Act, noting that the decision was a prima facie view pending final determination in the petition.
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1989 (10) TMI 62
Issues Involved:
1. Legality of the order passed by the Metropolitan Magistrate without notice to the petitioner.
2. Implications of the order on the petitioner's rights and principles of natural justice.
3. Requirement of notice and hearing under Section 110 (1-A) of the Customs Act.
4. Application of principles of natural justice in judicial and administrative proceedings.
Issue-Wise Detailed Analysis:
1. Legality of the order passed by the Metropolitan Magistrate without notice to the petitioner:
The petition challenges the legality of an order dated 25th April 1989, passed by the Metropolitan Magistrate, New Delhi, on an application by the Customs Department under Section 110 (1-A) of the Customs Act, 1962. The petitioner contends that the order is inherently defective as it was passed without any notice to him, thereby prejudicially affecting his rights and denying him an opportunity to be heard.
2. Implications of the order on the petitioner's rights and principles of natural justice:
The petitioner was arrested following the recovery of contraband goods from his premises and faced prosecution under Section 135 of the Customs Act. He argued that the order for preparing an inventory and disposing of the seized goods without his notice would severely impact his defense during the trial and adjudication proceedings. The petitioner emphasized that the principle of natural justice, specifically the rule of audi alteram partem (hearing both parties), should have been observed.
3. Requirement of notice and hearing under Section 110 (1-A) of the Customs Act:
The petitioner relied on the Supreme Court judgments, including Smt. Maneka Gandhi v. Union of India (AIR 1978 SC 597) and Harbans Lal v. M.I. Wadhawan (AIR 1987 SC 217), to argue that even in the absence of an express provision for notice, the principles of natural justice necessitate such a requirement. The court agreed, noting that the disposal of case property under Section 110 (1-A) of the Customs Act has serious implications for the accused, and thus, notice and hearing are essential.
4. Application of principles of natural justice in judicial and administrative proceedings:
The court highlighted that the principles of natural justice apply to both judicial and administrative proceedings. It referred to various judgments, including Olga Tellis v. Bombay Municipal Corporation (AIR 1986 SC 180) and A.R. Antulay v. R.S. Nayak (1988) 2 SCC 602, to reinforce that any order affecting a party's rights must be preceded by notice and an opportunity to be heard. The court found that the Customs Department's application under Section 110 (1-B) of the Customs Act, which implicitly aimed at disposing of the seized goods, required notice to the petitioner.
Conclusion:
The court concluded that the order passed by the Metropolitan Magistrate without notice to the petitioner was unsustainable and vitiated due to the lack of an opportunity for the petitioner to be heard. The petition was allowed, and the order dated 25th April 1989 was set aside. The court directed that the application under Section 110 (1-A) of the Customs Act be taken up afresh by the concerned court after issuing notice to the petitioner. The trial court was instructed to proceed further in light of the observations made in the judgment, ensuring compliance with the principles of natural justice.
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1989 (10) TMI 61
Issues: Bail granted to the first respondent challenged by Assistant Collector of Customs.
The judgment involves the challenge to the grant of bail to the first respondent by the Additional Chief Judicial Magistrate in connection with a crime under Section 135 of the Customs Act, 1962. The Customs Authorities arrested the first respondent along with others for attempting to smuggle gold biscuits into India. The Assistant Collector of Customs challenged the bail order on various grounds, including the risk of the first respondent absconding, his involvement in a well-planned smuggling scheme, and his past record of jumping bail in a previous case. The Additional Central Government Standing Counsel argued that releasing the first respondent on bail could jeopardize the investigation as the contraband gold had not been located, and he might have connections to other individuals involved in the smuggling operation.
The defense counsel for the first respondent contended that the lower court had considered all relevant points before granting bail. He cited a Supreme Court decision to support the argument that bail cannot be denied indefinitely, even in cases of economic offenses. However, the High Court judge, after reviewing the circumstances and arguments presented, found the risk of the first respondent jumping bail to be a significant concern. The judge noted that the first respondent had a history of absconding after being released on bail in a previous customs case. The judge also highlighted the substantial value of the gold biscuits involved in the current case and the first respondent's alleged connections with influential individuals both in India and abroad. The judge concluded that considering these factors, it was not appropriate to release the first respondent on bail at that stage.
In the detailed analysis, the judge emphasized the importance of preventing the first respondent from absconding, especially given his past behavior and the serious nature of the allegations against him. The judge noted that the Customs Authorities had issued a 'Red Alert Notice' for the first respondent's arrest, indicating the seriousness of the situation. The judge also questioned the lower court's reasoning in granting bail without thoroughly examining all relevant aspects, including the potential risks and connections of the first respondent. Ultimately, the judge quashed the bail order, concluding that it was not the appropriate time to release the first respondent given the circumstances of the case and the concerns raised by the prosecution.
