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1985 (5) TMI 217
Issues:
1. Timeliness of filing the appeal before the Appellate Collector.
2. Applicability of Section 14 of the Limitation Act for excluding time in computing limitation.
3. Exclusion of time under Section 14 based on preparatory steps for filing the appeal.
4. Validity of the order of the Collector (Appeals) due to lack of personal hearing.
Analysis:
Issue 1: Timeliness of filing the appeal before the Appellate Collector
The appellants filed an appeal to the Appellate Collector, which was dismissed as barred by limitation. Despite being misled by their Advocate into filing a revision petition to the Government first, the Tribunal held that the appeal before the Appellate Collector was not filed within the prescribed time limit. The Tribunal emphasized that there was no discretion available for condonation of the delay in filing the appeal before the Appellate Collector.
Issue 2: Applicability of Section 14 of the Limitation Act
The appellants argued for the application of Section 14 of the Limitation Act to exclude certain periods in computing limitation for filing the appeal. Section 14 allows for the exclusion of time spent in bona fide proceedings in court without jurisdiction. However, the Tribunal noted that even after excluding the relevant period, the appeal remained significantly beyond the time limit, rendering the argument invalid.
Issue 3: Exclusion of time under Section 14 based on preparatory steps
The appellants contended that the period from the date of receiving the order to the filing of the revision petition should be excluded based on preparatory steps, citing a judgment of the Andhra Pradesh High Court. However, the Tribunal rejected this argument, stating that the time taken for filing the revision petition far exceeded what could be considered as preparatory steps, making the exclusion unreasonable.
Issue 4: Validity of the order of the Collector (Appeals)
The appellants challenged the order of the Collector (Appeals) on the grounds of lack of a personal hearing. However, the Tribunal found that the appeal was time-barred, and there was no provision for condonation of delay at that time. Therefore, the absence of a personal hearing did not invalidate the order of the Collector (Appeals).
In conclusion, the Tribunal upheld the decisions of the lower authorities and dismissed the appeal based on the issues discussed above.
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1985 (5) TMI 216
Issues:
1. Failure to comply with signing requirements under R. 213(2)(c) of the Central Excise Rules, 1944.
2. Application for leave to amend the Memorandum of Appeal and for condonation of delay.
3. Interpretation of rules regarding who can sign a Memorandum of Appeal.
4. Invocation of discretionary power of the Tribunal under R. 11 of the Customs, Excise & Gold (Control) Appellate Tribunal (Procedure) Rules, 1982.
5. Whether requiring the principal officer to sign the Memorandum of Appeal constitutes an amendment.
Detailed Analysis:
1. The judgment dealt with a preliminary objection raised by the Respondent regarding the failure to comply with the signing requirements under R. 213(2)(c) of the Central Excise Rules, 1944. The Memorandum of Appeal and application were signed and verified by a person other than the principal officer of the appellant company, as required by the rule. The objection was based on the lack of proper authorization for the signatory.
2. The Appellant filed applications for leave to amend the Memorandum of Appeal and for condonation of delay. The appeal was initially filed by a person who was not the principal officer of the company, leading to the need for amendments to rectify the signing issue. The applications were heard and disposed of concurrently with the objection.
3. The judgment discussed the interpretation of rules regarding who can sign a Memorandum of Appeal. Rule 216(3) of the Central Excise (11th Amendment) Rules, 1982 refers to R. 213(2), which specifies the principal officer of a company as the competent signatory. The court emphasized the importance of compliance with the signing requirements.
4. The Appellant invoked the discretionary power of the Tribunal under R. 11 of the Customs, Excise & Gold (Control) Appellate Tribunal (Procedure) Rules, 1982, to rectify defects in the Memorandum of Appeal. The argument was made that the Appellant should not be penalized for the mistake made by the counsel, citing a relevant legal precedent.
5. The judgment analyzed whether requiring the principal officer to sign the Memorandum of Appeal would constitute an amendment. Drawing parallels from case law under the Civil Procedure Code, the court concluded that the defect in signing could be cured by amending the documents to have them signed by the principal officer within a specified timeframe. The court allowed the application under R. 11 for the necessary amendments and dismissed the application for condonation of delay as infructuous.
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1985 (5) TMI 215
Whether these various processes carried out by the petitioner company amount to bringing into existence different and distinct goods, commercially known as such, to attract levy of duty under Section 4 of the Central Excises and Salt Act, 1944?
Whether the impugned Act is ultra vires of entry 84 of List I of the Seventh Schedule?
