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2002 (12) TMI 96
Issues Involved:
1. Whether the activities carried out by the petitioner constituted the manufacture of excisable goods.
2. Whether the notice issued u/s 11A of the Central Excise Act was beyond the stipulated period.
3. Whether the payment of sales tax implies the manufacture of excisable goods.
4. Whether the statements of the officers of the petitioner company were admissible and conclusive.
Summary:
1. Manufacture of Excisable Goods:
The petitioner, a civil contractor, was engaged in setting up factory sheds for various companies. The Excise Department issued a show cause notice alleging that the petitioner had manufactured excisable goods such as structural steel items and cleared them without payment of duty. The petitioner contended that their activities were limited to executing works contracts and did not amount to the manufacture of excisable goods. The court referred to several judgments, including *Quality Steel Tubes (P) Ltd. v. Collector of Central Excise* and *Union of India v. J.G. Glass Industries Ltd.*, which established that goods embedded in the soil and not freely marketable do not qualify as excisable goods. The court concluded that the items manufactured by the petitioner were not marketable and were embedded into the soil, thus not qualifying as excisable goods u/s 3 of the Central Excise Act.
2. Notice Beyond Stipulated Period:
The petitioner argued that the notice issued u/s 11A of the Central Excise Act was beyond the period of six months. However, the court decided the matter on merits and did not delve into this issue.
3. Payment of Sales Tax:
The respondent argued that the payment of sales tax on the goods implied that they were excisable. The court noted that the sales tax was paid under the Maharashtra Sales Tax on the transfer of property in goods involved in the Execution of Works Contracts Act, 1985. The court held that the payment of sales tax does not necessarily imply that the goods are excisable under the Central Excise Act.
4. Admissibility of Officers' Statements:
The respondent relied on the statements of the officers of the petitioner company to argue that the items manufactured were excisable goods. The court acknowledged that these statements were admissible u/s 14 of the Central Excise Act but concluded that the statements alone were insufficient to determine the excisability of the goods. The court emphasized the need to consider the totality of the factors and found the respondent's reliance on these statements to be erroneous.
Conclusion:
The court allowed the petition, quashing the order dated 26th October 1989, and ruled that the petitioner was not liable to pay excise duty on the items in question. The petitioner was permitted to withdraw the deposit made in court, and the bank guarantees furnished were to be released. The judgment was stayed for eight weeks to allow the respondents to obtain any further orders.
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2002 (12) TMI 94
Issues Involved:
1. Quashing of the complaint under Sections 9AA/13/19 of the Central Excise Act, 1944.
2. Direction to not arrest the petitioners in connection with the case.
Detailed Analysis:
1. Quashing of the Complaint:
The petitioners sought a writ of certiorari to quash the complaint under Sections 9AA/13/19 of the Central Excise Act, 1944. They argued that the offences under Section 9 are deemed non-cognizable, meaning they do not warrant immediate arrest without a warrant. The petitioners contended that the Central Excise Officers do not have the authority to remand individuals to custody for pending investigations, as the Act only allows for inquiries, not full-fledged investigations. The court observed that no FIR or formal complaint had been lodged against the petitioners, and the remand application did not pertain to them. Consequently, the argument for quashing the complaint was not maintainable. The court emphasized that the Central Excise Act does not override the provisions of the Code of Criminal Procedure regarding arrests and the filing of complaints.
2. Direction to Not Arrest the Petitioners:
The petitioners also sought a writ of mandamus to prevent their arrest, fearing imminent detention based on the actions taken against others in the case. The court noted that the power of arrest under Section 13 of the Central Excise Act is conditional and must be exercised with due process. The court highlighted that the Central Excise Officers' powers are not equivalent to those of police officers under the Code of Criminal Procedure, particularly concerning non-cognizable offences. The court referenced Article 21 of the Constitution, which safeguards personal liberty and requires any deprivation of liberty to follow the procedure established by law. The court cited the Supreme Court's ruling in S.M.D. Kiran Pasha v. Government of Andhra Pradesh, which supports the pre-violation protection of fundamental rights. The court concluded that the authorities must adhere to legal procedures and cannot arrest individuals without prima facie evidence and due process.
