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Showing 41 to 60 of 144 Records

• 1993 (5) TMI 157
  

  Whether the alteration in the said mode of levy of tax by Act 24 of 1984 has the effect of altering the nature of the tax in a way that it has ceased to be a tax on entertainments and falls beyond the field of legislative competence conferred on the State Legislature by entry 62 of List II?

  Held that:- Appeal dismissed. The said provision for enhancement contained in sub-section (6) of section 5 relates to the cases where the proprietor of a cinema theatre opts for payment of weekly consolidated amount. Since the proprietor has the option to opt for the said scheme he cannot complain that the scheme suffers from inequality on account of absence of a corresponding provision for reduction of amount of tax. In any event the said grievance has now been removed by the introduction of sub-section (6-A) in section 5 by amendments, introduced in the Act by A.P. Act 23 of 1988 and A.P. Act 16 of 1991.

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• 1993 (5) TMI 150
  
  Issues:
  Jurisdiction of the court regarding transfer of company petition files and liquidation proceedings, interpretation of section 10 of the Companies Act, 1956, appointment of company judges, jurisdiction of the High Court in relation to the registered office of the company, proceedings for liquidation at two different places, petition for grant of leave to carry out proceedings against the company in liquidation, jurisdiction of the company judge in Jaipur and Jodhpur, cause of action arising at different places, and transfer of company application to Jodhpur.
  
  Analysis:
  The judgment dealt with a miscellaneous application filed by the official liquidator seeking the transfer of company petition files to a different High Court and permission to link related petitions. The court analyzed section 10 of the Companies Act, 1956, which specifies the jurisdiction based on the location of the company's registered office. The court emphasized that the High Court with jurisdiction over the registered office of the company has the authority. In this case, the registered office being in Bhilwara, the Rajasthan High Court at Jodhpur had the jurisdiction as per a notification dated December 23, 1976, assigning specific districts to different benches for disposal of cases.
  
  The judgment highlighted the appointment of company judges for specific areas and clarified that their jurisdiction does not overlap. It emphasized that the proceedings for liquidation cannot be conducted at two different places simultaneously. The court emphasized that the registered office of a company cannot be at two places at the same time and that the notification specified the place for jurisdiction. It was noted that the expression "registered office" refers to the place that has been the registered office for the longest period preceding the winding-up petition.
  
  Regarding a petition by a bank for leave to carry out proceedings against the company in liquidation, the court ruled that since the company petition had already been admitted at Jodhpur, the company judge there had the proper jurisdiction to decide on the bank's petition. The judgment rejected the argument that part of the cause of action arose at Jaipur, emphasizing that proceedings for liquidation should be conducted at one place to avoid complications. Consequently, the court directed the transfer of the relevant company application to Jodhpur for proper adjudication and ordered the listing of connected files for further action.
  
  In conclusion, the judgment underscored the importance of maintaining a single jurisdiction for liquidation proceedings, upheld the jurisdiction of the Rajasthan High Court at Jodhpur for the case at hand, and directed the transfer of the necessary files to ensure proper adjudication and avoid procedural complexities arising from dual proceedings.

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• 1993 (5) TMI 144
  
  Issues Involved:
  1. Prima facie case against the petitioner.
  2. Applicability of Section 9 of the FERA.
  3. Principles for grant or refusal of bail.
  
  Summary:
  
  1. Prima Facie Case Against the Petitioner:
  The petitioner approached the High Court for bail after being unsuccessful before the ACMM and ASJ. The prosecution alleged that the petitioner collected payments in India on behalf of Keith Fair Brother of Eastern Suburbs Ltd., UK, and received drafts from U.K. Paints Industries, New Delhi. The petitioner handed over these drafts to Keith, violating Section 9 of the FERA. The petitioner was arrested and his interim bail on medical grounds was declined due to the gravity of the offense and his frequent travels abroad.
  
  2. Applicability of Section 9 of the FERA:
  The petitioner contended that there was no prima facie case against him and argued that merely transferring drafts does not constitute payment to a person resident outside India. The court examined Section 9(1) of the FERA, which restricts payments to or for the credit of any person resident outside India unless through an authorized dealer or with RBI exemption. The court noted that the FERA's definition of currency includes drafts, making the petitioner's actions prima facie a violation of Section 9(1)(b). The court rejected the petitioner's argument that actual payment in cash or crediting an account is necessary for an offense under this section.
  
  3. Principles for Grant or Refusal of Bail:
  The petitioner argued for bail, citing the technical nature of the offense, his cooperation, and the seizure of his passport. The department opposed, citing ongoing investigations and the petitioner's potential to hamper the investigation. The court considered the petitioner's high connections, the publicity of the case, and the non-arrest of other key individuals. The court granted bail, emphasizing that the petitioner is not likely to flee and can be interrogated further while on bail. The bail was granted with conditions to ensure no tampering with evidence and cooperation with the investigation.
  
  Conclusion:
  The petitioner was admitted to bail on furnishing a personal bond of Rs. 2 lakhs with one surety, subject to conditions including not tampering with evidence, joining the investigation when required, not leaving India without court permission, and informing investigating authorities of his travel within India. The observations made were clarified to have no bearing on the final merits of the case.

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• 1993 (5) TMI 136
  
  The Appellate Tribunal CEGAT, New Delhi, allowed the appeal in favor of the appellant regarding the metallising of polyester/polyester films, following the judgment in Chemicoat Ltd. v. Collector of Central Excise. The impugned Order-in-Original was set aside, granting consequential relief to the appellants. Other points in the Memorandum of Appeal were not pressed by the appellant's counsel.

