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1990 (11) TMI 164
Issues Involved:
1. Whether the products manufactured and cleared by the plaintiffs prior to 21-5-1976 were not speciality oils exempted from excise duty?
2. Whether the payment of excise duty by the plaintiff for the products cleared prior to 21-5-1976 was not a mistake?
3. Whether the claim for refund by the plaintiff is barred by time?
4. To what relief is the plaintiff entitled?
Issue-Wise Detailed Analysis:
Issue 1: Whether the products manufactured and cleared by the plaintiffs prior to 21-5-1976 were not speciality oils exempted from excise duty?
The court found that the plaintiff had consistently claimed that the products manufactured were speciality oils and not lubricating oils. The Trade Notice No. 175/75 dated 3-10-1975 (Ex. D1) issued by the defendants clarified that certain speciality oils manufactured out of duty-paid base mineral oil were exempt from excise duty, provided their primary function was not lubrication. The court noted that the plaintiff paid excise duty under Tariff Item 11-B by mistake and filed a refund application on 17-5-1977, which was initially rejected but partly allowed upon remand. The court concluded that the products manufactured by the plaintiff were indeed speciality oils exempted from excise duty as per Ex. D1.
Issue 2: Whether the payment of excise duty by the plaintiff for the products cleared prior to 21-5-1976 was not a mistake?
The court held that the payment of excise duty by the plaintiff was made under a mistake. The plaintiff became aware of the exemption only in May 1977 and immediately filed for a refund. The court referenced the Appellate Collector's order, which indicated that the products were speciality oils and not compounded lubricating oils. The court found that the plaintiff's payment of excise duty was a mistake of fact and law, falling under Sec. 72 of the Contract Act, which allows for the recovery of money paid under mistake.
Issue 3: Whether the claim for refund by the plaintiff is barred by time?
The court examined the applicability of Rule 11B of the Central Excise Rules and Sec. 14(2) of the Limitation Act. It was determined that the plaintiff filed the refund application within three years from the date of knowledge of the mistake, which was in May 1977. The court also considered the period during which the plaintiff was pursuing legal proceedings for the refund, from 17-5-1977 to 28-11-1980, and held that this period should be excluded under Sec. 14(2) of the Limitation Act. The court concluded that the suit was filed within the limitation period and was not barred by time.
Issue 4: To what relief is the plaintiff entitled?
The court decreed that the plaintiff is entitled to recover Rs. 2,71,754.40 being the excise duty wrongly paid, with interest at 12% p.a. from 17-5-1977 until the date of decree and at 6% p.a. from the date of decree until realization. The court acknowledged that the plaintiff is liable to pay 1% excise duty under Tariff Item 68, amounting to Rs. 2718/-, which should be deducted from the total claim. Thus, the plaintiff is entitled to Rs. 2,69,036.40 after deduction.
Conclusion:
The suit is decreed in favor of the plaintiff for the recovery of Rs. 2,69,036.40 with interest at 12% p.a. from 17-5-1977 till the date of decree and at 6% p.a. from the date of decree till the date of realization, with pro-costs.
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1990 (11) TMI 163
Issues Involved:
1. Jurisdiction of the Additional Collector of Central Excise.
2. Constitutional validity of Sections 33 and 35F of the Central Excises and Salt Act, 1944.
3. Validity of Rules 4 and 5 of the Central Excise Rules, 1944.
4. Exigibility of goods to excise duty.
5. Inclusion of additional fittings in the cost of trailers for excise duty purposes.
Detailed Analysis:
1. Jurisdiction of the Additional Collector of Central Excise:
The petitioners challenged the jurisdiction of the Additional Collector to issue notices and pass orders under Section 11A of the Central Excises and Salt Act, 1944. The court examined the definition of "Collector" under Rule 2(ii) of the Central Excise Rules, which includes an Additional Collector. The court held that the Additional Collector is deemed to be a Collector by virtue of the definition in the Rules and may exercise the powers of a Collector. This interpretation was supported by the Division Bench of the Madras High Court in the case of Asia Tobacco Co. Ltd. v. Union of India and Another. The court concluded that the impugned orders were passed by an authority with competent jurisdiction and did not suffer from want of jurisdiction.
2. Constitutional Validity of Sections 33 and 35F of the Act:
The petitioners contended that Section 33 of the Act was unconstitutional. The court referred to its previous decision in W.P. No. 5892/1986, where it had held that there was no infirmity rendering Section 33 unconstitutional. Regarding Section 35F, Mr. Narayana did not press the issue during arguments. The court reaffirmed the constitutionality of Section 33 and did not find any grounds to declare it unconstitutional.
3. Validity of Rules 4 and 5 of the Central Excise Rules:
The petitioners argued that Rules 4 and 5 of the Central Excise Rules were ultra vires the provisions of the Act and unconstitutional. Rule 4 allows the Central Board of Excise and Customs to appoint Central Excise Officers and confer powers on them. Rule 5 permits the Collector to delegate his powers to subordinate officers. The court found that these rules were necessary for the effective implementation of the Act and did not constitute excessive delegation of authority. The court rejected the contention that these rules were unconstitutional or ultra vires.