Conclusion:
The court dismissed the petitioners' request to quash the complaint but partially allowed the petition by directing the authorities to act in accordance with the law regarding arrests. The court underscored the necessity of following due process and ensuring that any arrest under the Central Excise Act aligns with the procedural safeguards outlined in the Code of Criminal Procedure. The writ petitions were thus partly allowed, with no orders as to costs.
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2002 (12) TMI 93
The High Court of Judicature at Bombay reduced the petitioner's sentence from 2 years to 6 months and increased the fine to Rs. 1 lakh for smuggling contraband goods valued at Rs. 5 lakhs. The petitioner must pay the balance fine within one month or face imprisonment in default.
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2002 (12) TMI 92
Issues:
1. Petitioner seeking declaration and direction holding Customs Department liable for warehousing charges.
2. Dispute over Customs valuation leading to prolonged legal battle.
3. Allegation of mala fide adjudication by Revenue Authorities.
4. Petitioner's claim for relief from warehousing charges.
5. Interpretation of legal principles regarding Customs liability.
Analysis:
1. The petitioner, a sole proprietary concern in the tyre business, filed a petition seeking Customs Department liability for Central Warehousing Corporation charges. The dispute arose from Customs valuation discrepancies leading to prolonged legal proceedings.
2. The Customs Department raised the value of goods significantly, triggering penalties and fines. Despite appeals and adjustments by the CEGAT and Commissioner of Customs, the issue of Countervailing Duty (CVD) emerged, causing further delays and financial burdens on the petitioner.
3. The petitioner alleged mala fide adjudication by Revenue Authorities, claiming abuse of process of law. The petitioner argued that the delays and mounting charges were solely due to the Revenue's actions, not attributable to any fault on their part.
4. The petitioner sought relief from the accumulated warehousing charges, contending that the Customs Department should bear these costs given the prolonged legal battle and alleged misconduct by the Revenue Authorities.
5. The judgment emphasized the protection under Section 155 of the Customs Act for actions done in good faith by authorities. The court found no evidence of mala fide intentions in the authorities' actions, leading to the dismissal of the petitioner's claim for relief from warehousing charges. The court cited legal precedents to support the decision, highlighting that delays in clearance cannot absolve the petitioner of demurrage charges.
This detailed analysis covers the issues raised in the legal judgment, providing a comprehensive overview of the case and the court's decision.
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2002 (12) TMI 91
Issues involved: Reduction of import quota for raw material, alleged breach of Import Control regulations, challenge based on Article 14 of the Constitution, breach of principles of natural justice.
Reduction of Import Quota: The petition challenged an order reducing the entitlement of the petitioners to import raw material for manufacturing Sanitary Napkins by 20% for a specified period u/s clause 8 of the Import (Control) Order, 1955. The order was based on alleged illegal import of wood pulp between 1980 and 1985, leading to a breach of Import Control regulations.
Alleged Breach of Import Control Regulations: The show cause notice issued to the petitioners alleged illegal import of wood pulp, violating Import Policy provisions. Despite the petitioners' responses and legal challenges, the Deputy Chief Controller found them in breach and debarring them from imports.
Challenge under Article 14: The petitioners contended that the impugned order was discriminatory and violated Article 14 of the Constitution. They argued that the interpretation adopted discriminated against them compared to other similarly placed individuals, thus breaching their constitutional rights.
Breach of Principles of Natural Justice: The petitioners raised a crucial challenge regarding the breach of principles of natural justice. They argued that the decision-maker did not provide a fair opportunity for the petitioners to respond to adverse material obtained post-hearing, violating principles of natural justice and Article 14 of the Constitution.
