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1986 (7) TMI 377
Issues:
1. Assessment of turnover of "makhana" as an unclassified item.
2. Validity of notice dated 11th September, 1979 under section 21 of the U.P. Sales Tax Act.
3. Interpretation of the continuation of proceedings under section 21 of the Act.
4. Applicability of subsequent material in tax assessment during pending proceedings.
Analysis:
1. The judgment pertains to the assessment of the turnover of "makhana" as an unclassified item for the assessment year 1974-75. The assessing authority initially categorized "makhana" under "dry fruits" based on a specific notification. However, a previous court ruling determined that "makhana" should be taxed as an unclassified item. Subsequently, a notice was issued to the assessee under section 21 of the U.P. Sales Tax Act, leading to a reevaluation of the tax treatment of "makhana."
2. The validity of the notice dated 11th September, 1979, under section 21 of the Act was contested by the assessee on grounds of being a fresh notice beyond the period of limitation. The court deliberated on whether the said notice constituted a new initiation or a mere request for additional information during ongoing proceedings. The tribunal's decision to uphold the notice was based on the assessee's response not objecting to its nature as a fresh notice.
3. The judgment addressed the interpretation of the continuation of proceedings under section 21 of the Act. The court examined the order sheet of the assessing authority to determine the status of the proceedings initiated by the notice dated 23rd March, 1979. It was established that the proceedings remained active beyond the date contended by the assessee, thereby refuting the claim that the proceedings had concluded.
4. The applicability of subsequent material in tax assessment during pending proceedings was discussed based on a precedent cited by the Revenue's counsel. The court acknowledged the principle that new information discovered during ongoing proceedings could be considered for taxation. The assessee's argument that the notice dated 11th September, 1979, was a fresh notice was dismissed, as the court found the original notice to be still in effect.
In conclusion, the revision was rejected, emphasizing the continuity of the proceedings and the validity of the notice in question. The judgment highlighted the importance of procedural adherence and the consideration of subsequent information in tax assessments.
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1986 (7) TMI 376
Issues:
Jurisdiction of civil court in a suit for declaration and injunction against recovery of sales tax assessed against a partnership firm when the plaintiff claims not to be a partner of the firm.
Analysis:
The defendant filed a second appeal against a suit for declaration and injunction decreed by both lower courts. The plaintiff, Ram Singh, alleged that the sales tax authorities assessed a recovery against a business concern named Darshan Singh Ram Singh, in which he claimed not to be a partner. The State wanted to recover the amount from him based on his alleged partnership in the firm. The plaintiff contended that the assessment was against his brother, Darshan Singh, individually, and not against any partnership firm involving him. Both lower courts found that the civil court had jurisdiction to try the suit and that the plaintiff was not a partner in the firm. The defendant argued that the civil court had no jurisdiction and that the plaintiff was a partner in the firm, citing a Division Bench judgment. However, the court found no merit in the appeal.
In the present suit, the plaintiff's sole contention was that he had no association with the partnership firm assessed for sales tax, hence should not be liable for the recovery. The plaintiff did not challenge the assessment order or the department's right to recover the tax from Darshan Singh. The court held that since the plaintiff had no connection with the firm, the civil court had jurisdiction. Referring to the judgment cited by the defendant, it was noted that liability for tax assessment against a firm depends on the individual's involvement, as seen in a previous case where the individual was found liable due to his pivotal role in the firm.
Regarding the current case, it was established through evidence that the plaintiff never admitted to being a partner in the firm before the sales tax authorities. The diary allegedly recovered from the plaintiff, which could have shown his involvement, was not produced by the department. The lower appellate court found that the plaintiff never represented any interest in the business before the tax authorities. This factual finding could not be challenged in the second appeal. As the plaintiff had no association with the firm, he could not be held responsible for the recovery. Consequently, the appeal was dismissed, with no order as to costs.
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1986 (7) TMI 375
Issues:
- Interpretation of transactions as branch transfers or inter-State sales under the Central Sales Tax Act.
- Applicability of the Supreme Court decision in Sahney Steel and Press Works Ltd. case.