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1989 (10) TMI 60
Issues:
Classification of manufactured items under Central Excise Tariff, challenge to show cause notice and orders of authorities, jurisdiction of High Court under Article 226.
Analysis:
The petition was filed to challenge a show cause notice, an order by the Collector of Central Excise, and a decision by the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT). The petitioner, a manufacturing company, sought classification of certain items under T.I. 68 to avail exemption under specific notifications. The Assistant Collector classified the items under T.I. 19I(b) for duty payment, upheld by the Collector (Appeals) and CEGAT. The Tribunal considered the manufacturing process as valid and upheld the classification.
The High Court noted that the writ petition was belated and lacked explanation for the delay, thus rejecting the challenge to the Tribunal's decision. Additionally, the Court held that since the Tribunal's decision was based on proper evidence and law, the High Court could not review it under writ jurisdiction. The evidence showed the manufacturing of bed sheets, covers, and linen by the petitioner, falling under T.I. 19, which was upheld by the authorities.
Furthermore, the Court stated that the challenge to the show cause notice was consequential to the classification matter decided earlier. The petitioner could have appealed under Section 35-B of the Central Excises and Salt Act, but it was unclear if such an appeal was filed. The Court found no merit in the petition and summarily rejected it, citing various grounds including the finality of the Tribunal's decision and the availability of appeal options under the Act.
Therefore, the High Court dismissed the petition, emphasizing the importance of timely challenges, the finality of tribunal decisions, and the proper appeal procedures under the relevant law.
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1989 (10) TMI 59
Issues involved: Failure to file return, improper classification by Excise Department officers, misuse of quasi-judicial powers, unsatisfactory manner of conducting duties.
In this judgment, the High Court of Judicature at Bombay addressed the issue of failure to file a return in a case where the Excise Department officers had improperly classified a product, disregarding decisions of higher authorities. The Court noted the officers' tendency to prioritize revenue collection over proper classification, leading to a lack of discipline and misuse of quasi-judicial powers. The case involved an order by an Assistant Collector classifying a product under a different heading than claimed by the assessee, despite a previous decision in favor of the assessee by the Appellate Collector. Subsequent orders on remand failed to provide adequate reasoning and ignored relevant decisions, indicating incompetence and indiscipline among the officers.
The Court found the conduct of the officers unacceptable and lacking in proper understanding of legal precedents. Instead of a simple remand, the Court decided to quash the latest order and directed the Department to assign the matter to a competent officer for a proper decision. Additionally, the Court ordered the Department to pay costs to the petitioner as compensation for harassment, and directed the levy of excise duty based on the classification urged by the assessee and supported by the Appellate Collector's decision. The judgment emphasized the importance of upholding proper procedures and ensuring competent behavior from officers performing quasi-judicial functions within the Excise Department.
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1989 (10) TMI 58
Issues Involved:
1. Classification and excisability of Benzyl Methyl Salicylate (BMS).
2. Marketability as a criterion for excise duty.
3. Compliance with judicial directions and application of Supreme Court precedents.
Issue-Wise Detailed Analysis:
1. Classification and Excisability of Benzyl Methyl Salicylate (BMS):
The petitioner-company manufactures Salbutamol Sulphate and Benzyl Methyl Salicylate (BMS), which is an input for Salbutamol Sulphate. BMS is not sold in the market and is exclusively used for manufacturing Salbutamol Sulphate. The petitioner classified BMS as 'non-excisable' in their classification list for 1986-87. However, the Superintendent of Central Excise issued show cause notices classifying BMS under sub-headings 2942.00 and 2913.00, leading to an adjudication order that classified BMS under "other organic compounds" and held it as excisable. This order was challenged, and the court remanded the matter for a fresh order, which was again challenged on similar grounds.
2. Marketability as a Criterion for Excise Duty:
The main contention revolves around whether BMS is a marketable commodity, which is essential for attracting excise duty. The Assistant Collector's de novo order reiterated that marketability is not a criterion for classification under the Central Excise Act, relying on Rule 2(a) of the Rules of Interpretation. The petitioner argued that this stance contradicts Supreme Court decisions, which emphasize that marketability is crucial for determining excisability. The Supreme Court in multiple cases, including Union of India v. Delhi Cloth Mills, Union Carbide v. Union of India, and Geep Industrial Syndicate v. Union of India, has held that goods must be marketable to attract excise duty.
3. Compliance with Judicial Directions and Application of Supreme Court Precedents:
The petitioner argued that the Assistant Collector's order defied the High Court's earlier direction and Supreme Court precedents by not considering the marketability test. The Assistant Collector failed to reference the Supreme Court decisions cited by the petitioner, leading to a conclusion that the adjudicating authority did not judiciously apply the law. The High Court emphasized that marketability remains a time-honored test for excisability, even for transient items captively consumed in manufacturing other products. The court noted that the Assistant Collector's order was a replica of the previous order, ignoring the High Court's directive and Supreme Court rulings.