Held that:- The conclusion that inevitably follows that in view of the amendment made in Section 2(f) of the Central Excises and Salt Act as well as the substitution of new Item 19 I and Item 22(1) in Excise Tariff in place of the original Items, the contentions of the petitioners cannot be accepted. Section 3 of the Central Excises and Salt Act clearly indicates that the object of the entries in the First Schedule is firstly to specify exciable goods and secondly to specify rates at which excise duty will be levied. Reference has already been made to Rule 56A. Under sub-rule (2) of the Rule 56A, it is expressly provided that a manufacturer will be given credit of the duty which is already paid on the articles used in the manufacture subject to certain conditions. It is stated before us that excise duty will be charged on processed printed material. Processors will be given credit for the duty already paid on the grey cloth by the manufacturer of the grey cloth. In this view of the matter we are of the opinion that the views expressed by the Bombay High Court in the case of New Shakti Dye Works Pvt. Ltd. and Mahalakshmi Dyeing and Printing Works v. Union of India and Anr. (1983 (6) TMI 174 - BOMBAY HIGH COURT) are correct. The views expressed by the Gujarat High Court in Vijay Textiles v. Union of India [1979 (1) TMI 101 - HIGH COURT OF GUJRAT AT AHMEDABAD] in so far as it held that the processed fabrics could only be taxed under residuary entry and not under Item, 19 I or Item 22 of the First Schedule of the Central Excise Tariff cannot be sustained. Appeal dismissed.
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1985 (5) TMI 214
Issues Involved:
1. Validity of Section 65(1) and Section 42 of the Karnataka Agricultural Produce Marketing (Regulation) Act, 1980.
2. Quid pro quo for the enhancement of market fees from 1% to 2%.
3. Repugnancy between the Karnataka Act and the Tobacco Board Act, 1975.
4. Validity of the amendment of bye-laws under Section 148 of the Act.
5. Refund of market fees collected under Section 65(1) and excess fees under Section 65(2).
Summary:
1. Validity of Section 65(1) and Section 42 of the Karnataka Agricultural Produce Marketing (Regulation) Act, 1980:
The High Court struck down Section 65(1) and Section 42 of the Karnataka Act as unconstitutional. The Court found that the construction of rural roads did not qualify as a special service to the class of persons paying the fee, and the funds collected had been spent on public roads, which did not provide a direct benefit to the fee payers. The Court held that the amendments did not cure the constitutional defects identified in the Rajasekhariah case.
2. Quid pro quo for the enhancement of market fees from 1% to 2%:
The High Court examined the financial projections and estimates provided by the market committees and found that there was a broad and substantial correlation between the fees collected and the services rendered. The Court held that the enhancement of market fees from 1% to 2% was justified based on the projected developmental works and services. However, the Court directed the Chief Marketing Officer to re-examine the estimates and financial projections for certain market committees to ensure the correlation between fees and services.
3. Repugnancy between the Karnataka Act and the Tobacco Board Act, 1975:
The High Court held that the provisions of the Karnataka Act were not repugnant to the Tobacco Board Act, 1975. The Court found that the Central Act primarily dealt with the control and development of the tobacco industry, while the State Act regulated the marketing of agricultural produce, including tobacco. The Court noted that the two legislations could co-exist and operate cumulatively, provided the market committees obtained the necessary licenses under the Tobacco Board Act.
4. Validity of the amendment of bye-laws under Section 148 of the Act:
The High Court upheld the validity of the amendment of the bye-laws for enhancing the market fee from 1% to 2%. The Court found that the amendment was made in accordance with the procedure laid down in Section 148 of the Act, and the deletion of the requirement for previous publication and hearing of affected interests by the Karnataka Ordinance 22 of 1981 was valid. The Court noted that the Chief Marketing Officer's direction to amend the bye-laws could be regarded as his previous approval.
5. Refund of market fees collected under Section 65(1) and excess fees under Section 65(2):
The High Court directed the refund of market fees collected under Section 65(1) to the petitioners who had approached the Court and obtained writs of mandamus. However, the Court denied the refund of excess fees collected under Section 65(2), as the fees were found to be justified based on the services rendered. The Court also noted that the fees collected had been spent for the purposes envisaged by the Act and any refund would result in unjust enrichment of the petitioners.
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1985 (5) TMI 213
Principles of natural justice - Held that:- Appeal allowed. The highest bidder whose bid was rejected on the ground that the bid did not represent the market price, was not given an opportunity to raise his own bid when privately a higher offer was received. If the allegations made in the letter influenced the decision of the Chief Minister, fair-plan in action demands that the appellant should have been given an opportunity to counter and correct the same. Application of the minimum principles of natural justice in such a situation must be reading the statute and held to be obligatory. When it is said that even in administrative action, the authority must act fairly, it ordinarily means in accordance with the principles of natural justice variously described as fair play in action That having not been done, the grant in favour of the fourth respondent must be quashed.
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1985 (5) TMI 212
Issues:
Challenge to assessment orders under the Karnataka Sales Tax Act for the years 1972-73 and 1973-74 due to dissolution of a partnership firm without proper notice to ex-partners.
Analysis:
The petitioner, an ex-partner of a dissolved partnership firm, challenged assessment orders made by the Commercial Tax Officer without issuing notices to all ex-partners. The petitioner argued that assessments made post-dissolution without proper notice were illegal. The petitioner relied on a Division Bench ruling in S.M. Suligavi's case, emphasizing the necessity of serving notices on ex-partners for recovery proceedings.