4. Exigibility of Goods to Excise Duty:
The court did not delve into the specific facts regarding the exigibility of goods to excise duty, as these involved disputed facts best left to the appropriate appellate authority. The court noted that the petitioners had bypassed the statutory remedies available under the Act and directed them to file appeals before the Appellate Tribunal within 60 days. The Tribunal was instructed to consider the appeals as if filed within the prescribed time and examine the contentions on the exigibility of goods to tax and the quantum of penalties.
5. Inclusion of Additional Fittings in the Cost of Trailers:
The petitioner, Pramod Amberkar, contended that additional fittings secured from the open market and attached to trailers at the customer's request should not be included in the cost of the trailer for excise duty purposes. The court did not address this issue in detail, as it involved disputed facts. The court directed that this issue be considered by the Appellate Tribunal in the appeals to be filed by the petitioners.
Conclusion:
The petitions were dismissed concerning the jurisdiction of the Additional Collector and the constitutional validity of Sections 33, 35F, and Rules 4 and 5 of the Central Excise Rules. The court directed the petitioners to file appeals before the Appellate Tribunal within 60 days, where the issues of exigibility of goods to excise duty and the inclusion of additional fittings in the cost of trailers would be examined. The court emphasized that it could not decide questions of fact based on the material placed before it and left these to be addressed by the appropriate appellate authority.
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1990 (11) TMI 162
The High Court of Bombay rejected the petition for refund of duty as the price of goods already included excise duty, citing a previous full bench decision. The court preferred to follow the established law despite other cases being distinguishable on facts. The petition was dismissed.
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1990 (11) TMI 161
Issues Involved:
1. Whether printed cartons manufactured by the respondent-Company are products of the printing industry and thus exempt from excise duty under Notification No. 55/75.
2. Whether the end use of the printed cartons is relevant in determining their classification.
3. Whether the cost factor associated with printing affects the classification of printed cartons.
4. Whether the issuance of show cause notices to the respondent-Company was justified.
Issue-wise Detailed Analysis:
1. Classification of Printed Cartons:
The main issue was whether printed cartons are products of the printing industry, exempt from excise duty under Notification No. 55/75. The respondent-Company argued that printed cartons are understood in the trade as products of the printing industry, supported by various references and text books. The process of manufacturing printed cartons involves several stages, including designing, printing, cutting, creasing, and sometimes gluing. The dominant activity in this process is printing, making the final product a product of the printing industry.
The appellants contended that printed cartons are products of the packaging industry and not entitled to the exemption. They argued that the mere fact that something is printed on a carton does not change its essential nature or use as a packaging product.
The learned single Judge allowed the writ petition, holding that printed cartons must be understood in common parlance and not in any technical sense. He referred to literature establishing that printed cartons should be treated as products of the printing industry. However, the appellate court disagreed, stating that a carton remains a carton regardless of printing, and its primary function is packaging. The court concluded that printed cartons are products of the packaging industry.
2. Relevance of End Use:
The learned single Judge observed that the end use of the article was irrelevant in the context of the exemption notification or the tariff item. However, the appellate court held that for cartons, the question of end use does not arise as they have only one use-packaging. The court emphasized that the essential function of a carton is its capacity to contain, which is not altered by printing.
3. Cost Factor:
The respondent-Company argued that the cost involved in printing a carton could be more than the price of the paper or other material used. The learned single Judge considered this factor significant. However, the appellate court held that the cost factor is not determinative. The classification should be based on the primary function and common parlance understanding of the product, not the relative cost of printing.
4. Issuance of Show Cause Notices:
The respondent-Company challenged the show cause notices issued by the appellants, arguing that printed cartons are products of the printing industry and entitled to exemption. The learned single Judge quashed the show cause notices and directed a refund of the excise duty collected.
The appellate court, however, held that the issuance of show cause notices was justified. The court reasoned that the existence of an alternative remedy does not affect the jurisdiction of the court to grant relief in appropriate cases. Since the court found that printed cartons are not products of the printing industry, the issuance of show cause notices was warranted.
Conclusion:
The appellate court allowed the appeal, setting aside the judgment and order of the learned single Judge. The court dismissed the writ petition, holding that printed cartons are products of the packaging industry and not entitled to exemption from excise duty under Notification No. 55/75. The court also upheld the issuance of show cause notices to the respondent-Company.
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1990 (11) TMI 160
Issues:
1. Delay in consideration of the representation made by the detenu against his detention.
2. Whether the delay in considering the representation renders the detention impermissible and invalid under Article 22(5) of the Constitution of India.
Detailed Analysis:
1. The judgment deals with a Writ Petition challenging the detention of the petitioner under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974. The detenu had made a representation against his detention under Article 22(5) of the Constitution of India. The primary issue raised was the delay in the consideration and disposal of this representation, which the detenu argued vitiated his continued detention.
2. The detenu's representation was made on 29th March, 1990, but it was considered and rejected by the Competent Authority only on 22nd May, 1990, resulting in a delay of about 1 month and 24 days. The respondents attempted to explain this delay by stating that comments were sought from the Sponsoring Authority, leading to a chain of delays in obtaining necessary feedback. However, the specific delay of 19 days on the part of the Sponsoring Authority in providing comments was left unexplained.