Conclusion:
The High Court found that the Assistant Collector did not judiciously apply the law and failed to consider the marketability of BMS, as required by Supreme Court precedents. The court quashed the impugned order, directed the Department to refund the duty paid by the petitioner on BMS, and awarded costs to the petitioner. The court reiterated that marketability is an essential criterion for excisability, and the Department failed to provide evidence of BMS's marketability. The High Court's decision underscores the importance of adhering to judicial directions and established legal principles in excise matters.
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1989 (10) TMI 57
The High Court dismissed the writ petition filed by M/s. Ganesh Tobacco Company challenging the order of the Collector (Appeals) regarding the calculation of excise duty on branded chewing tobacco. The Tribunal directed the Assistant Collector to determine the tax liability based on the value of the tobacco minus the packing material cost, divided by the total weight of all packets. The Assistant Collector was also instructed to decide on the refund entitlement of the petitioner.
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1989 (10) TMI 56
Orders of detention passed 'with a view to preventing the detenu from abetting the smuggling of goods and dealing in smuggled goods otherwise than by engaging in transporting or concealing or keeping smuggled goods'
Held that:- Taking into consideration the allegations made in the grounds of detention and in the counter-affidavit and it appears that in the names of the (said) two firms huge amount of export duty has been evaded and the imported goods, which have been allowed to be cleared, have been sold in the market. We are unable to accept the contention made on behalf of the detenu that the goods were cleared and sold under the orders of the High Court. It has been rightly observed in the impugned order of the High Court that, surely, the High Court did not permit the detenu to sell the goods in the market. It may be that a part of the imported goods has not been allowed to be cleared and stands forfeited to the Government, but that is no ground in favour of the detenu. The Government may realise a part of the duty by selling those goods, but that is neither here nor there. The fact remains that the detenu got the goods cleared and sold the same in the market. We find no reason not to accept the contention of the respondents that the licences were procured by the detenu with a view to importing the goods duty free and selling the same in the market and thereby making a huge profit to the loss and detriment of national economy.
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1989 (10) TMI 55
Whether the Collector of Customs had exceeded his jurisdiction in confiscating the goods and imposing penalty for the first time in exercise of his revisional jurisdiction under Section 130(2) of the Act?
Held that:- When the Collector of Customs could confiscate the goods and impose penalties only in exercise of his original jurisdiction under Section 122 read with Section 124 of the Act, surely, the appellant had a right of appeal against such confiscation and imposition of penalty. At this stage, we may notice a very significant fact that in the impugned order of the Collector dated November 14,1979, it has been specifically stated at the very outset that an appeal against the order lies to the Central Board of Excise and Customs, New Delhi, within three months from the date of its despatch. It cannot, therefore, be said that the appellant was misled, as the order was purported to have been passed by the Collector of Customs in exercise of his revisional jurisdiction. The appellant, however, did not avail itself of its right of appeal under Section 128(a) of the Act and, accordingly, its complaint in that regard is not justified. Appeal dismissed.
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1989 (10) TMI 54
Whether the goods packed in the smaller cartons could be sold to the wholesale buyer in the course of wholesale trade at the factory gate without the outer carton in which the number of smaller cartons were packed?
Held that:- the correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing, which is primarily done or mainly done for protecting the goods, and not for making the goods marketable should not be included.
In the instant case having considered the order of the Tribunal it can be concluded that the Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller cartons are packed. The question is not whether these goods could be so sold, but the question is whether these goods are so sold usually and as such used to become marketable in such manner. In my opinion, there has been a misdirection by the Tribunal on this aspect of the matter. If the above be the true test, then the judgment and the order of the Tribunal must be set aside and the appeal must be allowed and the matter remanded back to the Tribunal to determine afresh this question from the stand point indicated above. Appeal allowed.
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1989 (10) TMI 53
Whether levy of cess on royalty is within the competence of the State Legislature?
Held that:- It is not in dispute that the cess which the Madras Village Panchayat Act proposes to levy is nothing but an additional tax and originally it was levied only on land revenue , apparently land revenue would fall within the scope of entry 49 but it could not be doubted that royalty which is a levy or tax on the extracted mineral is not a tax or a levy on land alone and if cess is charged on the royalty, it could not be said to be a levy or tax on land and, therefore, it could not be upheld as imposed in exercise of jurisdiction under entry 49 List II by the State Legislature.
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1989 (10) TMI 52
Whether section 13AA is in pith and substance, not levying tax on purchase but one levying tax on consignment?