The Government Advocate, citing P.K. Ahmed's case, contended that assessments on dissolved firms after serving notice on one ex-partner were valid. The Court referred to Rule 43(2) of the Karnataka Sales Tax Rules, allowing service of notices on any ex-partner of a dissolved firm. The judgment highlighted the Supreme Court's decision in Raja Reddy Mallaram and a Division Bench ruling in K.L. Parvathamma's case, supporting the service of notices on ex-partners post-dissolution.
The Court reconciled the conflicting rulings by stating that notice to all ex-partners was not mandatory for assessments on dissolved firms under the Karnataka Sales Tax Act. The judgment differentiated between recovery and assessment procedures, upholding the validity of assessments without individual notices to all ex-partners. The Court emphasized the applicability of Rule 43(2) in such cases and rejected the petitioner's contentions based on Suligavi's case.
In conclusion, the Court dismissed the writ petitions, affirming the validity of the assessment orders under the Karnataka Sales Tax Act. The judgment discharged the rule issued and stated that no costs were to be incurred.
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1985 (5) TMI 211
Issues Involved:
1. Legality of the search conducted by the sales tax department.
2. Legality of the seizure of books and documents.
3. Demand for security under section 7(4a)(i) of the Bengal Finance (Sales Tax) Act, 1941.
4. Petitioner's failure to adopt statutory remedies.
Detailed Analysis:
1. Legality of the Search Conducted by the Sales Tax Department:
The petitioner argued that the search was unlawful because section 14(3) of the Bengal Finance (Sales Tax) Act, 1941, did not permit the Commissioner or any authorised official to search the business premises. The power of search is found in section 14(4), which requires information from an external source and a reason to believe that the petitioner was keeping any accounts, registers, or documents or stock of goods for sale. The court held that the power to inspect given in sub-section (3) cannot be limited only to the inspection of such books as the dealer may choose to produce. The power must include the inspection of other books and documents which are in the business premises but which were not being produced by the dealer. The court cited the Supreme Court's decision in Commissioner of Commercial Taxes v. Ramkishan Shrikishan Jhaver, emphasizing that the power to inspect inherently includes the power to search if necessary. Thus, the search conducted by the sales tax department was lawful.
2. Legality of the Seizure of Books and Documents:
The petitioner contended that since the search was unlawful, the seizure of the books and documents was also unlawful. The court noted that section 14(3) allows the Commissioner to seize such accounts, registers, or documents if there is reason to suspect that any dealer is attempting to evade payment of any tax under the Act. The court found that the authorized officials had lawfully entered the business premises and requested the production of accounts, which were not produced. The officials found 178 account slips containing various transactions that could not be explained by anyone present. The court concluded that the seizure was lawful as it was based on a reasonable suspicion that the petitioner was attempting to evade payment of sales tax.
3. Demand for Security under Section 7(4a)(i) of the Bengal Finance (Sales Tax) Act, 1941:
The petitioner argued that the demand for security was unlawful. The court noted that the Assistant Commissioner of Commercial Taxes had ordered the furnishing of security after detecting cases of tax evasion by the petitioner. It was estimated that the petitioner had suppressed sales of more than a crore in one year and more than three crores in another year. A security of Rs. 5,00,000 was demanded after giving notice and considering the petitioner's written submission. The court upheld the demand for security, noting that it was based on good and sufficient reasons and was not entirely unlawful.
4. Petitioner's Failure to Adopt Statutory Remedies:
The petitioner filed the writ petition on 2nd July 1984, challenging the search and seizure conducted on 24th March 1983. The court noted that the petitioner had not provided any explanation for the delay in filing the writ petition. The court also observed that the petitioner had not availed of the statutory remedy of applying for revision if it was not satisfied with the order of security. The court held that the writ petition failed as it was not a case of inherent lack of jurisdiction, and the petitioner had not adopted the statutory remedy available.
Conclusion:
The court dismissed the writ petition, vacated the interim order, and held that the search and seizure conducted by the sales tax department were lawful. The demand for security was also upheld, and the petitioner's failure to adopt statutory remedies was noted. The court emphasized that the power to inspect inherently includes the power to search, and the authorized officials had acted within their legal rights.
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1985 (5) TMI 210
Issues:
1. Taxability of sale proceeds from "latex" extracted by the assessee.
2. Interpretation of agreements for the purchase of rubber trees and extraction of "latex."
3. Applicability of sales tax on the sale of "latex" under the Karnataka Sales Tax Act of 1957.
Detailed Analysis:
Issue 1: The main issue in this case was the taxability of the sale proceeds from the "latex" extracted by the assessee. The Commercial Tax Officer had brought the sale of "latex" by the assessee under the purview of the Karnataka Sales Tax Act. The Deputy Commissioner initially allowed the appeals filed by the assessee, but the Commissioner, using suo motu power of revision, revised the orders and restored the taxability of "latex" sales. The Court upheld the Commissioner's decision, stating that the sale proceeds from "latex" were indeed exigible to sales tax under the Act.