- Assessment of findings by the Sales Tax Tribunal regarding branch office operations and sales transactions.
Analysis:
The judgment involves four revisions under section 11(1) of the U.P. Sales Tax Act, filed by the Commissioner of Sales Tax against the Sales Tax Tribunal's order related to assessment years under the Central Sales Tax Act. The respondent-assessee, a dealer of iron and steel, had a head office in one location and a branch office in another. The assessing authority inferred that branch transfers were actually inter-State sales, leading to a notice under section 21 of the Act. The Tribunal allowed the appeals of the respondent-assessee and dismissed those of the Revenue, prompting the Commissioner to challenge the decision. The Commissioner argued that the transactions were inter-State sales, citing the Supreme Court decision in Sahney Steel and Press Works Ltd. case, urging the Tribunal to reconsider in light of this precedent. The respondent's counsel opposed, stating the differences in facts between the cases.
The Supreme Court decision in Sahney Steel and Press Works Ltd. case involved a company with multiple branches engaged in sales of goods. The Court held that the movement of goods from the registered office to branch offices for sale constituted inter-State sales. In contrast, the modus operandi of the respondent's firm in the present case involved manufacturing goods in one location and selling them at the branch office. The branch office maintained separate accounts, received payments, and handled sales independently. The Tribunal's findings supported the branch transfers' nature, emphasizing that all transactions and operations occurred at the branch office, not at the head office. The Court concluded that the respondent made no inter-State sales during the assessment years, affirming the Tribunal's decision.
The Court upheld the Tribunal's findings as factual, highlighting that the branch transfers were correctly interpreted and operational details supported this conclusion. The Commissioner's argument, based on the Sahney Steel case, was deemed inapplicable due to the differing circumstances. The Court rejected the revisions, emphasizing the validity of the Tribunal's decision and the absence of inter-State sales by the respondent during the relevant years. No costs were awarded in the judgment, and the petitions were consequently rejected.
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1986 (7) TMI 374
Issues:
1. Jurisdiction of the civil court to entertain a suit relating to sales tax matters.
2. Validity of the refund claimed by the respondent.
3. Impact of Central Act 28 of 1969 on the refund amount.
4. Finality of court orders and the effect on the refund claim.
5. Applicability of res judicata in the case.
Detailed Analysis:
1. Jurisdiction of the Civil Court:
The appellant contended that the civil court lacked jurisdiction to entertain the suit related to sales tax matters. The appellant relied on a judgment of the Supreme Court to support this argument. The appellant further argued that the respondent had no right to challenge the Supreme Court's judgment except as permitted by a new statute. The appellant highlighted that Central Act 28 of 1969 did not address the specific issues raised in the Supreme Court's judgment. The appellant also raised the defense of res judicata to bar the suit.
2. Validity of the Refund Claim:
The respondent sought to recover the amounts refunded to the appellant based on the provisions of Central Act 28 of 1969. The respondent claimed that the Act validated the levy, including the excise duty portion, and thus, they were entitled to claim a refund. The respondent argued that the amended provisions of Act 28 of 1969 supported their claim for a refund amounting to Rs. 11,000 and more.
3. Impact of Central Act 28 of 1969 on the Refund Amount:
The respondent's main contention was that the Central Act 28 of 1969, which came into force with retrospective effect, validated the levies made, including the excise duty portion. The respondent asserted that this validation entitled them to claim the refund amount that had been paid to the appellant.
4. Finality of Court Orders and the Effect on the Refund Claim:
Court orders from previous proceedings were crucial in determining the validity of the refund claim. The High Court's orders, which had become final as no appeals were filed by the State, supported the appellant's position. The court emphasized that since the respondent did not challenge the High Court's orders at a higher forum, their claim for a refund was not maintainable. The lower appellate court's findings were deemed unfounded in light of the finality of the High Court's orders.
5. Applicability of Res Judicata:
The appellant invoked the doctrine of res judicata to argue against the respondent's claim for a refund. The appellant asserted that the judgment of the Supreme Court and the subsequent High Court orders had conclusively settled the matter, barring the respondent from claiming the refund amount. The court ultimately set aside the judgment and decree of the lower appellate court, ruling in favor of the appellant.