Held that:- Imposition of a duty or tax in every case would not tantamount per se to any infringement of Article 301 of the Constitution. Only such restrictions or impediments which directly or immediately impede free flow of trade, commerce and intercourse fall within the prohibition imposed by Article 301. A tax in certain cases may directly and immediately restrict or hamper the flow of trade, but every imposition of tax does not do so. Every case must be judged on its own facts and its own setting of time and circumstances. Unless the court first comes to the finding on the available material whether or not there is an infringement of the guarantee under Article 301 the further question as to whether the Statute is saved under Article 304(b) does not arise. The goods taxed do not leave the State in the shape of raw material, which change their form in the State itself and there is no question of any direct, immediate or substantial hindrance to a free flow of trade. On the evidence adduced, we are in agreement with the High Court that the challenge to the imposition in the background of Article 301 cannot be sustained and, therefore, no question whether such imposition is saved under Article 304(b) of the Constitution arises.
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1989 (10) TMI 51
Issues:
1. Interpretation of section 16A(6) of the Wealth-tax Act regarding the binding nature of the Valuation Officer's report on the Wealth-tax Officer.
2. Jurisdiction of the Appellate Assistant Commissioner to refer matters to the Valuation Officer.
3. Revisionary powers of the Commissioner under section 25(2) of the Act.
4. Challenge to the Commissioner's order and the jurisdictional aspect of the same.
Analysis:
The judgment involved an application under section 27(3) of the Wealth-tax Act, 1957, seeking a statement of the case from the Appellate Tribunal, Indore Bench, Indore. The case pertained to the valuation of a plot of land for assessment years 1964-65 to 1973-74. The Wealth-tax Officer initially assessed the plot at different rates per square foot for various assessment years. Upon challenge by the assessee, the Appellate Assistant Commissioner set aside the assessments and directed the Wealth-tax Officer to refer the matter to the Valuation Officer for fresh assessment based on proper valuation.
Subsequently, the Wealth-tax Officer, despite obtaining the Valuation Officer's report, did not base the valuation on it for the reassessment. The Commissioner of Income-tax held the Wealth-tax Officer's orders as erroneous and prejudicial to revenue, directing a fresh assessment in conformity with the Valuation Officer's report. However, the Income-tax Appellate Tribunal disagreed, stating that section 16A was not applicable, and the Wealth-tax Officer was not bound by the Valuation Officer's report. The Tribunal quashed the Commissioner's order.
The Department filed a reference application under section 27(1) of the Act, questioning the Tribunal's decisions on the binding nature of the Valuation Officer's report, the applicability of section 16A, and the Commissioner's directive to accept the report. The court analyzed the Wealth-tax Officer's quasi-judicial discretion under section 16A(1) and emphasized that the appellate authority cannot dictate the exercise of this discretion. It cited precedents to establish that the Appellate Assistant Commissioner lacked jurisdiction to refer the matter to the Valuation Officer and that once the Wealth-tax Officer acted on such directions, the order merged with the Appellate Assistant Commissioner's order, precluding revision by the Commissioner under section 25(2).
The court rejected the reference application, stating that the questions raised were covered by previous judgments, particularly M. V. Kibe's case, and did not present any new legal issues. It highlighted that the jurisdictional aspect could be challenged at any stage, emphasizing the non-binding nature of an order issued without jurisdiction. Ultimately, the court held that the reference application did not raise any substantial question of law for its consideration, leading to its rejection.
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1989 (10) TMI 50
Issues involved: Interpretation of revenue expenditure u/s 35D(1)(ii) of the Income-tax Act, 1961 for fees paid to Registrar of Companies for amendment of memorandum and articles of association to increase authorized capital.
Summary:
The reference pertains to the Revenue's query on the allowability of Rs. 7,500 paid to the Registrar of Companies for amending the company's memorandum and articles of association to increase authorized capital as revenue expenditure for the assessment year 1974-75. The Income-tax Officer disallowed the claim, allowing only 1/10th under section 35D(1)(ii). The Commissioner of Income-tax (Appeals) disallowed the entire amount, but the Income-tax Appellate Tribunal allowed the deduction, deeming it as revenue expenditure. The Tribunal's decision was challenged by the Revenue, leading to this reference.
The High Court noted that various High Courts have consistently held such expenditure as capital in nature, citing cases like Mohan Meakin Breweries Ltd., Bharat Carbon and Ribbon Manufacturing Co. Ltd., Bombay Burmah Trading Corporation Ltd., and GrozBeckert Saboo Ltd. The Tribunal relied on decisions of the Allahabad and Bombay High Courts, but the High Court distinguished those cases, emphasizing that expenses for increasing capital are of a capital nature, unlike expenses for amendments to comply with legal changes. Therefore, the High Court held that the Rs. 7,500 expenditure should be treated as capital expenditure, not revenue expenditure.
In conclusion, the reference was answered in favor of the Revenue, stating that the amount paid for amending the memorandum and articles of association to increase authorized capital is not allowable as revenue expenditure. No costs were awarded in this matter.
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9911796707
