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1989 (7) TMI 309
Issues Involved:
The judgment addresses various questions of law under the Income-tax Act, 1961, including the assessability of salaries and allowances paid to a foreign technician, taxability of income in India, applicability of exemptions, and treatment of perquisites provided by the employer.
Question 1:
The issue was whether the salaries and allowances paid by the Fertilizer Corporation of India Ltd. to a foreign technician deputed by an Italian concern were assessable in the hands of the technician under specific sections of the Income-tax Act, 1961.
The court examined the nature of the income earned in India and concluded that since the liability to pay the salary arose outside India, the provisions of section 9(1)(ii) did not apply. The court referenced relevant case law and emphasized that the wider meaning of "earned" required the creation of a debt in favor of the assessee, which was not present in this case.
Question 2:
The Tribunal's decision on the assessability of the technician's income in India based on the salary certificate issued by the Italian concern was challenged.
The court upheld the view that the daily allowances paid in Indian currency were exempt under section 10(14) of the Act as they were considered reimbursements for expenses wholly and necessarily incurred for the duties of the employment. However, the rent-free furnished accommodation provided was deemed a perquisite under section 17(2)(i) and not covered by the exemption.
Question 3:
The Tribunal's ruling on the taxability of the entire amount of Italian lire paid by FCI to the Italian concern towards the technician's salary and allowances was examined.
The court held that the salary earned by the technicians was not taxable in India, as the liability to pay the salary arose outside India. It further discussed the procedural nature of the Explanation added to section 9(1)(ii) by the Finance Act, 1983, and concluded that it could not be applied retrospectively to the cases of the assessees.
Question 4:
The Tribunal's decision on the applicability of the Explanation added to section 9(1)(ii) by the Finance Act, 1983, with retrospective effect was reviewed.
The court determined that the Explanation, though inserted in 1983, could not be retroactively applied to assessments for the year 1976-77, as assessments must be made based on the law in existence at the relevant time. It emphasized that the Explanation did not alter the substantive rights of the assessees.
Question 5:
The Tribunal's ruling on the exemption of rupee payments taken in India as daily allowance from tax under section 10(14) was analyzed.
The court agreed with the assessees' argument that the daily allowances were exempt under section 10(14) as they were reimbursements for expenses incurred for the duties of the employment, and thus not taxable as salary income.
Question 6:
The Tribunal's decision on the treatment of the rent-free furnished accommodation provided by FCI to the technician as a perquisite under section 17(2) was assessed.
The court concurred with the Tribunal's view that the rent-free accommodation constituted a perquisite under section 17(2)(i) and was not covered by the exemption under section 10(14).
The judgment was delivered by B. L. Hansaria J. and W. A. Shishak J.
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1989 (7) TMI 308
Issues Involved:
1. Entitlement to the benefit of 'OGL' Appendix 6 List 8 Part I of ITC Policy 1985-88 AM.
2. Entitlement to the benefit of concessional rate of duty under Notification No. 386/86 dated 29-7-1986.
3. Liability of goods to confiscation under Section 111(d) and 111(m) of the Customs Act, 1962.
4. Liability of importers to penal action under Section 112(a) of the Customs Act, 1962.
Detailed Analysis:
1. Entitlement to the Benefit of 'OGL' Appendix 6 List 8 Part I of ITC Policy 1985-88 AM:
The Collector held that the appellant did not satisfy the conditions for importing items under OGL (Appendix 6 List 8 Part I), thus invalidating the import under Para 24 of the Import Policy 1985-88. However, the appellant produced a certificate of registration as an industrial unit, issued by the Deputy Director of Industries, Delhi, which confirmed their status as a small-scale industry for manufacturing A.R. grade of tartaric acid and polishing salt. The Tribunal found that the appellant was indeed a manufacturer and an actual user, thus entitled to import the goods under OGL provisions without an import license.
2. Entitlement to the Benefit of Concessional Rate of Duty under Notification No. 386/86:
The Collector denied the benefit of concessional duty, questioning the validity of the certificate issued by the Industrial Adviser. The Tribunal emphasized that the only condition for the concessional rate was obtaining a certificate from the Industrial Adviser, which the appellant had duly obtained and submitted. The Tribunal cited precedents, including Union of India v. Tara Chand Gupta and Bros., asserting that the Customs authorities must accept the certificate and cannot question its validity. Thus, the appellant was entitled to the concessional rate of duty.