In conclusion, the High Court allowed the appeal, emphasizing the finality of previous court orders and dismissing the respondent's claim for a refund based on the provisions of Central Act 28 of 1969. The court's decision was influenced by the lack of appeal by the State against the High Court's orders, leading to the rejection of the respondent's refund claim.
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1986 (7) TMI 373
The High Court of Allahabad allowed the revision petition filed by the assessee against the Sales Tax Tribunal's order related to the assessment year 1981-82. The Tribunal was directed to decide the appeal afresh after permitting the assessee to raise the question of exemption for purchases made in the course of inter-State trade on behalf of ex-U.P. principals. The order of the Tribunal was set aside in part, and no costs were awarded. The petition was partly allowed. (Case citation: 1986 (7) TMI 373 - ALLAHABAD HIGH COURT)
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1986 (7) TMI 372
The High Court of Allahabad allowed the revision filed by the assessee under section 11(1) of the U.P. Sales Tax Act against the judgment of the Sales Tax Tribunal. The Tribunal's decision was set aside, and the Tribunal was directed to reconsider the appeal and the Sales Tax Officer to pass a fresh assessment order after perusing the original accounts.
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1986 (7) TMI 371
The High Court of Allahabad allowed the revision petition of an iron and steel dealer regarding the issuance of form 3-Kha by a purchasing dealer. The Court set aside the Tribunal's order and directed a fresh decision considering section 3-B of the U.P. Sales Tax Act. The case required reconsideration as the Tribunal did not address the provisions of section 3-B. The Court ordered no costs to be awarded.
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1986 (7) TMI 370
The High Court of Allahabad allowed four sales tax revisions related to insurance companies selling scrap vehicles, ruling that the companies are not liable to pay sales tax on such transactions. The court directed the sales tax authorities to refund the amounts collected from the companies and ordered each party to bear their own costs. (Case citation: 1986 (7) TMI 370 - ALLAHABAD HIGH COURT)
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1986 (7) TMI 369
The assessee filed a revision against the Sales Tax Tribunal's order for the assessment year 1976-77. The Tribunal added taulia, mandi shulk, and palley dari to the taxable turnover. The assessee's application under section 22 of the U.P. Sales Tax Act was rejected by the assessing authority. The High Court upheld the Tribunal's decision, stating that disputed facts cannot be adjudicated under section 22. The revision was rejected, and no costs were awarded.
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1986 (7) TMI 368
The High Court allowed the Commissioner of Sales Tax's revisions against the Sales Tax Tribunal's judgment, stating that the eligibility certificate issued by the Director of Industries is crucial for determining if an assessee qualifies as a new unit for exemption. The Tribunal was directed to reconsider the case based on this requirement. The Tribunal's order was partially set aside, and the case was to be decided again without any costs. The petition was partly allowed. (Case citation: 1986 (7) TMI 368 - ALLAHABAD HIGH COURT)
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1986 (7) TMI 367
The High Court allowed the revision petition against the Sales Tax Tribunal's judgment due to lack of intimation to the assessee about the hearing date. The Tribunal was directed to decide the appeal afresh after hearing both parties. The order was quashed, and no costs were awarded. The copy of the order was to be sent to the Tribunal as per section 11(8) of the Act.
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1986 (7) TMI 366
The High Court of Allahabad allowed the revision petition, setting aside the Sales Tax Tribunal's order and directing a fresh decision on the appeal. The Tribunal had remanded the case for reassessment, but the High Court found that the assessee rightly claimed exemption for purchases made on behalf of ex-U.P. principals. The Tribunal's order was not sustained. The High Court ordered no costs to be paid. A copy of the order was to be sent to the Tribunal as per section 11(8) of the U.P. Sales Tax Act.
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1986 (7) TMI 365
The High Court of Allahabad allowed revisions for assessment years 1978-79 and 1979-80, reducing turnovers. The turnover for 1978-79 was reduced from Rs. 80,000 to Rs. 30,000, and for 1979-80 from Rs. 60,000 to Rs. 30,000. No changes were made for 1980-81. The widow of the deceased sole proprietor was unable to pay the tax imposed. Each party bears their own costs.