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• 1993 (5) TMI 127
  

  Contracts in notified areas illegal in certain circumstances - Plaintiff-company was established with main object of functioning as a stock exchange - It claimed that sections 13 and 19 of the Securities Contracts (Regulation) Act were brought in force in Ernakulam District under which no one other than the plaintiff was authorised to permit or organise dealings in securities in the Ernakulam District - Defendant-company had proposed to function as a parallel stock exchange - Plaintiff-company filed a suit for declaration that defendants were not entitled to carry on or establish or organise dealing in securities in any manner within Ernakulam District and for a decree of permanent injunction restraining defendants from establishing or carrying on or permitting dealing in stock, shares and securities from building of Corporation of Cochin within Ernakulam District - Whether plaintiff ought to have obtained sanction under Order 1, Rule 8, of Code of Civil Procedure so as to enable it to maintain suit - Held, no - Whether there is any express or implied bar created by Securities Contracts (Regulation) Act regarding maintainability of suit in civil court - Held, no - Whether plaintiff had made out a prima facie case for an injunction restraining defendant from carrying on business akin to that of a stock exchange within District of Ernakulam - Held, yes - Whether defendant was entitled to enter into spot delivery contracts - Held, yes

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• 1993 (5) TMI 126
  
  Issues Involved:
  1. Maintainability of the suit.
  2. Locus standi of the plaintiff.
  3. Disclosure of a cause of action.
  4. Prima facie case and balance of convenience.
  5. Applicability of sections 13, 18, and 19 of the Securities Contracts (Regulation) Act, 1956.
  
  Detailed Analysis:
  
  1. Maintainability of the Suit:
  The defendants argued that the suit was not maintainable for several reasons, including the lack of representative capacity under Order 1, Rule 8 of the Code of Civil Procedure, the necessity of sanction under Section 91 of the Code, and the claim that the Securities Contracts (Regulation) Act provides a special remedy that must be exclusively followed. The court held that the plaintiff, as a recognized stock exchange, was not one among numerous persons having an interest in the subject matter and thus did not need to proceed under Order 1, Rule 8. The court also found that Section 91(1) of the Code of Civil Procedure did not apply as there was no public right involved. The court rejected the argument that the plaintiff should have sought remedy exclusively through the Securities Contracts (Regulation) Act, noting that the Act did not provide a specific machinery for redressal, thus allowing the civil court's jurisdiction.
  
  2. Locus Standi of the Plaintiff:
  The defendants contended that the plaintiff had no locus standi as no legal right of the plaintiff was infringed and no legal injury was suffered. The court found that the plaintiff was claiming an exclusive right to function as a stock exchange within Ernakulam District and was alleging that the defendants were violating statutory provisions. The court cited precedents that allowed a citizen to sue for the violation of a statute even if not personally affected, thereby affirming the plaintiff's locus standi.
  
  3. Disclosure of a Cause of Action:
  The defendants argued that the plaint and the affidavit did not disclose a cause of action. The court found that the plaint sufficiently alleged that the plaintiff was the only recognized stock exchange and that the defendants were carrying on activities prohibited by sections 13 and 19 of the Securities Contracts (Regulation) Act. The court held that the plaint disclosed a cause of action as it claimed a right to function exclusively and alleged statutory violations by the defendants.
  
  4. Prima Facie Case and Balance of Convenience:
  The court examined whether the plaintiff had made out a prima facie case of statutory violation and infringement of its exclusive right. The court found that the plaintiff had shown prima facie that it was a recognized stock exchange and that sections 13 and 19 had been extended to Ernakulam District, prohibiting other persons from carrying on stock exchange activities. The court rejected the defendants' argument that they were only doing "spot delivery contracts," noting that the plaintiff had made out a prima facie case for an injunction. On the balance of convenience, the court found it favored the plaintiff, as the statutory scheme aimed to permit only one recognized stock exchange in a given area.
  
  5. Applicability of Sections 13, 18, and 19:
  The court analyzed sections 13, 18, and 19 of the Securities Contracts (Regulation) Act. Section 13 prohibits contracts in notified areas unless between members of a recognized stock exchange. Section 18 excludes "spot delivery contracts" from this prohibition. Section 19 prohibits organizing or assisting in organizing any stock exchange other than a recognized one. The court noted that while "spot delivery contracts" are exempt from section 13, they are not exempt from section 19. The court concluded that the defendants' activities, as described, would violate section 19, except for spot delivery contracts.
  
  Conclusion:
  The court modified the trial court's order to clarify that the first defendant could carry on spot delivery contract business but could not permit its members or others to trade among themselves in its premises. The appeals were substantially dismissed, affirming the injunction with the stated modification.

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• 1993 (5) TMI 125
  
  Issues Involved:
  
  1. Whether the facts established attract the invocation of sections 397 and 398 of the Companies Act, 1956.
  2. Whether the company court has travelled beyond the pleadings.
  3. Whether the absence of a separate petition u/s 543 affects the reliefs granted.
  4. Whether the petition was filed with the ulterior motive of recovering the money invested by the petitioners.
  
  Summary:
  
  Issue 1: Invocation of Sections 397 and 398 of the Companies Act, 1956
  
  The case revolves around the invocation of sections 397 and 398 of the Companies Act, 1956, concerning the conduct of the company's affairs in a manner prejudicial to public interest and oppressive to certain members. The company court initially granted substantial reliefs to the petitioners, including the deposit of Rs. 35,000 towards the value of movables sold, the purchase of shares from the petitioners, and furnishing accounts of the company's finances. However, the appellants contended that the facts did not justify the invocation of these sections, arguing that the business was closed in 1986 and thus not subject to action under sections 397 and 398, which are intended to address ongoing oppressive conduct.
  
  The court emphasized that sections 397 and 398 are preventive and aimed at terminating or preventing ongoing oppressive conduct, not addressing past acts. The court noted that the petitioners' complaints related to the years 1985-86, and the petition was filed in 1988, indicating that the alleged oppressive acts were not ongoing at the time of filing. The court concluded that past closed affairs do not fall within the scope of section 397, which requires present continuous wrongs.
  
  Issue 2: Examination Beyond Pleadings
  
  The appellants argued that the company court overstepped its jurisdiction by considering events that occurred after the filing of the petition and beyond the pleadings. The court agreed, stating that no evidence can be considered regarding facts not pleaded. The court cited precedents emphasizing that the examination should be confined to the complaints in the petition and not extend to subsequent events. The court found that the company judge had indeed considered events post-filing, which was unjustified and beyond the scope of sections 397 and 398.
  