3. Liability of Goods to Confiscation under Section 111(d) and 111(m) of the Customs Act, 1962:
The Collector's order for confiscation was based on the assumption that the appellant might not use the imported tartaric acid as declared. The Tribunal found this presumption unfounded, noting that the appellant had complied with all conditions and was engaged in manufacturing. The Tribunal clarified that if the appellant failed to fulfill the conditions later, appropriate action could be taken, but for the present, confiscation was unwarranted.
4. Liability of Importers to Penal Action under Section 112(a) of the Customs Act, 1962:
Given the findings on the first two points, the Tribunal concluded that penal action against the appellant was not justified. The Tribunal highlighted that the Customs authorities have adequate powers under Sections 111(o) and 112 to deal with any future violations of the conditions of exemption.
Final Order:
The appeal was allowed, the impugned order passed by the Collector (Customs), New Delhi was set aside, and all consequential relief was granted to the appellant.
Additional Remarks:
The Senior Vice President concurred with the decision but added that the Collector erred in concluding that the imported tartaric acid was of AR grade based solely on its purity. The Vice President emphasized the need for a comprehensive analysis of all parameters specified for AR grade, which was not conducted. The Customs authorities were reminded of their powers under Sections 111(o) and 112 to address any future non-compliance.
Conclusion:
The Tribunal allowed the appeal, setting aside the Collector's order and granting the appellant all consequential relief, emphasizing the necessity for Customs authorities to adhere to the conditions specified in exemption notifications and certificates issued by competent authorities.
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1989 (7) TMI 307
Issues Involved:
1. Applicability of Article 20(3) of the Constitution to incorporated companies or other bodies corporate.
2. Extension of Article 20(3) protection to directors, officers, or employees of such corporate bodies who are not accused or co-accused.
Detailed Analysis:
Issue 1: Applicability of Article 20(3) to Incorporated Companies or Other Bodies Corporate
Article 20(3) of the Constitution states, "no person accused of any offence shall be compelled to be a witness against himself." The court examined whether this provision could be invoked by an incorporated company or any other body corporate.
The court noted that, according to Article 367 of the Constitution and Section 3(42) of the General Clauses Act, 1897, a company or other body corporate is generally treated as a "person" for constitutional purposes. However, the court asserted that in the context of criminal prosecution, a company or body corporate would not be considered a "person" under Article 20(3). The court reasoned that a juridical person, such as a corporate entity, cannot "be a witness" as it cannot make an oath or affirmation, which is a prerequisite for giving evidence under the Oaths Act, 1969.
The court further emphasized that Article 20(3), which forbids compulsion to make an accused "a witness against himself," is not applicable to corporate bodies as they cannot provide oral evidence or take an oath. The court referred to the Evidence Act, which defines "evidence" to include oral and documentary evidence, and concluded that a corporate body cannot provide oral evidence and does not become a witness merely by producing documents.
The court also referred to the Supreme Court's decision in M.P. Sharma v. Satish Chandra, which initially suggested that producing documents could make one a witness. However, this view was overturned by a larger bench in State of Bombay v. Kathi Kalu Oghad, which clarified that "self-incrimination" must involve conveying information based on personal knowledge, which a corporate entity cannot do.
Additionally, the court considered American jurisprudence, noting that the Fifth Amendment's protection against self-incrimination does not extend to corporate bodies. The court found this reasoning persuasive and applicable to the Indian context.
Issue 2: Extension of Article 20(3) Protection to Directors, Officers, or Employees
The court addressed whether the protection under Article 20(3) extends to directors, officers, or employees of a corporate body who are not accused or co-accused. It concluded that employees or officers of a company cannot be equated with the company itself for the purposes of self-incrimination protection. The court reasoned that if such individuals were not allowed to testify against the company, many corporate crimes would go undetected and unpunished.
The court also highlighted the practical implications of extending Article 20(3) protection to corporate employees. It stated that preventing employees from testifying could hinder the prosecution of corporate crimes, which have become increasingly complex and widespread.
The court did not decide on whether a representative appointed under Section 305 of the Code of Criminal Procedure, who represents the corporation, could be compelled to testify against it.
Conclusion:
The court rejected the revisional application and discharged the rule, allowing the trial to proceed. It held that Article 20(3) does not apply to corporate bodies and does not extend protection to their directors, officers, or employees who are not accused. The judgment underscores the distinction between natural and juridical persons in the context of self-incrimination protections.