3. The court emphasized the importance of expeditiously considering detenus' representations, citing a Supreme Court ruling that highlighted the need to explain any delays satisfactorily. The court referenced a similar case where the Supreme Court ruled that unexplained delays in considering representations render continued detention impermissible and invalid under Article 22(5) of the Constitution.
4. Given the unexplained delay of 19 days in this case, similar to the precedent cited, the court concluded that the detenu's constitutional right under Article 22(5) had been infringed. Consequently, the court accepted the petition, quashed the detention order, and ordered the detenu's immediate release if not required in any other case.
5. The judgment underscores the significance of promptly addressing detenus' representations to uphold their constitutional rights and avoid invalidating detention orders due to unexplained delays in the review process.
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1990 (11) TMI 159
Issues Involved:
1. Whether Phosphoric Acid imported for the manufacture of fertilizer was liable to pay auxiliary duty of customs at the rate of 15% or 5% under Notification No. 14 dated 1st March, 1974.
2. The maintainability of the petitions in light of preliminary objections raised by the respondents.
3. The interpretation of the expression "rate of duty of customs specified in the said First Schedule read with any relevant notification of the Government of India."
Detailed Analysis:
Issue 1: Rate of Auxiliary Duty on Phosphoric Acid
The primary issue was whether the auxiliary duty on Phosphoric Acid imported for the manufacture of fertilizer should be 15% under Serial No. 1 or 5% under Serial No. 2 of the Notification No. 14 dated 1st March, 1974. The court examined the relevant provisions of the Indian Tariff Act, 1934, and the Customs Act, 1962. The standard rate of duty for Phosphoric Acid under Item 28(16) was 60% ad valorem, with a preferential rate of 10% if imported from Burma and 30% if imported for the manufacture of fertilizer. The court noted that Section 25 of the Customs Act allows the Central Government to exempt goods from customs duty, and such exemptions do not change the nature of the goods.
The court concluded that the highest rate of duty specified in the First Schedule for Phosphoric Acid was 60%. Therefore, under the Explanation to the Table in the notification, the auxiliary duty should be 15% as per Serial No. 1. The court rejected the petitioner's contention that the duty should be 5% under Serial No. 2, stating that the nature of the goods does not change due to the exemption.
Issue 2: Maintainability of the Petitions
The respondents initially raised several preliminary objections regarding the maintainability of the petitions, including:
- The petitions abated due to the Constitution (Forty-Second Amendment) Act, 1976.
- The petitions were not maintainable due to the availability of an efficacious remedy under the Customs Act.
- The petitions were barred by principles analogous to those in Order 23 Rule 1 of the CPC, 1908, as the petitioners had withdrawn an earlier petition on the same cause of action.
- The conduct of the petitioners in filing a revision application during the pendency of the petitions was questionable.
However, during the hearing, the respondents did not press these preliminary objections, and the court proceeded to consider the main issue regarding the auxiliary duty.
Issue 3: Interpretation of Relevant Notification
The court examined the interpretation of the expression "rate of duty of customs specified in the said First Schedule read with any relevant notification of the Government of India." The petitioner argued that due to the exemption notification, the rate of duty should be considered as 30%, falling under Serial No. 2 of the Table. However, the court held that the goods (Phosphoric Acid) remain the same irrespective of the exemption, and the highest rate of duty (60%) should be considered for determining the auxiliary duty. The court emphasized that exemptions granted under Section 25 of the Customs Act do not create a new item in the First Schedule of the Indian Tariff Act.
Conclusion:
The court agreed with the reasoning of Ahmadi J. in the earlier judgment and concluded that the auxiliary duty on Phosphoric Acid imported for the manufacture of fertilizer should be 15% under Serial No. 1 of the Table in Notification No. 14 dated 1st March, 1974. Both petitions were rejected, and the rule was discharged with costs quantified at Rs. 2500/- in each matter.
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1990 (11) TMI 158
Issues Involved:
1. Whether "steam" generated by the petitioner is liable to excise duty under the Central Excises and Salt Act, 1944.
2. Applicability of Exemption Notification No. 118/75-Central Excises.
3. Determination of "steam" as "goods" under excise law.
4. Whether the demand for excise duty is time-barred.
Detailed Analysis:
1. Liability of "Steam" to Excise Duty:
The petitioner contended that the "steam" generated and shared by four contributing units was not liable to excise duty as it was not "goods" within the meaning of Entry 68 of the Central Excises and Salt Act, 1944. The Assistant Collector, Central Excise, Baroda, concluded that "steam" is "goods" for the purpose of levy of Central Excise duty, as it involves conversion of water into gas/vapour, creating a new substance, similar to the process of making ice.
2. Applicability of Exemption Notification No. 118/75-Central Excises:
The petitioner argued that even if "steam" is considered "goods," it is exempt from excise duty under Notification No. 118/75-Central Excises, as it was manufactured in a factory and intended for use in the same factory. The Court found this contention without substance, stating that Sarabhai Common Services was producing "steam" and distributing it to various companies, thus not qualifying for the exemption.
3. Determination of "Steam" as "Goods":
The Court examined whether "steam" qualifies as "goods" under excise law. The Supreme Court's decision in Union of India v. Delhi Cloth and General Mills was referenced, which held that "goods" must be a new substance known to the market. The Court concluded that "steam" is marketable and known in the market as a source of power and for manufacturing purposes, thus qualifying as "goods."