  Issue 3: Separate Petition u/s 543
  
  The appellants contended that the reliefs granted by the company court were unsustainable in the absence of a separate petition u/s 543 of the Act. The court did not delve deeply into this issue, as it had already decided to dismiss the petition on other grounds.
  
  Issue 4: Ulterior Motive of Recovering Money
  
  The court noted that the primary object of the petition, as admitted by the petitioners, was to recover the money invested in the company. This was seen as an ulterior motive not aligned with the purpose of section 397, which is to address oppressive conduct, not personal grievances or recovery of investments. The court referenced the decision in Bellador Silk Ltd., In re, which held that a petition filed with the ulterior motive of recovering money is an abuse of the process and should be dismissed.
  
  Conclusion:
  
  The court allowed the appeals, set aside the judgment of the company court, and dismissed the application, C.P. No. 27 of 1988, on the grounds that the petition did not meet the criteria for action under sections 397 and 398, the company court overstepped the pleadings, and the petition was filed with an ulterior motive. No order as to costs was made.

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• 1993 (5) TMI 110
  
  Issues Involved:
  1. Inclusion of Dharmada (charity) receipts in the assessable value.
  2. Applicability of previous judicial decisions on Dharmada receipts.
  3. Prima facie merits of the case and undue hardship in the context of stay applications.
  
  Detailed Analysis:
  
  1. Inclusion of Dharmada (charity) receipts in the assessable value:
  The primary issue in this case was whether Dharmada receipts collected by the appellant from its customers should be included in the assessable value for the purpose of central excise duty. The appellant argued that these receipts were meant for charitable purposes and should not be included in the assessable value. The respondent, however, contended that these receipts were compulsory and thus should be included in the assessable value.
  
  2. Applicability of previous judicial decisions on Dharmada receipts:
  The appellant relied on several judicial decisions, including:
  - AIR 1979 S.C. 346 - Commissioner of Income-tax (Central) New Delhi v. Bijli Cotton Mills (P) Ltd.: The Supreme Court held that Dharmada amounts collected from customers were not trading receipts and were meant for charitable purposes.
  - 1987 (30) E.L.T. 624 (Tribunal) - Mohan & Co., Madras v. Collector of Central Excise, Madras: The Tribunal held that Dharmada receipts did not form part of the assessable value.
  - 1992 (41) ECR 457 (Tribunal) - Collector of Central Excise, Allahabad v. Panchamukhi Engineering Works and Another: The Tribunal reiterated that Dharmada receipts should not be included in the assessable value.
  
  The respondent countered by citing the Madras High Court decision in N.S. Pandaria Pillai v. The State of Madras (1973) 31 STC 108, which held that compulsory payments collected by the assessee formed part of the taxable turnover.
  
  The Tribunal noted that the Supreme Court decision in Bijli Cotton Mills was later and more relevant, and thus held that Dharmada receipts should not be included in the assessable value.
  
  3. Prima facie merits of the case and undue hardship in the context of stay applications:
  The appellant argued that they had a good case on merits and that requiring them to deposit the disputed amount would cause undue hardship. The respondent, however, argued for the rejection of the stay application.
  
  The Tribunal considered the following:
  - Hon'ble Madhya Pradesh High Court in Kinetic Honda Motor Ltd. v. Union of India (1992 (61) E.L.T. 52 (MP)): The court emphasized the importance of a prima facie case in granting stay or interim injunction.
  - Hon'ble Delhi High Court in Uptron Powertronics v. Collector of Central Excise, Meerut (1987 (28) E.L.T. 61 (Delhi)): The court held that prima facie merits should be considered first, followed by financial hardship.
  - Hon'ble Supreme Court in Assistant Collector of Central Excise v. Dunlop India Ltd. and Others (1985 (19) E.L.T. 22 (S.C.)): The court laid down principles for granting interim relief, emphasizing the need to consider public interest, balance of convenience, and irreparable injury.
  
  The Tribunal concluded that the appellant had a prima facie case on merits, supported by previous judicial decisions, and that the balance of convenience was in their favor. Consequently, the Tribunal dispensed with the pre-deposit of the duty amount of Rs. 26,60,857.00 and penalty of Rs. 4,00,000.00, and directed that recovery proceedings be stayed during the pendency of the appeal.
  
  Conclusion:
  The appeal was allowed, and the impugned orders were set aside. The Tribunal directed the revenue authorities to give consequential effect to the order, emphasizing that Dharmada receipts should not be included in the assessable value, and granted the stay application based on the prima facie merits of the case and the undue hardship that a pre-deposit would cause to the appellant.

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• 1993 (5) TMI 106
  
  The Collector filed a reference application challenging a decision allowing modvat credit for release paper used in manufacturing artificial leather cloth. The Tribunal held that the release paper is not a part of machinery but a transfer media for plastisol, thus eligible for credit. The reference application was dismissed, upholding the decision.

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• 1993 (5) TMI 105
  
  Issues Involved:
  
  1. Whether the Assistant Collector of Central Excise had passed an order permitting the appellants to avail of Modvat Credit on crucibles on 14-5-1987.
  2. Whether crucibles are used in relation to the manufacture of Ultramarine Blue.
  3. Whether crucibles can be termed as equipment, apparatus, or appliances and thus excluded from Modvat Credit under Rule 57(A) of the Central Excise Rules, 1944.
  4. Whether the demand notice was issued within the permissible time limit.
  
  Issue-wise Detailed Analysis:
  
  1. Whether an order was passed by the Assistant Collector of Central Excise permitting the appellants to avail of Modvat Credit on crucibles on 14-5-1987:
  
  The appellants argued that the Assistant Collector had granted permission to avail Modvat Credit on crucibles via a letter dated 14-5-1987. However, the tribunal found that the letter merely acknowledged the appellant's declaration and stated that Modvat Credit may be availed as admissible under the rules, without specifically permitting credit on crucibles. Thus, it was concluded that no specific order was passed by the Assistant Collector allowing Modvat Credit on crucibles, and the question of reviewing such an order did not arise.
  