Issue 2: The Court analyzed the nature of the agreements entered into by the assessee for the purchase of rubber trees and the extraction of "latex." It was noted that the assessee had the right to cut and remove the rubber trees, extract "latex," and sell it in the open market. The agreements were not lease agreements but rather contracts for the sale of the extracted "latex." The Court referred to previous judgments and agreed that such income derived from the sale of extracted products did not qualify as agricultural income but fell under non-agricultural income, subject to sales tax.
Issue 3: The Court considered the applicability of sales tax on the sale of "latex" under the Karnataka Sales Tax Act. Relying on precedents and rulings from the Madras and Kerala High Courts, the Court concluded that the sale of "latex" was indeed exigible to sales tax under the Act. The Court also referenced a previous case involving toddy tapping and sale, where a similar conclusion was reached regarding the taxability of such transactions. Ultimately, the Court dismissed the appeals filed by the assessee, directing each party to bear their own costs.
In conclusion, the Court affirmed the taxability of the sale proceeds from the "latex" extracted by the assessee, emphasizing that such transactions did not qualify as agricultural income but rather as sales exigible to tax under the Karnataka Sales Tax Act.
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1985 (5) TMI 209
Issues Involved:
1. Whether electric motors other than those of 3 to 7.5 horsepower fall within the ambit of entry No. 17 to the Third Schedule of the Delhi Sales Tax Act, 1975, and are exempt from sales tax.
2. If electric motors other than those of 3 to 7.5 horsepower are not covered by entry No. 17, whether they fall under entry No. 15 to the First Schedule or are parts of industrial machinery as per entry No. 27 of the notification dated 21st October, 1975.
Issue-wise Detailed Analysis:
1. Exemption of Electric Motors under Entry No. 17 of the Third Schedule:
The primary issue was whether electric motors other than those of 3 to 7.5 horsepower are exempt from sales tax under entry No. 17 of the Third Schedule of the Delhi Sales Tax Act, 1975. The Tribunal had initially interpreted that the words "3 to 7.5 h.p." qualified only monoblock pump-sets and not electric motors, thus exempting all electric motors. However, the High Court disagreed, stating that the qualification of "3 to 7.5 h.p." applies to electric motors as well. The Court reasoned that the legislative intent was to exempt electric motors used for agricultural purposes, typically those within the 3 to 7.5 horsepower range. Therefore, electric motors outside this range do not qualify for the exemption under entry No. 17.
2. Classification of Electric Motors under Entry No. 15 of the First Schedule or Entry No. 27 of the Notification:
The second issue revolved around the classification of electric motors that do not fall under entry No. 17. The Court examined whether these motors should be classified under entry No. 15 of the First Schedule, which pertains to "all electronic and electrical goods," or under entry No. 27 of the notification dated 21st October 1975, which covers "parts of industrial machinery and plant."
The Court concluded that electric motors are indeed "electrical goods" as per entry No. 15 of the First Schedule. This conclusion was supported by the fact that electric motors are inherently electrical in nature and are used to convert electrical energy into mechanical energy. Therefore, they fit within the general description of electrical goods.
However, the Court also considered the alternative contention that electric motors used in industrial settings could be classified as "parts of industrial machinery and plant" under entry No. 27 of the notification. The Court agreed that electric motors used in industries are integral to industrial machinery and plant. Hence, when sold for industrial purposes, these motors should be taxed at the reduced rate applicable to industrial machinery and plant, as specified in entry No. 27.
Conclusion:
The High Court ruled that:
- Only electric motors of 3 to 7.5 horsepower are exempt from sales tax under entry No. 17 of the Third Schedule of the Delhi Sales Tax Act, 1975.
- Electric motors not falling under entry No. 17 are classified as "electrical goods" under entry No. 15 of the First Schedule, subject to a sales tax rate of 10%.
- Electric motors used for industrial purposes are considered "parts of industrial machinery and plant" under entry No. 27 of the notification dated 21st October 1975, and are subject to a reduced sales tax rate of 5%.
The Court ordered that the parties bear their own costs.
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1985 (5) TMI 208
Issues Involved:
1. Eligibility for sales tax exemption under the West Bengal Sales Tax Act.
2. Validity of refusal to issue an eligibility certificate.
3. Interpretation of statutory notifications and agreements.
Issue-wise Detailed Analysis:
1. Eligibility for Sales Tax Exemption:
The petitioner started a business on March 1, 1978, manufacturing electrical fans and regulators, and obtained the necessary licenses and registrations, including a Central excise license and registration under the West Bengal Sales Tax Act, 1954. The petitioner claimed eligibility for sales tax exemption as a new industrial undertaking under Notification No. 1809-F.T. dated April 1, 1976. However, the concept of eligibility certification was introduced later by Notification No. 1658-F.T. dated April 1, 1980, which required a certificate for exemption, valid for 12 months and renewable at the authority's discretion.