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1989 (7) TMI 306
Issues:
1. Interpretation of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985.
2. Distinction between "industrial company" and "industrial undertaking" under the Act.
3. Competence to make a reference to the Board under the Act after a winding-up order is made.
4. Difference between an order in winding up and an order of winding up.
Analysis:
1. The judgment deals with the interpretation of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985. The court was tasked with determining whether Section 22 applies to a case where a winding-up order has already been passed. Section 22 provides for the suspension of legal proceedings in certain circumstances related to the rehabilitation of industrial companies.
2. The court emphasized the distinction between an "industrial company" and an "industrial undertaking" under the Act. An industrial company must own one or more industrial undertakings, which are defined as activities in scheduled industries carried out by a company. If an industrial undertaking ceases manufacturing or is not involved in scheduled industries, it may not qualify as an industrial undertaking under the Act.
3. The judgment addresses the competence to make a reference to the Board under the Act after a winding-up order has been issued. It highlights that for a reference to be valid, there must be a functioning board of directors of the sick industrial company. Once a winding-up order is passed, the board of directors ceases to hold office, rendering any subsequent reference by them incompetent.
4. The court clarifies the difference between an order in winding up and an order of winding up. An order in winding up encompasses various interim orders made during the winding-up process, while an order of winding up is the final culmination of the petition. The judgment emphasizes that once a winding-up order is made appointing an official liquidator or receiver, the proceedings must continue as per the Act, and Section 31 saves pending proceedings in such cases.
In conclusion, the court dismissed the application to stop further proceedings following the winding-up order, citing that Section 22 does not apply once a winding-up order is issued. The judgment underscores the importance of understanding the legal distinctions within the Act and the implications of different types of orders in winding up proceedings. It also encourages the submission of a rehabilitation scheme if it has the potential to revive the company, subject to legal considerations and notice to the official liquidator.
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1989 (7) TMI 291
Issues Involved:
1. Whether the offences punishable under sections 162(1) and 220(3) of the Companies Act are "continuing offences" within the meaning of section 472, Criminal Procedure Code.
2. The applicability of the limitation period under section 468, Criminal Procedure Code to these offences.
Issue-Wise Detailed Analysis:
1. Whether the offences punishable under sections 162(1) and 220(3) of the Companies Act are "continuing offences" within the meaning of section 472, Criminal Procedure Code:
The primary contention raised by the petitioners was that the prosecutions were barred by limitation as per section 468, Criminal Procedure Code, unless the offences could be classified as "continuing offences" under section 472. The court examined the nature of "continuing offences," noting that the term does not have a fixed concept and varies from statute to statute. The Supreme Court in Bhagirath Kanoria v. State, AIR 1984 SC 1688, emphasized that the expression is difficult to define with a static formula. The court differentiated between an offence and its effect, stating that the continuation of the effect does not make the original offence a continuing one. However, offences like "wrongful restraint" or "wrongful confinement" are considered continuing as long as the restraint or confinement persists.
The court referred to the Supreme Court decision in State of Bihar v. Deokaran Nenshi, AIR 1973 SC 908, which held that failure to submit returns within a prescribed period is not a continuing offence unless the law specifies continued penal liability for the default. The court concluded that sections 162(1) and 220(3) of the Companies Act, by providing for daily fines until the default is rectified, make the offences continuing ones. The court emphasized that the penal liability for the default continues until the omission or default is rectified, thus making it a continuing offence.
2. The applicability of the limitation period under section 468, Criminal Procedure Code to these offences:
The court examined the limitation period under section 468, Criminal Procedure Code, which bars prosecution if not initiated within the prescribed period unless the offence is a continuing one. The court noted that section 162(1) of the Companies Act imposes a daily fine for each day the default continues, thereby extending the penal liability until compliance. This provision aligns with the principle that continued non-compliance constitutes a fresh offence each day, as elucidated in Bhagirath Kanoria, where the Supreme Court held that each day of non-compliance with the obligation to pay contributions constituted a fresh offence.
The court also addressed contrary views from previous Division Bench decisions, such as National Cotton Mills v. Assistant Registrar of Companies [1984] 56 Comp Cas 222 (Cal), which held that offences under section 162(1) are not continuing offences. However, the court noted that this decision relied on earlier judgments that were overturned by the Supreme Court in Bhagirath Kanoria. The court also highlighted that the decision in Eastern Paper Mills [1988] Cal Crl LR (HC) 176, which held that offences under sections 162(1) and 220(3) are not continuing offences, did not adequately consider the implications of the Supreme Court's rulings in Deokaran Nenshi and Bhagirath Kanoria.