  2. Whether crucibles are used in relation to the manufacture of Ultramarine Blue:
  
  The Additional Collector admitted that crucibles are used in the manufacture of Ultramarine Blue. The tribunal noted that the department did not dispute this fact. Therefore, it was established that crucibles are indeed used in relation to the manufacture of Ultramarine Blue.
  
  3. Whether crucibles can be termed as equipment, apparatus, or appliances and thus excluded from Modvat Credit under Rule 57(A) of the Central Excise Rules, 1944:
  
  The tribunal examined whether crucibles could be classified as equipment, apparatus, or appliances. The show cause notice and the adjudication order suggested that crucibles are used as equipment or apparatus. However, the appellants contended that crucibles are consumables used in the manufacturing process and not equipment or apparatus. The tribunal referred to various decisions and concluded that crucibles, which get consumed in the manufacturing process, cannot be termed as apparatus, equipment, or appliances. Therefore, they should not be excluded from Modvat Credit.
  
  4. Whether the demand notice was issued within the permissible time limit:
  
  The appellants argued that the demand notice was time-barred. The tribunal noted that the appellants had informed the Assistant Collector about their intention to use Modvat Credit on crucibles, and the Assistant Collector's non-committal reply did not constitute a refusal. Given that the appellants acted with the knowledge and approval of the Assistant Collector, the tribunal found that the demand notice issued on 2-2-1989 was beyond the permissible time limit. The tribunal relied on various High Court decisions to conclude that the notice was time-barred, and thus, the demand failed on this ground.
  
  Conclusion:
  
  The tribunal set aside the impugned order demanding duty and imposing a penalty on the appellants. The appeal was allowed, and the appellants were granted consequential reliefs. The decision was based on the findings that no specific order was passed permitting Modvat Credit on crucibles, crucibles are used in the manufacture of Ultramarine Blue, crucibles cannot be classified as equipment or apparatus, and the demand notice was time-barred.

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• 1993 (5) TMI 104
  
  Issues:
  Whether waste parings and scrap of plastics arising from uncut polyurethane foam block are leviable to nil rate of duty under Notification No. 53/88 or chargeable to duty under Notification No. 54/88.
  
  Analysis:
  The appeals involved a common issue regarding the classification of waste parings and scrap of plastics. The main contention was whether these items are exempt from duty under Notification No. 53/88 or should be charged duty under Notification No. 54/88, as determined by the Appellate Authority. The waste materials in question were derived from uncut polyurethane foam blocks, which were themselves exempted under Notification No. 217/86 as inputs captively consumed for further manufacturing. The appellants argued that since duty was paid on the inputs, the waste materials should also be exempt. An additional ground was raised, citing a High Court decision that the term "duty of excise leviable thereon" in Notification No. 53/88 includes nil rate of duty. The appellants also sought the benefit of concessional rates under Notification No. 54/88 if their primary argument was rejected.
  
  During the hearing, the appellants reiterated their arguments, while the JDR did not oppose the inclusion of additional grounds and supported the Order-in-Appeal. The Tribunal considered the arguments and noted that no duty was paid on the uncut polyurethane foam blocks from which the waste materials originated. The Tribunal reasoned that accepting the appellant's plea would render Notification 54/88 redundant, which should be avoided. This interpretation was supported by the provisions of Notification No. 217/86, which excludes inputs used in the manufacture of final products exempt from duty or charged at nil rates. Therefore, the waste materials could not be covered under Notification No. 53/88 without conflicting with Notification 217/86.
  
  The Tribunal rejected the argument that duty had been paid on the inputs, emphasizing the distinction between raw materials and resultant goods. It was clarified that duty paid on raw materials does not automatically apply to the resulting goods. A harmonious interpretation of the relevant notifications led to the conclusion that waste materials from uncut polyurethane foam blocks, on which no duty was paid, should be charged duty under Notification No. 54/88. The Appellate Authority's decision to allow the benefit of concessional rates under Notification No. 54/88 was upheld, and the appeals were rejected. The Misc. petition was also disposed of accordingly.

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• 1993 (5) TMI 103
  
  Issues Involved:
  1. Waiver of pre-deposit of Rs. 10 lakhs penalty due to financial hardship.
  2. Recovery of the penalty amount during the pendency of the appeal.
  
  Issue-wise Detailed Analysis:
  
  1. Waiver of Pre-deposit of Rs. 10 Lakhs Penalty Due to Financial Hardship:
  
  The applicant sought a waiver of the pre-deposit of Rs. 10 lakhs imposed as a penalty, citing extreme financial hardship. The applicant submitted affidavits indicating a complete erosion of capital, outstanding debts to creditors amounting to Rs. 1.22 lakhs, absence of immovable property, and no other sources of income. The applicant also stated that he had not filed income or wealth returns for the past two years due to the collapse of his business.
  
  The department, represented by the learned JCDR, opposed the stay application, pointing out that records seized by the DRI indicated that the applicant had been dealing in substantial amounts, including a receipt of Rs. 20 lakhs from a company. Despite multiple adjournments and opportunities, the department did not provide concrete evidence to counter the applicant's financial condition as stated in the affidavits.
  
  The Tribunal, after considering the affidavits and the lack of rebuttal from the department, concluded that the financial hardship claimed by the applicant could not be doubted based on the evidence available. Therefore, the Tribunal decided to waive the pre-deposit of the Rs. 10 lakhs penalty under Section 129E of the Customs Act.
  
  2. Recovery of the Penalty Amount During the Pendency of the Appeal:
  
  There was a divergence in opinions between the members of the Tribunal on whether the department should be allowed to recover the penalty amount during the pendency of the appeal. One member (Technical) opined that while the pre-deposit for the purpose of hearing the appeal should be waived, the department should be at liberty to recover the amount if possible. This view was based on the premise that the applicant had nothing to lose if he had nothing to pay.
  