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1986 (7) TMI 364
The assessee was assessed under rule 41(5) of the U.P. Sales Tax Rules without being given notice, leading to the order being set aside by the High Court. The case was remanded for a fresh assessment after providing notice to the assessee. The petition was allowed. (Case: 1986 (7) TMI 364 - ALLAHABAD HIGH COURT)
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1986 (7) TMI 363
The assessee filed a revision against the Sales Tax Tribunal's judgment, questioning the rejection of their books of account due to inability to count cash during a survey. The court held that failure to allow verification of cash creates suspicion, justifying rejection of accounts. No material showed excessive turnover. The revision was dismissed with no costs.
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1986 (7) TMI 362
The High Court of Andhra Pradesh dismissed a writ petition challenging the inclusion of excise duty in turnover for sales tax purposes. The court held that excise duty, even if paid directly by a purchaser, forms part of the manufacturer's turnover. The petition was dismissed, and further proceedings were not stayed.
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1986 (7) TMI 361
Issues Involved:
1. Legality of the ex parte assessment order.
2. Failure to grant exemption under the M.P. General Sales Tax Act.
3. Improper assessment under the Central Sales Tax Act.
4. Denial of a fair hearing by the assessing and revisional authorities.
5. Failure of the revisional authorities to consider legal objections and amendments.
Detailed Analysis:
1. Legality of the Ex Parte Assessment Order:
The petitioner, a registered sales tax dealer, challenged the ex parte assessment order dated 28th January 1982, passed by the Sales Tax Officer (respondent No. 3). The assessment was based on information collected from the books of account and other documents seized during a raid conducted on 9th January 1979. The petitioner contended that the assessment was illegal as it was conducted without giving a proper chance of hearing and failed to consider the material available on record.
2. Failure to Grant Exemption Under the M.P. General Sales Tax Act:
The petitioner, registered as a small-scale industry, claimed exemption from sales tax for the period 1st April 1978 to 31st March 1979, based on a notification dated 25th November 1969 (annexure-P2). The notification was amended to extend the exemption period up to 31st March 1979 and allowed the petitioner to furnish the necessary statements at any time before assessment. The assessing authority failed to consider these amendments and improperly included exempt sales in the taxable turnover.
3. Improper Assessment Under the Central Sales Tax Act:
The petitioner argued that the assessing authority had a legal obligation to determine inter-State sales separately under the Central Sales Tax Act. The ex parte assessment improperly mixed inter-State and intra-State sales. The assessing authority ignored material evidence regarding inter-State sales and failed to give notice to the petitioner to furnish C forms, which was not a condition precedent for claiming exemption under section 6(2) of the Central Sales Tax Act.
4. Denial of a Fair Hearing by the Assessing and Revisional Authorities:
The petitioner filed a revision petition under section 39(1) of the M.P. General Sales Tax Act before the Deputy Commissioner, Sales Tax (respondent No. 2), which was rejected on the grounds of non-cooperation despite several opportunities given. The petitioner then filed suo motu revisions under sections 39(1)(a) and 39(1-A), which were also rejected without proper consideration of the legal points raised and without giving a chance of hearing.
5. Failure of the Revisional Authorities to Consider Legal Objections and Amendments:
The revisional authorities, including the Deputy Commissioner and the Commissioner, failed to consider the legal objections raised by the petitioner, including the amendments to the notification extending the exemption period. The orders were passed in a mechanical manner, ignoring the legal pleas and material evidence submitted by the petitioner.
Conclusion:
The High Court quashed the impugned orders (annexures-P3, P5, P7, and P9) and remanded the case to the assessing authority (respondent No. 3) to reassess and decide the case afresh in accordance with law. The court emphasized the need for the assessing authority to consider the amendments and give the petitioner an opportunity to make submissions regarding the exemptions claimed. The petitioner was directed to pay the costs of the respondents, amounting to Rs. 750, within two weeks. The petition was allowed.