2. Validity of Refusal to Issue an Eligibility Certificate:
The Assistant Commissioner of Commercial Taxes, Howrah Circle, rejected the petitioner's application for an eligibility certificate, deeming the petitioner's firm an expansion of the established unit, M/s. Khaitan Fans (P.) Ltd. This decision was upheld by the Additional Commissioner, Commercial Taxes, West Bengal, who concluded that the petitioner's business was not an independent unit but a diversification of sales for M/s. Khaitan Fans (P.) Ltd. to avoid sales tax. The petitioner argued that the refusal was not based on statutory conditions but rather on extraneous considerations.
3. Interpretation of Statutory Notifications and Agreements:
The court emphasized that statutory authorities must adhere strictly to the conditions laid down in the notifications and statutes. The refusal to grant the eligibility certificate should be based solely on non-compliance with these conditions. The court referenced the Supreme Court decision in Commissioner of Income-tax, Gujarat v. A. Raman and Co., which stated that tax avoidance through lawful means is permissible. The court found that the refusal to issue the eligibility certificate was not grounded in statutory requirements but in assumptions about the petitioner's business relationship with M/s. Khaitan Fans (P.) Ltd.
Judgment:
The court quashed the orders dated August 24, 1981, and February 17, 1981, which denied the eligibility certificate. The court directed the respondent authority to reconsider the matter afresh, adhering strictly to the statutory conditions and providing the petitioner an opportunity to be heard. The reconsideration was ordered to be completed within eight weeks from the date of communication of the order. Additionally, the sales tax authority was directed to consider the application for issuance of declaration forms in conjunction with the eligibility certificate matter.
Conclusion:
The petition was allowed, emphasizing the need for statutory authorities to act within the confines of the law and not on extraneous considerations. The court underscored the principle that any ambiguity in taxing statutes should benefit the assessee, and authorities must strictly follow legislative conditions without overstepping their statutory boundaries.
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1985 (5) TMI 207
Issues:
- Whether a claim that became barred by time during the pendency of a winding-up petition can be a legitimate basis for winding-up proceedings.
- Whether a creditor can seek a winding-up order based on a company's deemed inability to pay a debt that is barred by time.
Analysis:
The judgment addresses multiple winding-up petitions filed by different creditors against companies, all raising a common question regarding the legitimacy of using time-barred claims as a basis for winding-up proceedings. The court clarifies the distinction between the right and the remedy to enforce a claim, emphasizing that even if a claim becomes time-barred, the claimant remains a creditor of the company and can seek a winding-up order if there is a legitimate basis for it. The court highlights that a claim becoming time-barred extinguishes the remedy but not the right of the creditor.
The court rules that a creditor cannot seek a winding-up order solely based on a debt that is barred by time, as the debt must be both "due" and recoverable to be a valid basis for the petition. The court rejects the argument that the claims were within time when the petitions were filed, emphasizing that the company's liability to be wound up is determined when the winding-up order is made, regardless of the timing of the petition filing. The court also dismisses the application of the principle of "relation back" to winding-up petitions, stating that they are not equivalent to the filing of a suit under the Limitation Act.
Furthermore, the court denounces the misuse of winding-up petitions based on time-barred claims, labeling it as an abuse of the court's jurisdiction and a misuse of the Companies Act's provisions. The judgment criticizes the practice of using winding-up proceedings for claims of doubtful validity and highlights the importance of ensuring the proper use of legal remedies in corporate matters.
In conclusion, the court dismisses the winding-up petitions that relied on time-barred claims, emphasizing that such petitions are an abuse of the court's process and the Companies Act's provisions. The parties are directed to bear their respective costs, and the judgment serves as a caution against misusing winding-up proceedings for claims that are barred by time.
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1985 (5) TMI 206
Issues:
1. Dispute over payment to a secured creditor by the official liquidator.
2. Allegation of disposal of hypothecated assets without notice.
3. Interpretation of the rights of a hypothecatee in case of winding-up.
4. Consideration of waiver of security rights by the creditor.
Analysis:
The judgment revolves around a dispute between Syndicate Bank, a secured creditor of a company in liquidation, and the official liquidator regarding the payment of sale proceeds and the handover of hypothecated assets. The bank sought direction for payment from the sale of a diesel generating set and claimed that all machines in the company's factory were hypothecated to them. The official liquidator denied knowledge of the hypothecation and argued that the bank, holding a simple money decree, was an unsecured creditor. The bank insisted on its security rights, citing the appointment of a receiver to inventory the machines. The key issue framed was whether the bank was entitled to the payment.
The court noted that unlike a mortgage, a pledge, or hypothecation does not transfer interest but creates a special property in favor of the pledgee or hypothecatee. The bank failed to take possession or enforce security through the suit, opting for a simple money decree. By not claiming on the security, the bank was deemed to have waived its rights as a hypothecatee, leading to the bar under Order 2, rule 2 of the Civil Procedure Code. Citing precedents, the court held that the bank must now rank as an unsecured creditor and prove its claim during winding-up proceedings. The judgment emphasized that the bank's chosen course of action led to the dismissal of its claim, attributing the outcome to the bank's decisions.