  In contrast, another member (Judicial) disagreed, arguing that the applicant's conduct and financial status did not inspire confidence. The member noted discrepancies in the applicant's financial statements over the years and concluded that the applicant had not come to court with clean hands. This member proposed that the applicant should deposit Rs. 25,000, with the balance of the pre-deposit waived and recovery stayed until the appeal's pendency. The member cited the Kerala High Court's ruling in Ashok Rubber Products v. C.C.E., which held that an order dispensing with the requirement of pre-deposit should operate as a stay order against recovery until the appeal's disposal.
  
  The third member, called upon to resolve the difference, agreed with the Judicial Member's view. The third member emphasized that the financial condition stated by the applicant had not been countered by the department despite numerous opportunities. The member concurred that the waiver of pre-deposit should operate as a stay order against recovery, aligning with the Kerala High Court's judgment and the Tribunal's previous decisions.
  
  Final Order:
  
  In light of the majority opinion, the Tribunal ordered that the pre-deposit of Rs. 10 lakhs imposed as a penalty on the applicant is waived under Section 129E of the Customs Act. Furthermore, the recovery of the penalty amount by the Revenue is stayed during the pendency of the appeal.

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• 1993 (5) TMI 102
  
  Issues Involved:
  1. Liability of past dues on the new entity.
  2. Reliance on statements and evidence.
  3. Confiscation of goods.
  4. Classification of woollen fabrics.
  5. Penalty imposition under Rule 209A.
  6. Provisional release and confiscation.
  
  Detailed Analysis:
  
  1. Liability of Past Dues on the New Entity:
  The appellants argued that M/s. Abhinav Dyeing & Finishing Mills Pvt. Ltd., which took over M/s. SRFW, should not be liable for past dues. However, the Tribunal held that under Rule 230(2) of the Central Excise Rules, duty can be recovered even after the transfer of business. The business was a continuing entity, not an outright purchase by an independent third party, and thus the liability for past dues remains.
  
  2. Reliance on Statements and Evidence:
  The appellants contended that the Collector's reliance on the statement of Chuni Lal Vohra, who was 82 years old and claimed to be mentally depressed, was misplaced. However, the Tribunal found the statement credible and corroborated by other evidence, including the statement of Ranjan Vohra and the collection of documents by Chuni Lal Vohra himself. The Tribunal also noted that the Collector's findings were based on detailed material data, not just the statement.
  
  3. Confiscation of Goods:
  The confiscation of 5420 mtrs of woollen serge Battle Dress from M/s. SRFW was upheld because the appellants failed to submit price and classification lists, leading to short payment of duty. However, the confiscation of 579.20 mtrs from Chuni Lal Vohra's cattle shed was overturned due to the old and moth-eaten condition of the fabrics, extending the benefit of doubt to the appellants.
  
  4. Classification of Woollen Fabrics:
  The appellants argued that the fabrics, being 100% wool, should not be classified under Item 21 CET but under Item 68 CET. The Tribunal rejected this argument, stating that the appellants failed to provide substantial evidence, such as test reports or authoritative literature. The Tribunal referred to a similar case, Gaekwar Mills v. Collector of Central Excise, Baroda, which held that "predominates in weight" means over 50% and includes 100%.
  
  5. Penalty Imposition Under Rule 209A:
  The appellants argued that penalties under Rule 209A, which came into effect in April 1986, should not apply to periods before that date. The Tribunal agreed, reducing the penalties due to the advanced age of Chuni Lal Vohra and the lack of evidence for certain periods. The penalties were reduced as follows:
  - M/s. SRFW-Proprietor Abhinav Dyeing & Finishing Mills Private Limited: Rs. 5 lakhs
  - M/s. Shalloo Fabrics Pvt. Ltd. & M/s. Vohra Textile Mills: Rs. 50,000/- each
  - M/s. Ram Hukam Textile Mills: Rs. 5,000/-
  - Chuni Lal Vohra: Rs. 50,000/-
  
  6. Provisional Release and Confiscation:
  The Tribunal noted that the goods seized from Ram Hukam Textiles should have been returned due to the failure to issue a show cause notice within six months. However, the Tribunal referred to a Full Bench decision of the Karnataka High Court, which held that failure to issue notice within six months does not preclude the continuation of proceedings for confiscation and penalty.
  
  Conclusion:
  The appeals were disposed of with directions to redetermine the duty demanded in light of the findings and to provide consequential relief to the appellants.

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• 1993 (5) TMI 101
  
  Issues: Classification of goods under Heading 34.03 for exemption under Notification 136/86 and 51/86.
  
  Detailed Analysis:
  
  1. Background: The appeal was filed by the Collector of Customs, Bombay against orders passed by the Collector of Customs (Appeals) related to the classification of goods imported by two companies under Heading 34.03 and the eligibility for exemption under Notifications 136/86 and 51/86.
  
  2. Appellants' Argument: The Collector contended that the goods imported were not lubricating preparations but fell under another category. They argued that the exemption under Notification 51/86 only applied to lubricating preparations and not to preparations for the treatment of textile materials.
  
  3. Respondents' Argument: The respondents argued that the goods were lubricating preparations eligible for exemption under the notifications. They referred to expert opinions and test reports supporting their claim that the goods were synthetic lubricating preparations.
  
  4. Collector (Appeals) Findings: The Collector (Appeals) considered technical literature, expert opinions, and test reports to conclude that the goods were lubricating preparations. They noted that the spin finish oil primarily consisted of lubricants and had the essential character of a lubricating preparation.
  
  5. Legal Interpretation: The Tribunal analyzed the nature of spin finish oil as explained in various sources, confirming that it is a lubricating preparation used in textile processing to reduce friction and provide surface lubricity to yarns. The Chemical Examiner's report supported this conclusion.
  
  6. Decision: The Tribunal upheld the Collector (Appeals) findings that the goods were lubricating preparations eligible for exemption under Notifications 136/86 and 51/86. They emphasized that once the goods were classified as lubricating preparations, their use for treatment of textile material did not affect their eligibility for exemption.
  