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1986 (7) TMI 360
Issues:
- Interpretation of tax liability under the Kerala General Sales Tax Act, 1963 regarding goods sent outside the State on consignment basis.
- Determination of whether goods sent outside the State by an assessee to agents on consignment basis acquire the quality of last purchase within the State for tax purposes.
- Application of legal principles regarding the liability to pay tax on purchases when they acquire the quality of being the last purchases inside the State.
Analysis:
The judgment delivered by the Kerala High Court involved multiple tax revision cases filed by the Revenue, with the main case being T.R.C. No. 12 of 1985. The issue at hand revolved around the tax liability under the Kerala General Sales Tax Act, 1963 concerning goods like arecanut and copra sent outside the State on consignment basis by the assessee to agents. The Appellate Tribunal had held that such goods did not acquire the quality of last purchase within the State, thus not subject to tax. The Revenue challenged this decision, arguing that once goods move outside the State, they become liable to tax as the last purchase. The assessee-respondent contended that a dealer is not liable to pay tax on purchases until they acquire the quality of last purchases inside the State, citing legal precedents.
The Court analyzed the contentions of both parties and referred to the Supreme Court decision in State of Madras v. Narayanaswami Naidu [1968] 21 STC I (SC) which clarified that a dealer is not liable to pay tax on purchases until they become the last purchases inside the State. The Court rejected the Revenue's argument that goods sent outside the State for consignment sales became exigible to tax. It emphasized that whether goods are held inside or outside the State, they remain the property of the assessee, and the character of last purchase is crucial for tax liability. The Court also cited the Full Bench decision in Season Rubbers v. State of Kerala [1981] 48 STC 256 (FB) which supported the view that the liability to tax is on the transaction of purchase and the rate applicable is at the time of purchase, not at the time of disposal.
Based on the legal principles discussed and the precedents cited, the Court held that the tax revision cases lacked merit, upholding the decision of the Appellate Tribunal. It dismissed the cases with costs. Additionally, in another case (T.R.C. No. 127 of 1984), the Court found that the Appellate Tribunal's order for remit was unnecessary, as the closing stock sought to be taxed was not exigible to tax. The judgment was issued to counsel for the parties, and the petitions were dismissed.
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1986 (7) TMI 359
Issues Involved:
1. Constitutionality of Section 5(4) read with Item 2 of the IV Schedule and Explanation II of the Karnataka Sales Tax Act.
2. Alleged violation of Article 304(a) of the Constitution of India.
3. Discrimination in the rate of tax on sales of M.S. rounds manufactured within and outside the State.
Detailed Analysis:
1. Constitutionality of Section 5(4) read with Item 2 of the IV Schedule and Explanation II of the Karnataka Sales Tax Act:
The primary issue was whether Section 5(4) read with Item 2 of the IV Schedule and Explanation II of the Karnataka Sales Tax Act is unconstitutional. The petitioner, a registered dealer, argued that the provision discriminates against items of iron and steel manufactured outside Karnataka and brought into the State for sale. The State contended that the same rate of 4% tax is applied uniformly to both locally manufactured and imported items of iron and steel.
The court examined the relevant constitutional provisions and the Central Sales Tax Act, 1956, which impose restrictions on the State's power to levy sales tax on declared goods. The court noted that the State Act's provisions align with the Central Act's restrictions, ensuring a single-point levy and a maximum tax rate of 4%.
2. Alleged Violation of Article 304(a) of the Constitution of India:
Article 304(a) of the Constitution allows States to impose taxes on goods imported from other States, provided there is no discrimination between imported goods and similar goods manufactured within the State. The petitioner argued that the provision in question violated Article 304(a) by imposing different tax burdens on locally manufactured and imported M.S. rounds.
The court clarified that the provision ensures a uniform tax rate of 4% on both locally manufactured and imported items. The explanation provided in the State Act allows for a deduction of the tax already paid on the raw materials used in manufacturing the final product to avoid repetitive taxation. This mechanism ensures that the final tax burden remains 4%, thus not violating Article 304(a).