4. Time-Barred Demand for Excise Duty:
The petitioner contended that the demand for excise duty from 30th April 1975 to 31st March 1980 was time-barred. However, the Court noted that there was an interim order preventing the authority from taking action against the petitioner under the Central Excises and Salt Act, 1944. Hence, the demand was not time-barred as the authority was restrained from issuing a show cause notice during the interim period.
Conclusion:
The Court held that "steam" is "goods" liable to excise duty under Entry 68 of the Central Excises and Salt Act, 1944. The exemption under Notification No. 118/75-Central Excises was not applicable as the steam was not used within the same factory. The demand for excise duty was not time-barred due to the interim order. The petitioner was directed to pay excise duty with 12% interest. The request for a stay on the order was rejected.
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1990 (11) TMI 157
Issues:
1. Determination of export duty for raw wool based on the date of presentation of shipping bills.
2. Interpretation of Section 16 of the Customs Act regarding the relevant date for fixing the rate of duty and tariff valuation.
3. Applicability of Constitutional provisions in the context of export duty levy and exemption.
Analysis:
1. The judgment deals with the issue of determining the export duty for raw wool based on the date of presentation of shipping bills. The petitioners argued that as the shipping bills were presented on a specific date, no export duty was required to be paid. However, the court referred to Section 16 of the Customs Act, which specifies that the rate of duty applicable to export goods is determined based on the date of presentation of the shipping bill or the date of payment of duty. In this case, the petitioners were required to pay the export duty as the relevant date for fixing the rate of duty was the date of presentation of the shipping bills, which coincided with the date the export duty notification was issued.
2. The interpretation of Section 16 of the Customs Act was crucial in this judgment. The court emphasized that the relevant date for determining the rate of duty and tariff valuation for export goods is either the date of presentation of the shipping bill or the date of entry outwards of the vessel by which the goods are exported. The court also highlighted the proviso under Section 16, which deems the shipping bill to be presented on the date of entry outwards of the vessel if presented before that date. This interpretation was supported by a previous judgment that clarified the significance of the date of presentation of the shipping bill in determining export duty.
3. The judgment also addressed the contention raised regarding the constitutionality of the export duty levy and exemption under the Customs Act. The petitioners argued that the order of recovery violated certain Constitutional provisions. However, the court held that the levy of export duty and the grant of exemption under the Customs Act did not contravene the specified Constitutional provisions. It was also noted that the publication of the notification regarding export duty in advance was not a requirement. Therefore, the court dismissed the petitions, ruling that there was no substance in the arguments raised and ordered the discharge of the rule with costs, while vacating the interim relief granted.
This comprehensive analysis of the judgment highlights the key issues regarding the determination of export duty, the interpretation of relevant provisions of the Customs Act, and the constitutional aspects related to the levy of export duty and exemptions.
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1990 (11) TMI 156
Issues: Classification of product under Central Excise Tariff Act, 1985; Appeal against classification order; Refund of duty paid; Interpretation of Rule 173B(3) of Central Excise Rules; Show cause notice validity.
Classification of Product: The petitioner Company initially classified its product under sub-heading 4009.92 of the Central Excise Tariff Act, 1985, which was later approved. Subsequently, a new classification under sub-heading 4009.99 was sought but was rejected by the Assistant Collector. The Company appealed, and the Appellate Collector allowed the appeal, classifying the product under sub-heading 4009.99. The Department's appeal to CEGAT was dismissed due to a delay, making the Appellate Collector's decision final.
Refund of Duty Paid: Following the Appellate Collector's decision, the Company applied for a refund of the excess duty paid under the previous classification. However, the Department did not process the refund but instead issued a show cause notice demanding duty payment under the previous classification. The Company filed a petition under Article 226 of the Constitution of India seeking the refund.
Interpretation of Rule 173B(3): The Department argued that refund could only be claimed if duty was paid under protest as per Rule 173B(3) of the Central Excise Rules. The Court held that this rule did not apply retroactively and that the Department had no grounds to deny the refund under Section 11B(3) of the Act, which mandates refund in such cases.
Validity of Show Cause Notice: The Court found the show cause notice issued by the Department to be misconceived and ordered its quashing. It directed the Department to calculate and refund the excess duty paid by the Company from December 17, 1986, onwards by December 31, 1990. Failure to do so would result in interest payment at 15% per annum until the refund is made. Bonds and bank guarantees provided by the petitioners were discharged, and no costs were awarded in the case.
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1990 (11) TMI 155
Issues: Assessment of assessable value for excise duty on cigarettes based on conversion charges only.
Analysis:
The petitioner company, engaged in cigarette manufacturing, sought to have the assessable value of cigarettes assessed based solely on conversion charges received from another company. The Assistant Collector of Central Excise, however, determined the value by considering the selling price declared by the other company for similar brands of cigarettes. The petitioner challenged this assessment, arguing that including post-manufacturing profit of the other company was impermissible. The petitioner relied on the Supreme Court judgment in Ujagar Prints case, emphasizing that assessable value should include only conversion charges, manufacturing profit, and expenses. The respondents, on the other hand, cited the Jammu & Kashmir High Court judgment, asserting that the taxable event under excise law is manufacture, necessitating assessment based on the actual value of the manufactured goods.