  7. Conclusion: The appeals filed by the Collector were rejected, and the Tribunal affirmed the classification of the goods under Heading 34.03 as lubricating preparations, making them eligible for the relevant exemptions. The decision was based on expert opinions, test reports, and the essential character of the goods as lubricants.

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• 1993 (5) TMI 100
  
  Issues Involved:
  1. Demand of Central Excise duty for the period 1-4-1983 to 31-3-1986.
  2. Demand of Central Excise duty for the period 1-4-1986 to 30-6-1987.
  3. Imposition of penalty.
  4. Allegations of suppression of facts.
  5. Validity of extended period of limitation.
  6. Eligibility for Small Scale Industry (SSI) exemption.
  7. Proper valuation of excisable goods.
  
  Detailed Analysis:
  
  1. Demand of Central Excise Duty for the Period 1-4-1983 to 31-3-1986:
  The appellants, M/s. Debes Industries, were alleged to have manufactured and cleared goods under Tariff Item No. 68 valued at Rs. 53,76,946.19 without obtaining a Central Excise license and without payment of Central Excise duty amounting to Rs. 5,72,538.10. The appellants admitted that they had not filed the prescribed declaration for the years 1983-84 and 1984-85. The Tribunal upheld the Collector's finding that the appellants had manufactured and cleared excisable goods without obtaining a Central Excise license during this period.
  
  2. Demand of Central Excise Duty for the Period 1-4-1986 to 30-6-1987:
  The appellants availed a concessional rate of duty under Notification No. 175/86-C.E., dated 1-3-1986, which was not admissible, resulting in duty evasion of Rs. 3,06,106.35. The Tribunal confirmed the Collector's finding that the appellants had suppressed material facts to avail the concessional rate of duty and thereby evaded central excise duty.
  
  3. Imposition of Penalty:
  The Tribunal confirmed the imposition of penalty on the appellants, rejecting their contention that no penalty was leviable. The Tribunal held that the appellants had manufactured and cleared goods without obtaining a Central Excise license and without payment of duty, justifying the imposition of penalty.
  
  4. Allegations of Suppression of Facts:
  The appellants contended that they had informed the Department about their status as a division of Malhati Tea and Industries Ltd. through various communications, including a declaration dated 4-4-1985 sent under Certificate of Posting. However, the Tribunal found that there was no presumption that the declaration was received by the Department. The Tribunal upheld the Collector's finding of suppression of facts, noting that the appellants had knowingly suppressed information regarding the clearances from other factories owned by Malhati Tea and Industries Ltd.
  
  5. Validity of Extended Period of Limitation:
  The Tribunal examined whether the extended period of limitation invoked by the Collector for confirming the demand was legally sustainable. The Tribunal held that the invocation of the extended period was justified, as the appellants had suppressed facts and evaded duty. The Tribunal cited the case of R.G. Nagori and Sons v. CCE, which held that even if there is no specific allegation of fraud or suppression of facts in the show cause notice, the extended period of 5 years for raising the demand would be justified if such allegations are otherwise spelled out at length in the show cause notice.
  
  6. Eligibility for Small Scale Industry (SSI) Exemption:
  The appellants claimed that they were eligible for SSI exemption under various notifications. However, the Tribunal found that the appellants were not eligible for SSI exemption, as the aggregate value of clearances from all factories of Malhati Tea and Industries Ltd. exceeded the prescribed limits. The Tribunal rejected the appellants' contention that they entertained a bona fide belief that they were eligible for SSI exemption.
  
  7. Proper Valuation of Excisable Goods:
  The appellants contended that the Collector failed to determine the value of clearances in terms of Section 4 of the Central Excises and Salt Act, 1944, and that the turnover value included transportation costs, packing costs, taxes, and other charges that should not be included in the assessable value. The Tribunal remanded the matter to the Collector to re-hear the issue of valuation of excisable goods cleared during the relevant period and determine the duty recoverable and the penalty to be imposed accordingly.
  
  Conclusion:
  The Tribunal confirmed the findings of the Collector regarding the demand of duty and imposition of penalty. However, the matter was remanded to the Collector for re-determination of the value of excisable goods cleared during the relevant period in accordance with Section 4 of the Central Excises and Salt Act, 1944. The appellants were to be granted a personal hearing before the final decision.

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• 1993 (5) TMI 99
  
  Issues Involved:
  
  1. Classification of Paper Cones, Paper Tubes, Paper Cores, Spools, and Paper Bobbins under the Central Excise Tariff.
  2. Retrospective application of the Telex advice dated 8-1-1987.
  
  Issue-Wise Detailed Analysis:
  
  1. Classification of Paper Cones, Paper Tubes, Paper Cores, Spools, and Paper Bobbins under the Central Excise Tariff:
  
  The appellants, manufacturers of Paper Cones, Paper Tubes, Paper Cores, Spools, and Paper Bobbins, initially classified their products under Heading 4818.19 of CET, 1985, claiming full exemption from duty under the New Budget Proposals dated 28-2-1986. This classification was approved by the Assistant Collector. Subsequently, they filed a fresh Classification List No. 4/86-87 dated 22-3-1986, classifying their products under sub-heading 4818.90 with a duty rate of 12% Adv., as directed by the Range Superintendent. This was approved on 9-4-1986. The Collector of Central Excise (Appeals), Bombay, modified the Assistant Collector's order, classifying the products under sub-heading 4818.19 effective from 8-1-1987, and under sub-heading 4818.90 for the period prior to 8-1-1987.
  
  The appellants argued that their products should be classified under sub-heading 4818.19 from 1-3-1986, as settled by the Central Board of Excise and Customs' Telex message dated 8-1-1987. The respondent countered, citing a Tribunal decision in M/s Andhra Pradesh Paper Mills Ltd. v. Collector of Central Excise, Guntur, which classified "reel core" under Tariff Item 4818.90, not 4812.12, and the Supreme Court judgment in G. Claridge & Company Ltd. v. Collector of Central Excise, which held that similar products are not containers under sub-heading 4818.19 but articles of pulp under sub-heading 4818.90.
  