Ultimately, the court held that the offences under sections 162(1) and 220(3) of the Companies Act are continuing offences, thus not barred by the limitation period under section 468, Criminal Procedure Code. The court dismissed the revisional applications and directed the lower court to proceed with the cases expeditiously.
Conclusion:
The judgment concluded that the offences under sections 162(1) and 220(3) of the Companies Act are continuing offences, thereby not subject to the limitation period under section 468, Criminal Procedure Code. The court emphasized the necessity of interpreting statutory provisions to ensure compliance and proper enforcement of the law, aligning with the principles established by the Supreme Court in relevant cases.
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1989 (7) TMI 290
Issues Involved: Appeal against order of company judge for winding up petition dismissal.
Facts: Respondent placed order for red polished stones, paid advance, appellant supplied goods, respondent alleged quality and delay issues, appellant claimed due amount and sales tax, winding up petition filed under section 433 of Companies Act.
Contentions: Respondent disputed rate, quality, and delay, claimed loss due to incomplete supply, appellant denied liability, respondent raised objections after taking delivery without demur, some goods exported by respondent, respondent's counter-claim vague and doubtful.
Judgment: Single judge found no merit in respondent's contentions, noted fabricated letters, lack of bona fides in defense, dismissed petition but ordered respondent to deposit Rs. 25,000, further deposit of Rs. 50,000 made by respondent, lack of merit in respondent's counter-claim, no basis for defense, lack of ability to pay due amount.
Decision: Appeal allowed, winding up petition admitted, question of advertisement and citation left to company judge, consideration for provisional liquidator appointment, directors to be summoned for statements, no order as to costs.
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1989 (7) TMI 274
Issues Involved:
1. Whether the oral order pronounced by the Bench on 19-4-1988 allowing the appeal with the remark "Order to follow" amounts to an "Order" passed by the Appellate Tribunal within the meaning of sub-section (1) of Section 35-C of the Central Excises and Salt Act, 1944.
Detailed Analysis:
1. Background and Preliminary Objection:
The appellants, dissatisfied with an order of recovery of Rs. 1,13,802.62, filed an appeal before the Tribunal. The appeal was heard on 19-4-1988, and the Bench orally pronounced the order allowing the appeal with the remark "Order to follow." Due to the illness of a member and the transfer of another, the reasoned order was not written. The case was reopened for rehearing, leading to a preliminary objection by the appellants that the oral order constituted a final order.
2. Definition and Legal Interpretation of "Order":
The Central Excises and Salt Act, 1944, does not define "Order" in Section 35-C. The Tribunal referred to definitions in the Code of Civil Procedure and legal dictionaries, concluding that an "Order" involves a formal expression of a decision. The Tribunal emphasized that an order must be reasoned and written, as required by Rule 26 of the CEGAT (Procedure) Rules, 1982.
3. Requirement of a Reasoned Order:
The Tribunal highlighted that the Act's scheme and provisions necessitate a reasoned order. Section 35-C mandates that the Tribunal pass orders after giving parties an opportunity to be heard. The finality of the Tribunal's orders, subject to appeal or reference, implies that orders must be reasoned to ensure transparency and fairness.
4. Judicial Precedents:
The Tribunal cited several judicial precedents to support the necessity of a reasoned order:
- Tarapore & Co. v. Tractors Exports: Final orders must dispose of the rights of parties.
- Venkata Reddy v. Pethi Reddy: A final decision must be unalterable except by appeal or revision.
- Govindrao v. State of Madhya Pradesh: Recording reasons ensures decisions are lawful and not arbitrary.
- Mahabir Prasad v. State of U.P.: The duty to provide reasons is implicit in the nature of appellate jurisdiction.
- Commissioner of Income Tax v. Walchand and Co.: The Tribunal must record reasons in support of its decisions.
5. Analysis of Oral Pronouncement:
The Tribunal concluded that the oral pronouncement "Appeal allowed. Order to follow" without a reasoned order does not constitute a valid order under Section 35-C. The formal expression of a decision must be accompanied by intelligible grounds or reasons.
6. Inapplicability of Certain Judgments:
The Tribunal distinguished the present case from Surendra Singh v. State of Uttar Pradesh and Vinod Kumar Singh v. Banaras Hindu University, where judgments were dictated but not signed. In the present case, no judgment was dictated, and the formal expression of the decision was incomplete.