The High Court emphasized that excise duty is triggered by the manufacture of taxable goods, obligating the manufacturer to pay duty based on the actual assessable value of the goods. The Court agreed with the Jammu & Kashmir High Court's view that the manufacturer must be assessed on the actual value of the manufactured goods, not just on job or conversion charges. While acknowledging the petitioner's argument regarding the method of calculation for assessing the value, the Court reiterated the importance of considering the actual assessable value of the manufactured goods for excise duty purposes.
Referring to the Supreme Court's decision in Ujagar Prints case, the High Court highlighted the proper method of valuation for excise duty assessment. The Court emphasized that the value for assessment should include the cost of raw materials, job work done, manufacturing profit, and expenses, excluding post-manufacturing profits. The Assistant Collector's decision to determine the taxable value based on the selling price of the other company was deemed incorrect as it included the trader's profit. The Court directed the assessing authority to determine the selling price of the cigarettes manufactured by the petitioner to establish the actual assessable value for excise duty purposes. Consequently, the Court allowed the writ petition, set aside the Assistant Collector's order, and remitted the case for fresh disposal in line with the observations and legal principles discussed.
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1990 (11) TMI 154
Issues:
1. Appeal against order of acquittal under Import and Exports (Control) Act and Customs Act.
2. Whether the order of acquittal calls for interference in the appeal.
3. Evidence of recovery of film reels and conspiracy to export without permission.
4. Examination of witnesses and confessional statements.
5. Failure to examine Abdul Aziz and reliance on Section 138B of the Customs Act.
6. Corroboration of evidence and confessions of co-accused.
7. Recovery of empty tins from accused No. 1's residence and its relevance.
8. Legal principles regarding confessions and evidence under the Customs Act.
Analysis:
The judgment involves an appeal against an order of acquittal concerning a case under the Import and Exports (Control) Act and the Customs Act. The accused were charged with attempting to export film reels without permission. The appeal raised the issue of whether the acquittal should be interfered with. The court noted that interference with an acquittal is rare unless the judgment is found to be perverse. The evidence of recovery of the film reels and the conspiracy to export without permission were discussed. The court highlighted the importance of examining witnesses and the significance of confessional statements in such cases.
The failure to examine Abdul Aziz, a crucial witness, was a key point of contention. The court addressed the relevance of Section 138B of the Customs Act regarding the examination of witnesses. The judgment emphasized the need for corroboration of evidence and the limitations of relying solely on confessions of co-accused. The recovery of empty tins from accused No. 1's residence was also discussed, emphasizing the importance of considering all evidence in reaching a verdict.
Legal principles regarding confessions and evidence under the Customs Act were analyzed in detail. The court referred to relevant case laws to support its decision. Ultimately, the court concluded that the learned Magistrate had not made a perverse decision and had considered the evidence and legal provisions adequately. The appeal was dismissed, confirming the order of acquittal by the Additional Chief Metropolitan Magistrate. The judgment provided a comprehensive analysis of the case, highlighting the importance of evidence, corroboration, and legal principles in such matters.
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1990 (11) TMI 153
Issues Involved:
1. Applicability of Section 167(2) of the Cr.P.C. to the N.D.P.S. Act.
2. Entitlement to bail under Section 167(2) of the Cr.P.C.
3. Prematurity of the Department's application for cancellation of bail.
4. Inherent powers of the Court under Section 482 of the Cr.P.C.
Issue-wise Detailed Analysis:
1. Applicability of Section 167(2) of the Cr.P.C. to the N.D.P.S. Act:
The primary issue revolves around whether Section 167(2) of the Cr.P.C., which mandates bail if a chargesheet is not filed within 90 days, is applicable to offenses under the N.D.P.S. Act. The learned Spl. Judge had referred this question to the Division Bench due to conflicting views among judges. The Applicant/Accused sought interim bail pending this decision, arguing that the favorable interpretation by Deshpande J., who held that Section 167(2) applies to N.D.P.S. Act offenses, should be followed.
2. Entitlement to Bail under Section 167(2) of the Cr.P.C.:
The Court reiterated that the proviso to Section 167(2) creates an absolute right to bail if the chargesheet is not filed within 90 days. This right is described as an "order-on-default" rather than on merits. Despite the chargesheet being filed later, the Applicant/Accused is entitled to bail, though the State can seek cancellation post-filing. The Court emphasized that the bail granted under this provision is not defeated by the subsequent filing of the chargesheet or remand under Section 309(2) of the Cr.P.C.
3. Prematurity of the Department's Application for Cancellation of Bail:
The Court examined whether the Department could seek cancellation of bail before the Applicant/Accused was actually released on bail. Referring to Sections 437(5) and 439(2) of the Cr.P.C., it was noted that these provisions apply to persons already released on bail. The Court concluded that an application for cancellation of bail before the actual release is premature, as the language of the relevant sections implies that the accused must first be released on bail for these provisions to be invoked.