In conclusion, the court dismissed the bank's application, ruling in favor of the official liquidator. Each party was directed to bear its respective costs. The judgment highlights the importance of actively asserting security rights and the consequences of choosing a specific legal course, ultimately impacting the creditor's standing in insolvency proceedings.
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1985 (5) TMI 191
The Appellate Tribunal CEGAT, New Delhi allowed the appeal filed by the appellants against the Order-in-Appeal No. V(IF) 2-2/76. The appellants, manufacturers of Maida, were entitled to a refund of Excise Duty amounting to Rs. 8,532/- paid during a specific period as duty on Maida was withdrawn through an Exemption Notification. The Tribunal granted the refund based on the judgment of the High Court of Madhya Pradesh in a similar case.
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1985 (5) TMI 190
Issues:
1. Application for amendment of an order under Section 35(2) of the Central Excises & Salt Act.
2. Interpretation of Section 35C(2) regarding rectification of mistakes apparent from the record.
3. Grounds for claiming rectification based on trade notice and a judgment of the Bombay High Court.
4. Dissenting opinion on the jurisdiction of a bench to hear an application for amending an order passed by another bench.
Analysis:
The judgment pertains to an application filed by M/s. Shree Laxmi Textile Mills seeking an amendment of an order dated 6-7-1984 under Section 35(2) of the Central Excises & Salt Act. The application argued that duty should have been paid at a lower rate based on a trade notice and a lower quantity manufactured. The Tribunal considered the scope of Section 35C(2) in rectifying mistakes apparent from the record. It was established that errors to be rectified must be obvious and manifest, not requiring extensive reasoning. The Tribunal cited precedents to differentiate between powers of review/revision and rectification under the Act.
The applicants presented three grounds for rectification, but the Tribunal found them debatable and not apparent from the record. The grounds included reliance on a trade notice and a judgment of the Bombay High Court. The Tribunal noted that these grounds were not raised during the original appeal as the appellants were unaware of them at the time. It was concluded that these grounds did not meet the criteria of being mistakes apparent from the record, as they required external investigation and interpretation beyond the existing record.
A dissenting opinion was presented regarding the jurisdiction of a bench to hear an application for amending an order passed by another bench. The dissenting member argued that the application directly sought to amend the previous order and questioned the logic of allowing such applications. The dissent emphasized that no bench should entertain applications to modify orders passed by other benches, even for rejection, when the original bench is available. The dissenting member declined to pass any order on the application, highlighting the potential implications of allowing such amendments.
In conclusion, the majority of the Tribunal dismissed the application for amendment, emphasizing that the grounds presented did not constitute mistakes apparent from the record. The judgment underscored the importance of clarity and specificity in seeking rectification under Section 35C(2) of the Central Excises & Salt Act, highlighting the need for errors to be readily discernible from the existing record without the need for extensive investigation or external references.
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1985 (5) TMI 189
The appeal involved a question of whether copper strips, after insulation, should be subjected to duty again. The Collector of Central Excise found against the appellants, but the Tribunal ruled in favor of the appellants based on the Bombay High Court decision. The Tribunal held that copper strips, after insulation, are not liable to duty again. The appeal was allowed, and the demand against the appellants was set aside.
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1985 (5) TMI 188
Issues Involved:
1. Non-granting and/or non-disposing of applications for permission to import carbon steel re-rollable scrap.
2. Compliance with Import Export Policy AM-1984 and Hand Book of Import Export Procedure AM-1984.
3. Obligations of MSTC and SAIL in supplying re-rollable scrap.
4. Petitioners' entitlement to direct import licenses.
5. Assessment and reassessment of petitioners' consumption capacity.
Detailed Analysis:
1. Non-granting and/or non-disposing of applications for permission to import carbon steel re-rollable scrap:
The petitioners challenged the non-granting and/or non-disposing of their applications for permission to import carbon steel re-rollable scrap. The applications were made in accordance with the Import Export Policy of AM-1984, specifically under para 73(2) and para 155(1) of the Hand Book of Import Export Procedure AM-1984. The petitioners had registered their requirements with MSTC but faced delays and lack of clarity in the supply process.
2. Compliance with Import Export Policy AM-1984 and Hand Book of Import Export Procedure AM-1984:
The judgment emphasizes the provisions of para 155(1) of the Hand Book of Import Export Procedure AM-1984, which mandates that the canalising agency must indicate within 90 days the arrangements for supply. If the agency fails to do so, the actual user may approach the CCI&E (Monitoring Committee) for direct imports. The judgment found that MSTC failed to comply with these provisions, leading to the petitioners' inability to procure the required raw material.
3. Obligations of MSTC and SAIL in supplying re-rollable scrap:
MSTC directed the petitioners to approach SAIL for their requirements. However, SAIL redirected them to AISRA, which expressed its inability to recommend any material allotment. Despite the petitioners completing all formalities, including opening a confirmed revolving L/C, no substantial supply was made. The judgment criticized MSTC and SAIL for not fulfilling their obligations and misleading the Monitoring Committee about their ability to supply the material.