7. Conclusion:
The Tribunal overruled the preliminary objection, holding that the oral pronouncement on 19-4-1988 was not a valid order under Section 35-C. The case was rightly reopened for rehearing due to the absence of a reasoned and written order.
Summary:
The Tribunal concluded that an oral pronouncement without a reasoned and written order does not constitute a valid order under Section 35-C of the Central Excises and Salt Act, 1944. The requirement for a reasoned order is implicit in the Act's provisions and supported by judicial precedents. The preliminary objection by the appellants was overruled, and the case was correctly reopened for rehearing.
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1989 (7) TMI 273
Issues Involved:
1. Inclusion of additional grounds in the appeal.
2. Validity of the Show Cause Notice issued under Rule 10 of the Central Excise Rules.
3. Jurisdiction of the Collector of Central Excise to demand short levy under Section 11A of the Central Excises and Salt Act, 1944.
4. Demand of Central Excise duty under Item 68 of Central Excise Tariff.
5. Confiscation of plant and machinery under Rule 173Q(2) of the Central Excise Rules.
6. Imposition of penalty on the appellants.
7. Exemption of silver utensils from duty.
Detailed Analysis:
1. Inclusion of Additional Grounds in the Appeal:
The appellants sought to include additional grounds after Para 26 of the memorandum of appeal. The learned consultant did not press the point numbered as para 26B but urged for the inclusion of para 26A, which pertains to the validity of the Show Cause Notice issued under Rule 10 of the Central Excise Rules and the jurisdiction of the Collector of Central Excise to demand short levy under Section 11A of the Central Excises and Salt Act, 1944. The Departmental Representative had no objection, and hence, the additional ground numbered as para 26A was allowed.
2. Validity of the Show Cause Notice:
The appellants contended that Rule 10 cited in the Show Cause Notice was not in existence at the relevant time, and the short-levy should be demanded only under Section 11A of the Central Excises and Salt Act, 1944. They argued that under Section 11A, only the Assistant Collector was empowered to demand duty invoking the longer period, not the Collector. The Tribunal noted that these contentions were raised as additional grounds in the appeal and were not objected to before the Collector during adjudication. The Tribunal referenced the Andhra Pradesh High Court and the Supreme Court's observations that compliance with a notice and participation in adjudication without demur precludes challenging the notice's validity later.
3. Jurisdiction of the Collector of Central Excise:
The appellants argued that the Collector lacked jurisdiction to demand duty for the period beyond six months under Section 11A as it existed at the material time. The Tribunal referenced its decisions in D.C.W. Ltd. v. Collector of Central Excise and U.P. Laminations v. Collector of Central Excise, which held that there is no prohibition in Section 11A(2) on the Collector exercising the powers of the Assistant Collector.
4. Demand of Central Excise Duty:
The appeal contested the order demanding Central Excise duty under Item 68 of the Central Excise Tariff for the period from 18-6-1977 to 31-3-1979. The appellants argued there was no fraudulent intention in obtaining the Chartered Accountant's certificate and that discrepancies were due to the department's arbitrary valuation of silver bullion. The Tribunal found that the appellants had omitted certain particulars in their declaration based on their understanding of the law, which could at best be a mitigating factor for the penalty but did not absolve them of the duty demand.
5. Confiscation of Plant and Machinery:
The Tribunal found merit in the appellants' submission that confiscation under Rule 173Q(2) was harsh and unjustified. The adjudicating authority did not record specific reasons for directing such confiscation as required by the Rule. The Tribunal set aside the order confiscating the plant and machinery.
6. Imposition of Penalty:
The Tribunal reduced the penalty on the appellants from Rs. 25,000/- to Rs. 15,000/- considering the facts and circumstances of the case. The reduction was justified as the omission in the declaration was based on the appellants' understanding of the law, which could be seen as a mitigating factor.
7. Exemption of Silver Utensils from Duty:
The appellants argued that silver, including utensils, was always exempt from duty under Item 68-CET. The Tribunal did not find this argument persuasive as it was raised for the first time during the appeal and was not substantiated with adequate legal backing.
Conclusion:
The Tribunal allowed the inclusion of additional grounds, upheld the demand for duty, set aside the confiscation of plant and machinery, and reduced the penalty. The appeal was disposed of with modifications to the Collector's order as indicated.