  The Tribunal considered whether the Collector (Appeals) erred in applying the Telex advice prospectively from 8-1-1987 instead of retrospectively from 1-3-1986. It was determined that the classification of the subject products under sub-heading 4818.19 w.e.f. 8-1-1987 should also be considered. The Tribunal concluded that the subject products fall under heading 4818.90, not 4818.19, even prior to 8-1-1987. The Tribunal held that disputes on classification matters should not shut out new grounds solely because they were not raised before the lower authorities or no cross-appeal or cross-objections were filed by the respondent.
  
  2. Retrospective Application of the Telex Advice Dated 8-1-1987:
  
  The appellants contended that the Telex advice dated 8-1-1987 should have retrospective effect from 1-3-1986, the date of filing the Classification List. The respondent argued that such Telex advices are irrelevant for classification purposes and cannot override statutory provisions or operate as estoppel against correct tariff interpretation. The Tribunal agreed, stating that trade notices/advices are meant for administrative guidance and do not bind or regulate classification decisions. Therefore, the Telex advice could not operate retrospectively.
  
  Conclusion:
  
  The Tribunal held that Paper Cones, Paper Tubes, Paper Cores, Spools, and Paper Bobbins are classifiable under Heading 4818.90 and not under Heading 4818.19, even prior to 8-1-1987. However, since the department did not file any appeal or cross-objection against the part of the impugned order-in-appeal that classified the goods under sub-heading 4818.19 w.e.f. 8-1-1987, the Tribunal allowed the benefit already availed by the appellants until the date of this order and ruled that the classification under Heading 4818.90 would have a prospective effect. The appeal was disposed of accordingly.

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• 1993 (5) TMI 98
  
  Issues Involved:
  
  1. Classification of iron and steel castings.
  2. Applicability of Notification No. 223/88.
  3. Interpretation of Rule 2(a) of CETA 1985.
  
  Summary:
  
  Issue 1: Classification of Iron and Steel Castings
  
  The appellants, M/s. Shivaji Works Ltd. and M/s. Continental Castings Ltd., are engaged in the manufacture of iron and steel castings. The primary contention is whether these castings should be classified under Heading No. 7325.10 to 7325.90 of the CETA 1985 or under Chapters 84 to 87 as parts of machines or motor vehicles. The department argued that the castings are tailor-made for specific machines and thus should be classified under Chapters 84 to 87. The lower appellate authority upheld this view, stating that the castings are identifiable as machine parts and fall under the respective chapters.
  
  Issue 2: Applicability of Notification No. 223/88
  
  The appellants claimed that their products should be classified under Heading No. 7325.10 to 7325.90 and charged to duty accordingly, as per Notification No. 223/88 dated 23-6-1988. This notification specifies different rates of duty for castings and cast articles of iron and steel. The department issued show cause notices demanding differential duty, arguing that the castings had the essential character of machine parts. The adjudicating authority confirmed these demands, and the lower appellate authority upheld this decision.
  
  Issue 3: Interpretation of Rule 2(a) of CETA 1985
  
  The Tribunal examined whether the castings, up to the proof-machining stage, acquire the essential character of machine or motor vehicle parts under Rule 2(a) of the Interpretative Rules of CETA 1985. Rule 2(a) states that incomplete or unfinished goods having the essential character of complete or finished goods should be classified accordingly. The Tribunal noted that the castings in question are sold as raw or unmachined castings and require further machining by the customer to become usable machine parts. The Tribunal concluded that the castings do not acquire the essential character of machine parts merely by being tailor-made and thus should not be classified under Chapters 84 to 87.
  
  Conclusion:
  
  The Tribunal set aside the impugned orders and allowed the appeals, stating that the castings should be classified under Heading No. 7325.10 to 7325.90 of CETA 1985 and not under Chapters 84 to 87. The Tribunal emphasized that Rule 2(a) does not permit the reclassification of goods that squarely fall under a specific tariff heading based on their essential character.

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• 1993 (5) TMI 97
  
  Issues: Application for waiver of pre-deposit of duty, coercion and threat in obtaining evidence, denial of opportunity for cross-examination, financial capacity of the petitioner.
  
  Waiver of Pre-Deposit of Duty:
  The application sought waiver of duty amounting to Rs. 23,73,837.64 imposed on the petitioner by the Collector of Central Excise. The petitioner argued that the seizure of a private diary, allegedly created under coercion and threat by officers, formed the basis of the proceedings. The petitioner contended that the impugned order failed to consider their explanation regarding the circumstances of coercion and threat. Additionally, the petitioner requested cross-examination of third parties whose statements were relied upon, which was denied. The tribunal noted the financial incapacity of the petitioner and directed a pre-deposit of Rs. 2,25,000 in addition to the Rs. 75,000 already paid, with the balance duty pre-deposit being dispensed with pending appeal.
  
  Coercion and Threat in Obtaining Evidence:
  The petitioner claimed that the private diary used as evidence was created under coercion and threat by officers. They highlighted that despite requesting the diary to be sent for examination by a handwriting expert, no conclusive opinion was provided. The tribunal acknowledged the petitioner's argument but emphasized that the petitioner had given inculpatory statements on multiple occasions, which were attested by family members. The tribunal found that, at an interlocutory stage, the impugned order was prima facie sustainable, considering the statements made by the petitioner and lack of retraction or complaint of coercion to the authorities.
  
  Denial of Opportunity for Cross-Examination:
  The petitioner's plea for cross-examination of third parties, whose statements were crucial in the case, was rejected. The tribunal noted this denial but balanced it against the petitioner's own inculpatory statements and the lack of retraction or complaint of coercion to the judicial magistrate. Despite the denial of cross-examination, the tribunal found that, at the interlocutory stage, the impugned order was not vitiated by the lack of cross-examination.
  
  Financial Capacity of the Petitioner:
  The petitioner's financial capacity was a significant factor in the tribunal's decision. The petitioner's counsel highlighted the petitioner's humble background as a former worker in a soap factory and emphasized their financial constraints. The tribunal took into account the petitioner's financial status, directing a specific pre-deposit amount while considering the petitioner's non-income tax assessee status and the lack of specific financial information available to the Department regarding the petitioner's financial position.
  