4. Inherent Powers of the Court under Section 482 of the Cr.P.C.:
The Department argued for the use of the Court's inherent powers under Section 482 to cancel bail before the Applicant/Accused's release. However, the Court held that where express provisions exist (Sections 437(5) and 439(2)), recourse to inherent powers is not permissible. The cited case of Department of Central Excise v. Rajesh Tulsidar did not specifically address this issue, thus offering no assistance.
Conclusion:
The Court dismissed the Department's application for cancellation of bail as premature. It granted interim bail to the Applicant/Accused pending the Division Bench's decision on the applicability of Section 167(2) to N.D.P.S. Act offenses. The bail was set at Rs. 25,000/- with two sureties, and several conditions were imposed, including the surrender of the Applicant/Accused's passport and regular attendance at the Customs office.
The operation of the bail order was stayed for one month to allow the Department to challenge it in the Supreme Court.
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1990 (11) TMI 152
Issues involved: Determination of whether the process of cutting jumbo rolls of graphic art films into smaller sizes constitutes 'manufacture' for the purpose of levying Central Excise duty.
Summary:
The petitioner imported jumbo rolls of Graphic art films, which were later slit into various widths and cut into different lengths before being marketed in India. The Central Excise Tariff specified rules under Section 11 for photographic and cinematographic items. Initially, the Central Board of Excise and Customs clarified that cutting and repacking jumbo rolls would not amount to 'manufacture'. However, a subsequent clarification stated that converting jumbo rolls into plates and film in flat form would be considered a manufacturing process due to a change in the Tariff entry.
The petitioner argued that cutting jumbo rolls into smaller sizes did not constitute 'manufacture' based on previous clarifications. The respondents contended that the process of converting jumbo rolls into flats was indeed a manufacturing process as it resulted in a distinct commodity. The Court noted the definition of 'manufacture' as bringing into existence a new substance and held that merely cutting jumbo rolls into flats did not meet this criteria.
The Court further explained that different Tariff entries applied to distinct manufactured products, and since no new manufacturing process occurred by cutting jumbo rolls into flats, the petitioner was not required to obtain a Central Excise license. The Court ruled in favor of the petitioner, stating that the direction to obtain a license was not valid as long as the petitioner's activities were limited to cutting jumbo rolls into flats and plates of smaller sizes.
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1990 (11) TMI 151
The petitioner filed a refund claim for Central Excise Duty paid for certain years, but it was rejected as time-barred under Section 11B of the Central Excises and Salt Act. The High Court dismissed the writ petition, stating that the petitioner should establish their case through civil proceedings for refund. No costs were awarded.
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1990 (11) TMI 150
Issues:
1. Refund application for excess duty recovered by the Department.
2. Applicability of the doctrine of unjust enrichment in refund cases.
3. Delay in payment of refund by the Department.
4. Department's intention to appeal to the Supreme Court affecting refund obligation.
Analysis:
Issue 1: The petitioners submitted refund applications for excess duty recovered by the Department for specific periods. The Collector of Central Excise (Appeals) allowed the refund claims, but the Assistant Collector initially rejected them based on the doctrine of unjust enrichment. However, the Customs, Excise & Gold (Control) Appellate Tribunal held that the doctrine of unjust enrichment does not apply in such cases, directing the Excise authorities to process the refunds.
Issue 2: The Department resisted refund payment citing the doctrine of unjust enrichment and pending decision on appealing to the Supreme Court. The Court emphasized that the doctrine does not apply in this context, especially when duty was paid under protest and statutory provisions mandate refund in such cases. The Court held the Department accountable for refunding the amount as per the applications submitted by the petitioners.
Issue 3: Despite favorable decisions by appellate authorities and judicial precedents, the Department delayed refund payment. The Court reiterated that the Department is obligated to process and refund the amount promptly, within 8 weeks from the judgment date. Failure to comply would result in the Department being liable to pay interest at a rate of 15% per annum until the actual refund is made, in addition to bearing the costs of the petition.
Issue 4: The Department's intention to appeal to the Supreme Court was not accepted as a valid reason to postpone refund payments. The Court clarified that the petitioners are entitled to the relief granted by the appellate authorities and directed the Department to proceed with refund processing without delay. The judgment emphasized the Department's duty to adhere to the refund obligations outlined in the statutory provisions and judicial decisions.
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1990 (11) TMI 149
Issues:
Manufacturer claiming exemption from excise duty, clubbing of clearances for exemption under Notification No. 175/86, constitutionality of clubbing clearances, reliance on Division Bench judgment, relevance of prior case law on clubbing clearances.
Analysis:
The petitioner, a manufacturer of Patent and Proprietary Medicines and Drugs, sought exemption from excise duty under various notifications but faced refusal from the second respondent to release goods manufactured from a factory where multiple licensees operated. The petitioner challenged the clubbing of clearances under Notification No. 175/86, citing violation of Article 19 (1) (g) of the Constitution of India. The court noted a previous batch of writ petitions where a similar issue was raised and rejected, upholding the constitutionality of clubbing clearances. The petitioner relied on a Division Bench judgment, but the court found it irrelevant as it did not address the specific argument presented. Additionally, the court differentiated the facts of a prior case law cited by the petitioner, emphasizing the need for factual evidence in cases involving clubbing of clearances. The court clarified that the current petition focused on the validity of the notification allowing clubbing, rather than factual grievances, and upheld the method under clause 3 of the notification as valid. As there was no relief sought to challenge factual findings, the court dismissed the writ petition, affirming the validity of clubbing clearances under the notification.