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1989 (7) TMI 272
Issues:
Classification of products emerging after processing yarn, eligibility for excise duty benefits under Notification No. 119/75, interpretation of "manufacture" in the context of job work.
Analysis:
1. The appeals involved the classification of products resulting from processing yarn by the respondents. The Assistant Collector classified the new products under T.I.68 based on distinct constitution, use, and marketability. The appellants argued that the processed yarn remained yarn for all purposes. The Collector (Appeals) allowed the appeals, stating that the respondents were only doing job work and liable for excise duty on the job work carried out.
2. The Revenue appealed the Collector's order, contending that the new products emerging from the processing by the respondents were distinct and not eligible for benefits under Notification No. 119/75. They cited the Aditya Mills Ltd. case where it was held that the emergence of a new product through twisting and doubling constituted manufacture under the Central Excises and Salt Act, 1944.
3. The respondents, represented by Shri Bharucha, argued that the twisting of yarn did not result in a new product, citing judgments like National Organic Chemical Industries Ltd. and Madura Coats Ltd. In Madura Coats Ltd., the High Court held that the yarns did not transform into a new substance, maintaining their original identity even after processing.
4. The Tribunal analyzed the precedents and emphasized the judgment in Aditya Mills Ltd., where the Supreme Court upheld that a new product emerged if the processed material resulted in a distinct commodity with its own character and use. The Tribunal concluded that in the present appeals, the processed yarn lost its original identity, aligning with the definition of manufacture.
5. The Tribunal rejected the argument that the articles should retain their essential identity after processing, as held in NOCIL case, emphasizing that in the current appeals, the processed yarn lost its identity. Consequently, all five appeals were allowed, setting aside the Collector (Appeals) order.
This comprehensive analysis highlights the classification of products resulting from yarn processing, the interpretation of "manufacture" in job work scenarios, and the eligibility for excise duty benefits under relevant notifications, providing a detailed overview of the legal judgment.
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1989 (7) TMI 268
Issues:
1. Limitation period for review show cause notice under Section 36(2) of the Central Excises and Salt Act, 1944.
Analysis:
The judgment by the Appellate Tribunal CEGAT, New Delhi involved a review show cause notice issued by the Government of India to M/s. Industrial Gases (Bihar) Ltd. against an order-in-appeal passed by the Appellate Collector of Central Excise, Calcutta. The review proceedings were transferred to the Tribunal for disposal as an appeal under Section 35-P of the Central Excises and Salt Act, 1944. The key issue raised at the outset of the hearing was regarding the limitation of the review show cause notice under the proviso to sub-section (2) of erstwhile Section 36 of the Act.
The learned consultant representing the respondents contended that the review show cause notice was time-barred, as per the proviso to sub-section (2) of Section 36. The notice was dated July 1981, and it was argued that it was issued after the expiration of the limitation period prescribed by the Act. The Central Government, through the notice, sought to set aside the order of the Appellate Collector and restore the order of the Assistant Collector of Central Excise, Ranchi, or pass any other appropriate orders after considering the submissions of the assessee.
Upon examination of the review show cause notice and relevant provisions of the Act, the Tribunal found that the notice was indeed issued after the expiry of the limitation period specified under Section 36(2). The notice did not pertain to non-levy of duty, short-levy, or erroneous refund, which would have triggered the extended period of limitation under Section 11-A. As a result, the Tribunal dismissed the appeal on the grounds of limitation, without delving into the merits of the case.
In conclusion, the Tribunal's decision was based on the clear provisions of Section 36(2) of the Central Excises and Salt Act, 1944, which mandate that a review show cause notice must be issued within the prescribed limitation period. Since the notice in question was issued beyond the statutory timeframe and did not involve matters warranting an extended limitation period, the appeal was dismissed solely on the basis of being time-barred, without addressing the substantive merits of the case.
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1989 (7) TMI 267
Issues:
- Confiscation of primary gold
- Validity of show cause notice
- Ownership claims of gold
- Compliance with Gold (Control) Act
- Imposition of personal penalty
Confiscation of primary gold:
The appellant's residential premises were searched, leading to the discovery of 293.100 gms of primary gold and 1976.000 gms of gold ornaments. The appellant, a licensed goldsmith, claimed the primary gold belonged to customers for new ornaments. Despite the appellant's explanations, the authorities confiscated the primary gold under the Gold (Control) Act, leading to the appeal against the order.