4. Petitioners' entitlement to direct import licenses:
The judgment highlighted that the petitioners were entitled to direct import licenses due to the failure of MSTC and SAIL to supply the required material. The Monitoring Committee initially rejected the petitioners' request based on misleading information from SAIL. However, the judgment ordered that if the respondents cannot supply the material from indigenous sources, they must issue direct import licenses within two months after 90 days.
5. Assessment and reassessment of petitioners' consumption capacity:
The petitioners' consumption capacities were assessed by a Technical Committee appointed by the Central Government. The judgment noted that the respondents did not provide any evidence to contradict the petitioners' claimed capacities. The court allowed for the possibility of reassessment by a duly appointed Technical Committee, provided the petitioners are given an opportunity to be heard.
Conclusion:
The writ petitions were allowed, with the court directing the respondents to reassess the petitioners' consumption capacities if necessary and to make arrangements for supply within 90 days. If the supplies cannot be made from indigenous sources, direct import licenses must be issued. The court emphasized the importance of adhering to the provisions of the Import Export Policy and the Hand Book of Import Export Procedure to ensure the actual users are not deprived of necessary raw materials.
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1985 (5) TMI 184
Issues:
- Legality and correctness of the order passed by the Collector of Central Excise (Appeals) Calcutta
- Availing benefit of exemption under Notification 83/83 in respect of straw board
- Charging higher value from customers than approved value
- Demand raised against the respondents in respect of excise duty
- Interpretation of Section 4 of the Central Excises and Salt Act, 1944
- Application of the Explanation to Section 4(4)(d)
- Plea of limitation for raising demand against the respondents
Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi questions the legality and correctness of the order dated 28-6-1984 passed by the Collector of Central Excise (Appeals) Calcutta. The respondents were availing the benefit of exemption under Notification 83/83 for straw board but had collected excise duty from customers without including it in the value for determining liability to central excise duty. The Collector (Appeals) allowed the appeal, leading to the Revenue filing an appeal to the Tribunal. The respondents had charged higher value from customers than the approved value, resulting in a demand raised against them for excise duty. The Assistant Collector of Central Excise confirmed a portion of the demand against the respondents.
During the hearing, the Advocate for the respondents argued that the valuation of excisable goods should be determined according to Section 4 of the Central Excises and Salt Act, 1944. The Advocate contended that duty was specific and ad valorem, and therefore, the value had to be determined in accordance with Section 4. However, the Tribunal found no merit in this argument and referred to the Explanation to Section 4(4)(d) inserted retrospectively by the Finance Bill, 1982. The Explanation clarified the calculation of excise duty payable on excisable goods, supporting the Tribunal's decision.
Regarding the plea of limitation for raising demand against the respondents, the Tribunal noted that the duty element was collected from customers despite not being included in the price list. This discrepancy was discovered during scrutiny by the Revenue. The Tribunal rejected the argument that a shorter period of limitation should apply and upheld the demand raised against the respondents. The impugned order was found to be in contravention of the Explanation to Section 4(4)(d) and was set aside by the Tribunal. Consequently, the appeal was allowed, and the order passed by the Assistant Collector of Central Excise was restored.
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1985 (5) TMI 181
Issues:
1. Interpretation of Section 27(1) of the Customs Act, 1962 regarding the timeline for filing refund claims.
2. Determination of whether subsequent refund applications are considered as a continuation of the original claim or as fresh claims.
Analysis:
The appellant imported spherical bearings and paid duty, later discovering a short landing issue. The clearing agents filed a refund claim, but the goods were seized and released after a redemption fine. Subsequently, a revised claim was filed due to survey shortage. The revenue authorities rejected the claim as time-barred under Section 27(1) of the Customs Act, 1962, stating the character of the claim had changed from shortlanding to survey shortage. The Collector (Appeals) upheld the rejection, citing the six-month limitation period. The appellant argued the subsequent claim was a continuation of the original claim, emphasizing the undefined term "claim" in the Act.
The appellant's advocate argued that both the original and subsequent refund applications were part of the same claim, citing similarities with Section 78B of the Indian Railways Act, 1890. The advocate contended that the word "claim" should be interpreted broadly, and the Collector (Appeals) erred in considering the subsequent application as a fresh claim. The advocate sought acceptance of the appeal or a remand.
The Departmental Representative maintained that Section 27(1) was mandatory, asserting the subsequent application was time-barred and unrelated to the original claim. Referring to Section 27(4), the Representative supported the Collector (Appeals)'s decision, urging dismissal of the appeal.
After considering the arguments, the Judge determined that the subsequent refund application was a continuation of the original claim filed within the statutory period. The Judge held that the original claim was within time, and the subsequent application clarified and quantified the refund amount. The Judge remanded the case to compute the correct refund amount and directed payment to the appellant within three months.
In conclusion, the appeal was allowed, emphasizing the continuity of the refund applications and the need for proper computation and payment of the refund amount.