This judgment addresses the issue of clubbing clearances for excise duty exemption under Notification No. 175/86 in the context of a manufacturer of Patent and Proprietary Medicines and Drugs. The petitioner's contention against clubbing clearances was based on the alleged violation of Article 19 (1) (g) of the Constitution of India. The court, however, upheld the constitutionality of clubbing clearances, citing a previous order in a similar case where such clubbing was deemed valid. The petitioner's reliance on a Division Bench judgment and prior case law was deemed irrelevant as they did not directly address the specific argument raised in this case. The court emphasized the need for factual evidence in cases involving clubbing of clearances, highlighting the distinction between challenging the validity of the notification and disputing factual findings. Ultimately, the court dismissed the writ petition, affirming the validity of clubbing clearances under the notification and suggesting avenues for challenging factual determinations through appeals.
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1990 (11) TMI 148
Issues:
- Delay in disposing of a refund application by the Assistant Collector of Central Excise
- Issuance of show cause notices to explain why the refund should not be refused on the ground of unjust enrichment
Analysis:
1. Delay in Disposing of Refund Application:
The petitioners, a company manufacturing paper-based decorative laminates, filed a refund application seeking the return of excess duty paid under protest. The Assistant Collector's erroneous classification of goods led to the overpayment of duty. The Collector of Central Excise (Appeals) allowed the petitioners' appeal, confirming the correct classification. Despite this, the refund application filed on August 1, 1989, remained unresolved for a significant period. The petitioners were entitled to a refund as per Section 11B(3) of the Act. The dismissal of the appeal by CEGAT finalized the classification issue. The Department's failure to process the refund application prompted the petitioners to file a writ petition.
2. Show Cause Notices on Unjust Enrichment:
The Department served two show cause notices, citing the doctrine of unjust enrichment and referring to a previous case. The petitioners argued that the reliance on the earlier case was incorrect, as subsequent judgments had clarified the position. They contended that Excise authorities are bound by statutory provisions and cannot deny refunds based on unjust enrichment. CEGAT's decision in Collector of Central Excise v. Weldekar Laminates Pvt. Limited emphasized that authorities cannot refuse refunds based on unjust enrichment. The Division Bench of the High Court had also upheld this principle in a related case. The petitioners had paid the duty under protest and were entitled to a refund as a matter of right under Section 11B(3) of the Act.
3. Judgment and Relief Granted:
The High Court ruled in favor of the petitioners, declaring the show cause notices as illegal. The Department was directed to process the refund application without considering unjust enrichment and in line with previous court decisions. The respondents were ordered to refund the amount by December 31, 1990. Failure to comply would result in the Department being liable to pay interest at 18% per annum. The costs of the petition were to be borne by the respondents. A request for a stay of the judgment was refused.
This judgment highlights the importance of adhering to statutory provisions in granting refunds and emphasizes that Excise authorities cannot deny refunds based on the doctrine of unjust enrichment when the statutory requirements for refund are met.
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1990 (11) TMI 147
Issues Involved:
1. Requirement of pre-deposit for hearing appeals before the Collector (Appeals).
2. Assessable value determination for retail sales versus wholesale sales.
3. Legality and correctness of the demand order issued by the Superintendent.
4. Prima facie case and balance of convenience for granting stay of impugned orders.
Detailed Analysis:
1. Requirement of Pre-Deposit for Hearing Appeals:
The petitioners challenged the Assistant Collector's orders dated 28-11-1989 and 30-11-1989, which required a pre-deposit of the impugned demand as a condition precedent for hearing appeals before the Collector (Appeals). They argued that respondent No. 2 (Collector of Central Excise) was not willing to hear the stay applications or appeals, and respondent No. 3 (Assistant Collector of Central Excise, Ghaziabad) was pressing for immediate payment. The court issued a show cause notice limited to why the application for stay under Section 35F of the Act should not be disposed of. The Collector (Appeals) dismissed the stay applications, stating that the appellants did not produce evidence of undue hardship and that the waiver of pre-deposit would be prejudicial to public interest.
2. Assessable Value Determination:
The petitioners contended that the ex-factory wholesale price should be applicable to all clearances, including retail sales. The Assistant Collector's order for the period from 7-1-1988 to 10-9-1989 required a separate price list for wholesale sales in UP State, which the petitioners argued was incorrect. They maintained that the ex-factory price should be the assessable value for all sales, whether wholesale or retail.
3. Legality and Correctness of the Demand Order:
The Superintendent issued a demand order for Rs. 69,59,353.29, alleging duty short paid for the period August 1987 to October 1989. The petitioners filed appeals and stay applications, arguing that the demand was neither legally tenable nor factually correct. The court noted that the Collector (Appeals) directed the Assistant Collector to recheck the calculation of the demand.
4. Prima Facie Case and Balance of Convenience:
The petitioners argued that they had a prima facie case and that the balance of convenience lay in their favor. They cited a 3-Member Bench decision of the Central Excise and Gold (Control) Appellate Tribunal, which held that the normal price under Section 4(1)(a) should be the assessable value for all sales. The court found that the Collector (Appeals) erred by not considering this relevant order and focusing solely on the financial element. The court concluded that the balance of convenience favored the petitioners, as they were clearing motorcycles on furnishing a bank guarantee for the differential duty.