Validity of show cause notice:
The appellant waived a written show cause notice but argued that an oral notice should have been provided. The appellant had submitted detailed arguments, indicating awareness of the charges against him. The tribunal found that the appellant was adequately informed of the charges, satisfying statutory requirements, thus rejecting the contention of inadequate notice.
Ownership claims of gold:
The appellant later claimed that the primary gold belonged to customers, supported by letters and affidavits from the customers. The tribunal noted that the customers demanded to be heard before any confiscation order but were not served show cause notices. The failure to issue notices to the claimants rendered the confiscation order invalid under the Gold (Control) Act.
Compliance with Gold (Control) Act:
The appellant, as a licensed goldsmith, failed to maintain proper accounts and records as required by the Gold (Control) Act. This non-compliance led to a contravention of Section 55 of the Act. The tribunal acknowledged the appellant's lapse in maintaining accounts but reduced the personal penalty from Rs. 5000 to Rs. 1000 due to the appellant's inactive business status and the small quantity of gold involved.
Imposition of personal penalty:
The tribunal held that the personal penalty imposed on the appellant was excessive, considering his status as a licensed goldsmith and the minimal quantity of gold found. The penalty was reduced to Rs. 1000. The tribunal partially allowed the appeal, setting aside the confiscation order and reducing the personal penalty imposed on the appellant.
The judgment highlights the importance of statutory compliance, adequate notice, and ownership verification in cases involving the confiscation of goods under relevant laws.
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1989 (7) TMI 266
Issues:
- Appeal against the Order of Additional Collector of Customs, Bombay for confiscation and fine on imported goods.
Analysis:
The appeal before the Appellate Tribunal CEGAT, Bombay involved a dispute regarding the classification of imported goods by the customs department. The appellants, actual users, imported a consignment of 12% Nickelply Wire Cloth Cold Bonded/Mesh Nickel/Cold Bonded Wire Cloth under OGL Appendix 10 Sr. No. 1 of AM 1983. The customs department objected, claiming the goods fell under Serial 502 of Appendix 3 of AM 83, requiring a specific license. The Additional Collector ordered confiscation of the goods valued at Rs. 2,33,423.00 but allowed redemption upon payment of a fine of Rs. 75,000. The appeal challenged this order of confiscation and imposition of redemption fine.
The appellants argued through their consultant that the goods were wrongly described as wire cloth in the invoice by the suppliers. They provided clarifications from manufacturers stating the material was a special mesh used in nickel cadmium batteries manufacturing, requiring cold bonded mesh. They referenced letters from authorities confirming import under OGL and not falling under specific appendices of the ITC Policy. Additionally, they highlighted a letter from a government undertaking seeking clarification on a similar consignment, which was also imported under OGL. The appellants contended that the goods were bonded mesh, not woven wire cloth, and suitable for battery manufacturing, not covered under Serial 502 of Appendix 3.
On the other hand, the Respondent argued that the goods were woven material of nickel-coated steel wire, falling under Serial No. 502 of Appendix 3. They disputed the validity of the clarifications provided by the appellants and emphasized the specific description of the goods in the invoice and technical data. The Respondent also questioned the timing and relevance of the clarification from DGTD, suggesting a remand if to be considered.
After considering the arguments and evidence presented, the Tribunal observed that the imported item was indeed a woven material but for a specialized purpose of manufacturing Nickel Cadmium Batteries, distinguishing it from ordinary wire cloth. The Tribunal noted the appellants' proactive approach in seeking essentiality certificates and clarifications from authorities before import. The Tribunal found persuasive value in the subsequent clarification from DGTD, indicating import under OGL during the relevant policy period. The Tribunal emphasized that when two views are possible, the one favorable to the appellants should prevail, especially considering their efforts to seek guidance before import. Consequently, the Tribunal allowed the appeal, granting consequential relief to the appellants.
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1989 (7) TMI 265
Issues Involved:
1. Applicability of Central Excise Notification No. 179/77 for exemption from additional duty of Customs.
2. Validity of the Appellate Collector's ruling on the Assistant Collector's finding without an appeal by the Revenue.
3. Entitlement to refund based on reduction in value due to goods being under-grade.
Issue-wise Detailed Analysis:
1. Applicability of Central Excise Notification No. 179/77 for exemption from additional duty of Customs:
The appellants claimed a refund of the additional duty of Customs under Section 3 of the Customs Tariff Act, 1975, arguing that the imported corkwood was produced without the use of power, thus qualifying for exemption under Notification No. 179/77. The Assistant Collector initially found that no power was used in the production of the corkwood, but the Appellate Collector dismissed this finding, questioning the sufficiency of the evidence. The Tribunal referred to the decision in C.C; Madras v. Carborundum Universal, which held that excise exemption notifications are applicable to additional duty of Customs on imported goods. The Tribunal concluded that the conditions of Notification No. 179/77 were satisfied, as the evidence showed that the corkwood was produced manually without the use of power.