3. Discrimination in the Rate of Tax on Sales of M.S. Rounds Manufactured Within and Outside the State:
The petitioner claimed that the tax burden was higher on M.S. rounds manufactured outside the State due to the lack of a deduction mechanism for tax paid on raw materials. The court found this argument to be based on a misinterpretation of the provision. The court explained that the deduction mechanism is intended to prevent repetitive taxation and ensure that the final tax burden remains 4% on the sale turnover of the manufactured goods.
The court referred to several Supreme Court decisions to support its conclusion. In particular, the court cited the case of V. Guruviah Naidu and Sons v. State of Tamil Nadu, where the Supreme Court upheld a similar provision, stating that there is a clear nexus between raw materials and the finished product, and the deduction mechanism does not constitute discrimination.
Conclusion:
The court concluded that Section 5(4) read with Item 2 of the IV Schedule and Explanation II of the Karnataka Sales Tax Act is not violative of Article 304(a) of the Constitution. The provision ensures a uniform tax rate and prevents repetitive taxation, thereby not discriminating against goods manufactured outside the State.
Order:
(i) Rule discharged.
(ii) The writ petitions are dismissed with costs. Advocate's fee Rs. 1,000.
Writ petitions dismissed.
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1986 (7) TMI 358
Issues Involved:
1. Dutiability of chicory powder under Tariff Item 68 CET.
2. Eligibility for exemption under Notification No. 55/75.
3. Validity of retrospective demand for duty.
Detailed Analysis:
1. Dutiability of Chicory Powder under Tariff Item 68 CET:
The primary issue was whether the process of roasting and grinding chicory roots with the aid of power to produce chicory powder constitutes "manufacture" under the Central Excises and Salt Act. The appellants contended that this process does not amount to manufacture, relying on a previous Tribunal judgment in M/s. Pyrites, Phosphates and Chemical Ltd., where crushing and sieving did not result in a new product. However, the Tribunal referenced a later decision involving Rock Phosphate, where the processes of breaking, powdering, and sieving were deemed to amount to manufacture as they produced a marketable commodity. Applying this reasoning, the Tribunal concluded that roasting and grinding chicory roots to produce chicory powder creates a new and distinct commercially marketable commodity, thus constituting manufacture under the Act.
2. Eligibility for Exemption under Notification No. 55/75:
The appellants claimed that chicory powder should be exempt from duty under Notification No. 55/75, which exempts "all kinds of food products and food preparations." They cited the Prevention of Food Adulteration Act to argue that chicory powder qualifies as a food product. However, the Tribunal emphasized that terms in one statute should not be interpreted by another statute's definitions. The Tribunal noted that chicory powder is not consumed as food or beverage but is used as an additive to coffee. Referring to the Andhra Pradesh High Court's decision that a coffee-chicory blend is not a food product, the Tribunal held that chicory powder does not qualify for exemption under Notification 55/75.
3. Validity of Retrospective Demand for Duty:
In Appeal No. 1071 of 1981, the appellants argued against the retrospective demand for duty from 1-9-1979 to 28-2-1980, citing a letter from the Collector dated 19-7-1975, which stated that chicory powder was not dutiable. They contended that they stopped paying duty based on this official communication and that any demand for duty should be prospective from the date of the show cause notice (29-2-1980). The Tribunal referenced decisions in M/s. Nuchem Plastic Ltd. and M/s. Inarco Ltd., which held that the Department should not change its stance without compelling reasons and that demands should be prospective if no such reasons exist. The Tribunal found that the appellants had relied on the Collector's letter and had not paid duty accordingly. Therefore, the demand for duty should be enforceable only from the date of the show cause notice (29-2-1980), not retrospectively.
Conclusion:
The appeal of M/s. Radio Electronics (Appeal No. 1073/81-D) was dismissed, confirming the lower authorities' orders. However, the appeal of M/s. Eagle Chicory (Firm) (Appeal No. 1071 of 81-D) was allowed, setting aside the orders of the lower authorities regarding the recovery of duty for the period prior to 29-2-1980, and clarifying that duty under Tariff Item 68 was payable from 29-2-1980 onwards.
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