  Conclusion:
  The tribunal directed the petitioner to pre-deposit a specified amount by a set date, granting a stay of recovery pending appeal upon compliance. Both parties agreed to list the appeal for disposal after the pre-deposit was made, acknowledging the importance of legal questions and revenue implications in the case. The matter was scheduled for compliance reporting on a specified date, allowing for further proceedings after the pre-deposit was completed.

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• 1993 (5) TMI 96
  
  Issues Involved:
  1. Revocation of temporary CHA licence and forfeiture of security deposit u/s Regulation 21(c) of Customs House Agents Licensing Regulations, 1984.
  2. Alleged violations of Regulation 14(a), (d), (j), (k), and (l) by the appellants.
  3. Allegation of misconduct by the appellants, including acting as a consolidating agent for a Dubai firm and abetting smuggling.
  
  Summary:
  
  Issue 1: Revocation of Temporary CHA Licence and Forfeiture of Security Deposit
  The appeal was against the Order-in-Original by the Collector of Customs, Bombay, which revoked the temporary CHA licence of the appellants and forfeited their security deposit u/s Regulation 21(c) of the Customs House Agents Licensing Regulations, 1984. The appellants contested the order, arguing that the violations alleged under Regulation 14 should invoke Regulation 22, not Regulation 21, and thus the suspension and revocation were not justified.
  
  Issue 2: Alleged Violations of Regulation 14(a), (d), (j), (k), and (l)
  The appellants were accused of failing to obtain proper authorization from two passengers, not advising them to comply with the Customs Act, refusing access to records, failing to maintain records, and acting in a manner unbecoming of a CHA. The Enquiry Officer concluded that these charges were established. However, the appellants argued that they did not act as clearing agents for the passengers, and the statements of the passengers were uncorroborated and not subject to cross-examination.
  
  Issue 3: Allegation of Misconduct and Acting as a Consolidating Agent
  The appellants were also accused of misconduct, including acting as a consolidating agent for a Dubai firm and attempting to smuggle goods. The appellants contended that there was no bar against a CHA acting as a Shipping Agent and that the findings were based on retracted statements without corroboration. The Additional Collector of Customs had previously exonerated the appellants in related proceedings under the Customs Act, which the appellants argued should influence the current proceedings.
  
  Judgment:
  The Tribunal found that the legal contention of invoking Regulation 21 for violations of Regulation 14 was not sustainable. The Tribunal emphasized that the term "misconduct" was not defined in the Regulations and should be interpreted broadly to include any conduct rendering the CHA unfit for business. However, the Tribunal concluded that the evidence did not support the allegations against the appellants. The statements of the passengers were not admissible as they were not subject to cross-examination, and the retracted statement of Vijay Thakkar lacked corroboration. Furthermore, there was no bar against the appellants acting as consolidating agents, and the findings of the Additional Collector in related proceedings under the Customs Act, which exonerated the appellants, could not be ignored.
  
  The Tribunal set aside the findings of the authority below, revoked the order canceling the licence, and ordered the restoration of the licence. The judgment highlighted that the proceedings under the Customs Act and the CHA Regulations are independent but findings under the Customs Act have a significant bearing on the CHA Regulations.
  
  Separate Opinion:
  One member highlighted that the proceedings under the Customs Act, which exonerated the appellants, have an important bearing on the allegations of misconduct under the CHA Regulations. The absence of an appeal from the Department against the exoneration under the Customs Act constrained the Tribunal from overlooking this finding, leading to the conclusion that the appeal should be allowed.

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• 1993 (5) TMI 95
  
  Issues:
  1. Appellants manufactured unbranded biris without observing Central Excise formalities and removed them clandestinely.
  2. Seizure of biris and initiation of proceedings to recover duties and impose penalties.
  3. Appeal against orders passed by Additional Collector of Central Excise, Patna.
  4. Show cause notices issued beyond the limitation period.
  5. Jurisdiction of Additional Collector in issuing show cause notices.
  6. Allegations of fresh show cause notices and connection to remand orders.
  7. Applicability of res judicata principles in subsequent proceedings.
  
  Analysis:
  The judgment involves two appeals against orders passed by the Additional Collector of Central Excise, Patna. In Appeal E-194/92, the appellant was accused of manufacturing and removing unbranded biris without following Central Excise formalities. The department alleged clandestine removal of 1,67,42,450 biris and seized 2,26,000 biris. The Adjudicating Officer confirmed duty demand and penalty. The Collector (Appeals) upheld the penal action but set aside the removal allegations, remanding the matter. Subsequently, a fresh show cause notice was issued, leading to the impugned order. Similarly, in Appeal E-195/92, the appellant faced similar accusations for removing 99,03,000 biris clandestinely, resulting in duty demand and penalty imposition. The Collector (Appeals) remanded the matter, and a fresh show cause notice was issued, culminating in the impugned order demanding duty on 23,74,000 biris.
  
  The central issue revolved around the timeliness of the show cause notices issued by the Additional Collector. The advocate for the appellants argued that the notices were beyond the five-year limitation period, rendering the demands time-barred. The contention was supported by legal precedents emphasizing the necessity of specifying duty amounts in show cause notices and the jurisdictional limitations on Additional Collectors in issuing such notices. The department, represented by the J.D.R., argued that the notices were not fresh but part of ongoing adjudication cases, commencing from the remand order date. However, the absence of explicit references to the remand order in the notices led to the conclusion that they were indeed fresh notices, as per legal interpretations.
  
  The Tribunal concurred with the appellants, ruling that the show cause notices were indeed fresh and not in compliance with the remand order, thereby exceeding the limitation period. Citing legal precedents, the Tribunal held that the demands were time-barred, leading to the setting aside of the impugned orders. The judgment focused solely on the limitation aspect, refraining from delving into the case merits. The possibility of the department pursuing proceedings in line with the remand order was acknowledged, but the Tribunal did not opine on the applicability of res judicata principles in potential future proceedings, as the current decision was based solely on the limitation issue.

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