Conclusion:
The court allowed the petition, quashed the impugned orders of the Collector (Appeals) dated 1-6-1990, and confirmed the interim stay orders. The respondent No. 2 was directed to dispose of the petitioners' appeals within two months without requiring any pre-deposit. No costs were awarded.
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1990 (11) TMI 146
Issues:
1. Entitlement to total exemption of excise duty on fire works.
2. Orders of detention of goods manufactured.
3. Violation of condition for exemption - use of power in manufacturing process.
4. Ancillary relief of clearing goods without excise duty.
5. Adjudication of demands and appeals.
6. Quashing of orders and passing of show cause notices.
7. Tenability of show cause notices and remedies available in law.
Analysis:
Issue 1: Entitlement to total exemption of excise duty on fire works
The judgment addressed the controversy of whether the petitioners are entitled to total exemption of levy of excise duty on fire works manufactured by them. The petitioners sought exemption until the withdrawal of the notification. The court dismissed the Writ Petitions as the investigation concluded with no evidence of violation of the exemption condition, and the detained goods were released.
Issue 2: Orders of detention of goods manufactured
The judgment discussed the orders of detention of goods manufactured by the petitioners during the exemption period. It was noted that in some cases, the goods were released after investigations, while in others, appeals were pending or dismissed. The court refrained from adjudicating the controversy in writ jurisdiction, allowing the concerned authorities to pass orders on merits.
Issue 3: Violation of condition for exemption - use of power in manufacturing process
The controversy revolved around whether the petitioners violated the condition for exemption by using power in the manufacturing process. The court emphasized that the departmental authorities should adjudicate on these matters, especially when investigations were completed, and orders of adjudication were pending.
Issue 4: Ancillary relief of clearing goods without excise duty
Some petitioners sought ancillary relief to clear goods without payment of excise duty. The judgment highlighted that the authorities should pass adjudication orders on merits, giving the petitioners an opportunity to present their case before taking any further action.
Issue 5: Adjudication of demands and appeals
The judgment mentioned cases where adjudications were over, demands were confirmed, and appeals were either pending or dismissed. It directed the authorities to consider the questions involved and pass orders without being influenced by the dismissal of the writ petitions.
Issue 6: Quashing of orders and passing of show cause notices
Certain petitioners challenged orders of detention and sought directions to pass orders on show cause notices. The court emphasized that the authorities should adjudicate on the matters on merits and allow the petitioners to present their arguments before making any decisions.
Issue 7: Tenability of show cause notices and remedies available in law
In cases where show cause notices were challenged, the judgment dismissed the petitions, advising the petitioners to seek remedies available in law after orders of adjudication were passed. It reiterated the importance of giving the petitioners an opportunity to present their arguments before final decisions were made.
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1990 (11) TMI 145
Whether Palm Kernel at the relevant time could be imported under OGL as done by the appellant or it could not be done as the same was canalised item which could have been imported through STC or Hindustan Vegetables Oil Corp., New Delhi ?
What duty could be imposed in the facts and circumstances of the present case?
Held that:- Since `Palm Kernel' was not included within `Palm seed' the Customs authorities had no legal justification to confiscate or impose redemption fine, or penalty, as the goods had already been shipped on various dates i.e. on 26-5-1987 and 25-7-1987. It is no longer in dispute that if the Palm Kernel was not a canalised item before 27-7-1987 then it could have been imported under OGL before that date. The crucial dates in this regard are 26-5-1987 and 25-7-1987 when the goods were actually loaded in the ship and not the date of arrival of the ship in the territorial waters of India.
The High Court has overlooked that on 15-10-1987 the petitioner had only applied for warehousing of the goods on the direction of Division Bench of High Court. The Single Judge had passed an interim order for clearing the goods after payment of customs duty, but the department went in appeal and the Division Bench by its order dated 18-9-1987 directed the imported goods to be kept in a bonded warehouse or any other warehouse approved by the Customs authorities and until further orders the appellant was directed not to take delivery of the same. The appellant submitted the bills of entry on 28-1-1988 and admittedly no duty was payable on that date. Moreover where goods imported are kept in a warehouse under a bond, the date of arrival of such goods in India is not relevant for determining the duty, therefore the High Court committed error in holding the appellant was liable to pay duty as in force on the date of arrival of goods.
There is no dispute that the remaining goods were also stored in a private warehouse and the appellant had filed the bills of entry and complied with all the required formalities for debonding and clearance of the goods on 28-1-1988, therefore the appellant was entitled to an order cancelling the licence of the private warehouse enabling it to remove the goods. There is no valid reason as to why the same procedure should not have been followed in respect of the remaining goods in respect of which the bills of entry were filed on 28-1-1988 for debonding and clearance of goods. Merely because the Officer failed to discharge his duties by making illegal demand for deposit of redemption fine, the appellant could not be held liable to pay duty. The appellant is therefore entitled to the delivery of goods without paying any duty as on 28-1-1988 no duty was payable on the goods.
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