Decision: The High Court allowed the petition, quashing the impugned order due to the clear breach of principles of natural justice. The Court emphasized that the decision-maker must not act on material not seen or commented on by the affected party, highlighting the importance of fair opportunity and procedural fairness. The Court declined remand, considering the long period since the order and the liberal import policy in place.
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2002 (12) TMI 90
Issues:
Condonation of delay in filing appeal due to legal advice and pending representations.
Analysis:
The petitioners, engaged in processing textile fabrics, filed an application seeking condonation of delay after their appeal was dismissed. The delay was attributed to the legal consultant's advice that the order in question was not appealable due to lack of preamble and breach of natural justice principles. The petitioners made representations to reconsider the decision, but no response was received. Despite this, the petitioners believed their representations were pending and did not challenge the order immediately. A refund application was also rejected, leading to subsequent appeals. The Tribunal rejected the condonation application, citing unsatisfactory explanation for the delay.
The High Court acknowledged that the delay should have been condoned. The legal consultant's advice, the pending representations, and the delayed response from the authorities contributed to the petitioners' belief that their representations would be considered. The Court noted that the delay was not solely the petitioners' fault, as the consultant's advice, coupled with the authorities' inaction on the representations, misled them. Considering these factors, the Court set aside the dismissal order, directed the Tribunal to restore the appeal, and emphasized that the delay should be condoned. The Court highlighted that all parties involved contributed to the delay, and the dismissal of the appeal was unjust given the circumstances.
In conclusion, the High Court disposed of the petition, ordering the restoration of the appeal without costs. The judgment emphasized the need to consider all factors contributing to the delay, including legal advice and pending representations, in condoning delays in filing appeals.
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2002 (12) TMI 89
Whether the proviso to Section 11A of the Central Excise Act can be applied?
Whether the benefit of Notification No. 85/85, dated March 17, 1985 can be availed by assessee?
Held that:- A person from availing the benefit of exemption under the notification if clause (a) or clause (b) applies. Had the Revenue proceeded on the basis of facts which make out a case under Para 2 of the notification, extracted above, it would have been valid for the Tribunal to have recorded the finding which it did. The show cause notice, as noted above, did not proceed on the footing that the assessee did not disclose the fact of production of goods in two factories by the same manufacturer or in a factory by more manufacturers than one. The simple case of the Revenue was that by not disclosing the fact that M/s. Freyssinet Prestressed Concrete Co. Ltd. is a subsidiary of M/s. Gammon India Ltd. of which the assessee is a division, there has been a suppression of fact which entitled the Collector to invoke the proviso to Section 11A of the Central Excise Act. On this aspect, the finding recorded by the Tribunal is not in accord with the case of the Revenue. We are, therefore, of the view that it is not open to the Revenue to make out a new case for invoking the proviso to Section 11A of the Central Excise Act.
Insofar as the appeals filed by the assessee are concerned, in view of the fact that the goods produced by the assessee, a division of M/s. Gammon India Ltd., and M/s. Freyssinet Prestressed Concrete Co. Ltd., a subsidiary of M/s. Gammon India Ltd., are for and on behalf of M/s. Gammon India Ltd., clubbling of the clearance of goods cannot be said to be illegal, having regard to the provisions of the aforesaid notification. The assessee cannot, therefore, avail the exemption under the notification. The appeals filed by the Revenue as well as the assessee are dismissed.
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2002 (12) TMI 88
The Supreme Court dismissed the appeal regarding the classification of liquid glucose under sub-heading 1702.29, following previous decisions and circulars. The Board withdrew the earlier classification order for uniformity. The appeals were dismissed with no costs.