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1985 (5) TMI 178
Issues Involved:
1. Interpretation of Notification No. 198/76.
2. Fixation of base clearances.
3. Authority of the Assistant Collector to review and revise base clearances.
4. Time limit for raising the demand for duty.
Issue-wise Detailed Analysis:
1. Interpretation of Notification No. 198/76:
The primary issue in this case pertains to the interpretation of Notification No. 198/76. The appellants argued that the notification should be interpreted such that the base clearance should be fixed with reference to the clearances made by a particular manufacturer. They contended that the base clearance should be determined based on the clearances made by the appellants after they leased the factory from the previous owners. However, the respondent argued that the notification should be read plainly, and the base clearances should be fixed based on the clearances made from the factory, irrespective of the manufacturer.
2. Fixation of Base Clearances:
The Assistant Collector initially fixed the base clearances at 111789 kgs. However, upon audit, it was pointed out that the clearances should have been fixed by taking the average of the clearances made during the previous three years, as per para 2(2)(c) of the notification. Consequently, the base clearances were revised to 227787 kgs, and demands were raised for the duty short paid. The appellants contested this revision, arguing that the Assistant Collector had no authority to change the base clearances once fixed unless there was a change in law, tariff entry, or a pronouncement by the Supreme Court.
3. Authority of the Assistant Collector to Review and Revise Base Clearances:
The appellants argued that the Assistant Collector had no power to review and revise the base clearances once fixed. They contended that the Assistant Collector could only exercise limited power of review in specific circumstances, such as a change in law or fresh facts coming to light. The respondent, however, maintained that the Assistant Collector had the power to review and revise the base clearances if they were erroneously fixed. The judgment held that the Assistant Collector had the authority to rectify wrong fixation of base clearances, as it was necessary to correct errors and ensure proper duty collection.
4. Time Limit for Raising the Demand for Duty:
The appellants argued that the demand for duty was raised after the six-month period and, therefore, a part of the demand was out of time. The respondent contended that the demand should be reckoned from the date of the letter by the Superintendent. The judgment concluded that the relevant show cause notice for raising the demand was issued on 23-11-1978, and any demand should be limited to the six-month period preceding this show cause notice. The judgment partially allowed the appeal, limiting the demand to the six-month period.
Conclusion:
The judgment clarified that the base clearances should be fixed based on the clearances made from the factory, irrespective of the manufacturer. It upheld the authority of the Assistant Collector to review and rectify erroneous base clearances. However, it limited the demand for duty to the six-month period preceding the relevant show cause notice issued on 23-11-1978. The appeal was partially allowed on these grounds.
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1985 (5) TMI 177
Issues Involved:
1. Eligibility of propylene for exemption from duty under Notification No. 276/67.
2. Locus standi of the appellants to file the application for refund.
Detailed Analysis:
1. Eligibility of Propylene for Exemption from Duty:
The primary issue was whether the propylene obtained by the appellants to start up their plant was eligible for duty exemption under Notification No. 276/67, dated 21-12-1967, as amended. The Assistant Collector of Central Excise initially rejected the refund claim, stating that the propylene was not used in the manufacture of specified goods eligible for exemption. The appellants argued that the propylene was essential for starting up their plant, which was necessary for the manufacture of petrochemicals. The Tribunal referenced the Supreme Court decision in J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. Sales Tax Officer, Kanpur, which interpreted "in the manufacture of goods" to encompass the entire process, including essential preliminary steps like starting up the plant. The Tribunal also cited the decision in M/s. Neyveli Lignite Corpn. Ltd., which held that test and trial runs are integral to the manufacturing process and eligible for exemption. The Tribunal concluded that the propylene used for starting up the plant was indeed used in the manufacture of specified goods and eligible for exemption.
2. Locus Standi of the Appellants to File the Application for Refund:
The second issue was whether the appellants had the locus standi to file the refund application or if it could only be done by the manufacturer, NOCIL. The respondents raised this preliminary objection for the first time before the Tribunal. The appellants countered by presenting a "No Objection Certificate" from NOCIL, allowing them to claim the refund. The Tribunal noted that neither the Assistant Collector nor the Collector (Appeals) had rejected the refund claim on the locus standi ground. The Tribunal also referenced the Supreme Court decision in M/s. Steel Strips Ltd. v. Assistant Collector of Customs, which allowed a refund claim based on a similar no-objection scenario. The Tribunal found that the application for refund, though made by the industrial user, was effectively made on behalf of NOCIL and could not be dismissed on the locus standi ground. The Tribunal also noted that objections regarding locus standi should be raised at the earliest opportunity, referencing decisions like Sri Ram Pasricha v. Jagannath & Ors. and Lakhi Prasad Fogia v. Murlidhar Marwari & Ors., which held that late objections are deemed waived.
Conclusion:
The Tribunal set aside the impugned order, accepted the appellants' claim for refund, and allowed the appeal. The Tribunal held that the propylene used for starting up the plant was eligible for exemption under Notification No. 276/67 and that the appellants had the locus standi to claim the refund, supported by the no-objection certificate from NOCIL. The Tribunal emphasized substantial compliance with procedural requirements and the principle that procedural non-compliance due to the revenue's actions should not vitiate a valid claim.
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