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2002 (12) TMI 87
Application for rectification
Held that:- In this case, admittedly while passing the order dated 24th July, 1998, apart from the reports, reliance had also been placed upon the literature of the respondents themselves. The Judicial Member notes that reliance had been placed upon this literature. Judicial Member therefore records, as noted above, that the Tribunal may again come to the same conclusion. If that be so, then it is clear that there is no mistake apparent on the record. In such a case there can be no rectification under Section 35C(2). We, therefore, set aside the impugned order and restore the original order dated 24th July, 1998.
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2002 (12) TMI 86
The Supreme Court allowed the appeal, set aside the Tribunal's order, and remitted the case for further examination due to lack of a definite finding on whether core yarn was used in manufacturing tapsa yarn. The appellant cited contradictory Tribunal judgments and argued in favor of the appeal, while the respondent suggested examining evidence on core yarn usage.
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2002 (12) TMI 85
Whether cigarettes removed for the purposes of tests in the quality control laboratory situated within the factory premises could be treated to be excisable goods manufactured and consequently liable to payment of excise duty under the provisions of the Act?
Whether excise duty is leviable on the cigarettes that are destroyed during the process of testing in the laboratory?
Held that:- The cigarette, which is the end product of tobacco, is fit for consumption before the same is removed for test. Packing of the cigarette cannot be said to be incidental or ancillary to the manufacturing process, but the same may be incidental or ancillary to its sale only. In case it is laid down that packing of cigarette is incidental or ancillary to the completion of manufactured products, the same may result into evasion of excise duty as before packing the cigarettes the same may be regularly supplied to each and every employee for his consumption without payment of excise duty thereon. The definition of 'manufacture' under Section 2(f) very clearly includes process which is incidental or ancillary to the completion of manufactured product. Manufacture of cigarette is completed when the same emerges in the form of sticks of cigarettes which are sent to the laboratory for quality control test. Sticks of cigarettes can be consumed and manufacture of the end-product, i.e., cigarette, which is commercially known in the market as such, is completed before its removal for test and after testing only packing of the same, which is the requirement of Rule 93 of the Rules, is done. Thus, we hold that sticks of cigarette which are removed for the purpose of test in the quality control laboratory located within the factory premises of the appellant-Company are liable to excise duty.
Coming now to the second question, it may be stated that learned counsel appearing on behalf of the Revenue could not dispute the proposition that the quantity of cigarette sticks that is destroyed in the course of quality control test is not liable to excise duty. In view of the non-maintenance and non-production of accounts in relation to the destruction of cigarette sticks during the course of testing, we are of the opinion that excise duty was leviable on the entire stock of cigarette sticks sent to the laboratory for quality control test. Appeal dismissed.
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2002 (12) TMI 84
The Supreme Court remitted the case to the Tribunal for reconsideration based on evidence. The appellant's appeal was partly allowed. The case involved excise duty on semi-finished goods used for manufacturing carpets. The Tribunal was directed to decide the matter afresh.
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2002 (12) TMI 83
Whether Messrs. Parle Products Limited and Messrs. Parle Biscuits Limited were "related persons" and were purchasing goods at lower prices and selling the same at higher prices and that the appellant had not filed the price list in Part IV for the sale to a related person, rather they filed the price list in Part I?
Held that:- Having regard to the plain meaning of the definition of "related person", it is to be noticed that the appellant is a subsidiary company of Messrs. Parle Products Limited and Messrs. Parle Biscuits Limited is also a subsidiary company of Messrs. Parle Products Limited. Therefore, the relationship between the appellant and Messrs. Parle Biscuits Limited, though indirect, they have mutual interest in the business of each other. The facts and circumstances of the case show that there is mutuality of interest between the three companies as sixty per cent of the products of the appellant are sold to Messrs. Parle Products Limited and the remaining forty per cent of the total product of toothpaste is being sold to Messrs. Parle Biscuits Limited. Moreover, Messrs. Parle Products Limited are incurring the expenses for sales promotion and advertisement for the sale of the appellant's product, namely, "Prudent toothpaste".
Thus no reason to disagree with the views expressed by the Tribunal by conferming the demand.
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2002 (12) TMI 82
Issues involved: Whether the Tribunal was justified in clubbing the production of three interconnected units for the purpose of central excise duty assessment.
The Supreme Court considered the appeal questioning the Tribunal's decision to treat three interconnected units as one for central excise duty assessment. The Tribunal found that the units had mutual interests, shared resources, and common operations, leading to the conclusion that their production should be clubbed together. The appellants argued that they were independent units with only some common facilities for convenience. Additionally, one of the appellants, a limited company, contended that a circular should prevent its production from being combined with the other units. The Attorney General supported the Tribunal's findings of mutual interest among the units based on factual evidence. However, the issue of circular applicability was not raised before the Tribunal, leading to a suggestion for remand for further examination.
The Court agreed with the Tribunal's finding of mutual interest among the units, supported by shared management, procurement, operations, and resources. The interconnected nature of the units was established through various commonalities, leading to the rejection of the appellants' arguments against their inter-relationship. Regarding the limited company appellant's contention based on circulars, the Court noted the need for further examination as the issue was not raised before the Tribunal. Therefore, the matter was remanded back to the Tribunal for a decision on the applicability of the circulars in question.
In conclusion, the Court confirmed the mutual inter-relationship between the units as found by the Tribunal and remanded the appeals for further consideration on the applicability of the circulars. The appeals were allowed for fresh disposal by the Tribunal in accordance with the law, specifically focusing on the limited purpose of circular applicability.
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2002 (12) TMI 81
The Supreme Court of India dismissed the appeal regarding the product "Aprot" not being classified as 'prepared and preserved food' for exemption under Notification No. 17/70. The order of the Customs, Excise and Gold (Control) Appellate Tribunal was upheld. (Citation: 2002 (12) TMI 81 - SC)
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2002 (12) TMI 80
Whether Section 11A was applicable?
Held that:- Lesser collection of duty because the adjustment of duty paid on inputs is not a case of short-levy as contended by learned Counsel for assessee. The notification in question was issued under sub-rule (1) of Rule 8. Said Rule, omitted vide Notification No. 19/88-C.E., dated 1-7-1988 dealt with power to authorize exemption from duty in special cases. If exemption is granted under Rule 8(1), goods do not cease to be excisable goods and levy of duty is not erased. Emphasis was on the duty of excise leviable on the manufactured item and duty of excise paid on the inputs available for adjustment. Therefore, Section 11A had no application to such a situation. To that extent the Tribunal was not justified in its conclusions; but that is not the end of the controversy.
It appears that the assessee had specifically questioned applicability of the notification after same was rescinded. Tribunal has not recorded any finding in this regard. The effect of Section 38A, which was introduced with retrospective effect, is also to be considered. We, therefore, deem it proper to remand the matter back to the Tribunal for consideration of these aspects. If the Tribunal holds that after the notification was rescinded w.e.f. 1-3-1986; Paragraph 3 of the Appendix became inoperative, then the position would be different. While considering that aspect the effect of Section 38A has to be kept in view. In case the Tribunal comes to the conclusion that Paragraph 3 of the Appendix was applicable because of Section 38(A)(C), it has to consider the further stand of the assessee about adjustment in the credit account maintained under Paragraph 5 of the Appendix.
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2002 (12) TMI 79
The Supreme Court allowed the appeal against the Customs Tribunal's judgment, remanding penalty imposition decision to the Commissioner for fresh consideration. The appellant voluntarily disclosed a mistake and paid the duty amount. The Court directed the Commissioner to decide on penalty imposition without costs.
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2002 (12) TMI 78
Issues Involved:
1. Whether a mistake committed by the importer in payment of higher duty owing to a computer mistake can be subject matter of an order of refund.
2. Whether Section 154 of the Customs Act applies to the rectification of such mistakes.
3. Whether the petition is barred by limitation u/s 27 of the Customs Act.
4. Whether the State can unjustly enrich itself at the cost of the importer.
Summary:
Issue 1: Mistake in Payment of Higher Duty
The petitioner, a public limited company, imported machinery and spare parts and paid 100 times more customs duty due to a clerical error in the declared value. The petitioner sought rectification and refund of the excess amount paid, arguing that the mistake was apparent from the record.
Issue 2: Applicability of Section 154 of the Customs Act
The petitioner filed an application u/s 154 of the Customs Act for rectification of the clerical error. The court examined Section 154, which allows correction of clerical or arithmetical mistakes in any decision or order passed by customs authorities. The court concluded that Section 154 does not cover errors committed by the importer and thus, does not apply to this case.
Issue 3: Limitation u/s 27 of the Customs Act
The respondents argued that the petition is barred by limitation u/s 27 of the Customs Act, which requires filing an application for refund within six months. The court noted that the bar of limitation would not apply if the State is unjustly enriching itself at the cost of the importer.
Issue 4: Unjust Enrichment by the State
The court emphasized that the State must act reasonably, fairly, and equitably, adhering to the principles under Article 14 of the Constitution of India. The court held that the State should not take recourse to unjust enrichment due to a bona fide mistake by the petitioner. The court further stated that a genuine mistake, even if committed by the petitioner, should be rectified, and the State should not unduly benefit from it.
Conclusion:
The court allowed the writ petition, directing the respondents to consider the matter on merit and pass an appropriate order after giving an opportunity of hearing to the petitioner. The court issued a writ of mandamus accordingly, disposing of the petition without any order as to costs.
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2002 (12) TMI 77
Legality and validity of clause 9A of the Cement Control Order 1967?
Whether the appellants are entitled to refund of the contribution made by them under clause 9A of the Control Order?
Held that:- In the present case, it is clear that the burden of payment under clause 9A was passed on to the customers. The President of the Cement Manufacturer Association, soon after the insertion of the amendment in February, 1982, in a communication dated March 12, 1982, sent to the Secretary of Ministry of Commerce, Department of Industrial Development, Government of India, while giving break-up of the price of non-levy cement added in the said price, a sum of Rs. 9 per mt. payable under clause 9A on production of the non-levy cement. Further, it appears that the levy under clause 9A was accepted by the entire cement industry except the challenge made by the four appellants by filing the writ petitions; one just before the contribution under clause 9A was withdrawn and three after it was withdrawn. Besides the principles of unjust enrichment on equitable principles which squarely apply here, the applicants are not entitled to claim refund of amount paid into the CRA under clause 9A. It is evident that the amount so deposited was expended for the purpose under the Control Order. Under these circumstances, we direct that pursuant to declaration of invalidity of clause 9A of the Control Order, the amount of contribution already paid under clause 9A will not be liable to be refunded to the appellants.
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2002 (12) TMI 76
"(1) Whether, on the facts and in the circumstances of the case and in the absence of a certificate from the Export House being filed along with the return, the assessee is entitled to the deduction under section 80HHC with regard to the foreign sales made? - (2) Whether, on the facts and in the circumstances of the case and on an interpretation of sub-section (4A) of section 80HHC read with State Level Committee v. Morgardshammar India Ltd. and Dr. Mrs. Renuka Datla v. CIT is not the provision mandatory and does not non-compliance of the provision result in disallowance of the deduction? - (3) Whether, on the facts and in the circumstances of the case and in the light of the Supreme Court decision in Keshavji Ravji and Co. v. CIT and also in the absence of a statutory requirement like the one in subsection (4A) of section 80HHC, the Tribunal is justified in relying on CIT v. Malayalam Plantations Ltd. and does the same have application in the case on hand?" - the questions of law framed for the decision of this court are answered against the Revenue and in favour of the assessee. In other words, questions Nos. 1 and 3 are answered in the affirmative and question No. 2 in the negative. Accordingly, the appeal fails and it is dismissed.
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9911796707