2. Validity of the Appellate Collector's ruling on the Assistant Collector's finding without an appeal by the Revenue:
The Tribunal noted that the Assistant Collector's finding that no power was used in the production of corkwood was not challenged by the Revenue in an appeal. The Appellate Collector, therefore, should not have overruled this finding. The Tribunal emphasized that the Appellate Collector could not place the appellants in a more disadvantageous position than before the appeal. The Tribunal agreed with the appellants' counsel that the Appellate Collector's ruling was erroneous in the absence of an appeal by the Revenue.
3. Entitlement to refund based on reduction in value due to goods being under-grade:
The appellants sought a refund of duty based on a reduction in the value of the goods, which were found to be under-grade after clearance. The Collector (Appeals) accepted the reduction in value but rejected the refund claim, stating that the defect was noticed post-clearance. The Tribunal examined Section 22 of the Customs Act, which deals with abatement of duty on damaged or deteriorated goods, and concluded that the reduction in value was due to the goods being sub-standard, not due to damage or deterioration as envisaged in Section 22. The Tribunal found that the appellants failed to satisfactorily establish their refund claim based on the reduction in value. However, the Tribunal allowed relief for exemption from additional duty of Customs, consistent with their finding on the applicability of Notification No. 179/77.
Conclusion:
The Tribunal allowed Appeal No. 598/82 and Supplementary Appeal No. 3733/88, granting exemption from additional duty of Customs. Appeal No. 1466/84 was partially allowed for relief in payment of additional duty of Customs but dismissed regarding the refund claim based on reduction in value.
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1989 (7) TMI 260
Issues Involved:
1. Confiscation of 2 Kruggrrands of gold.
2. Imposition of penalties under the Customs Act, 1962.
3. Imposition of penalties under the Gold (Control) Act, 1968.
4. Legal import of the two Kruggrrands of gold.
5. Liability of M/s. Lamba Jewellers and its partners.
Issue-wise Detailed Analysis:
1. Confiscation of 2 Kruggrrands of Gold:
The Department seized 2 Kruggrrands of gold from the appellant Sardar Virender Singh Lamba, claiming they were not declared upon import. The Adjudicating Authority ordered their absolute confiscation under Section 111(d) of the Customs Act. The Tribunal upheld this decision, stating there was no evidence of legal import of the Kruggrrands and they were correctly classified as articles of gold, not ornaments.
2. Imposition of Penalties under the Customs Act, 1962:
Penalties were imposed under Section 112 of the Customs Act on M/s. Lamba Jewellers, Virender Singh Lamba, and Manmohan Singh. The Tribunal found no evidence that Virender Singh acquired the Kruggrrands with knowledge of their liability for confiscation. The Show Cause Notice did not allege abetment or possession with such knowledge. Consequently, the penalty on Virender Singh under the Customs Act was set aside. Similarly, the penalty on M/s. Lamba Jewellers was also set aside due to lack of evidence showing their involvement in acquiring the Kruggrrands.
3. Imposition of Penalties under the Gold (Control) Act, 1968:
Penalties were imposed under Section 71 of the Gold (Control) Act on M/s. Lamba Jewellers, Virender Singh Lamba, and Manmohan Singh. The Tribunal upheld the penalties on Virender Singh, finding the documents recovered were not merely rough notes and related to transactions around 1984. However, the penalty on M/s. Lamba Jewellers was set aside due to lack of evidence showing the firm's involvement in the contravention.
4. Legal Import of the Two Kruggrrands of Gold:
Manmohan Singh contended the Kruggrrands were imported by his wife as part of a necklace. The Tribunal rejected this argument, stating the Kruggrrands were articles of gold, not ornaments, as defined under the Gold (Control) Act. The Tribunal found no evidence of legal import and upheld their confiscation.
5. Liability of M/s. Lamba Jewellers and its Partners:
The Tribunal found no evidence linking M/s. Lamba Jewellers or its other partners to the seized Kruggrrands or the documents. The statutory records of the firm were in order, and nothing was recovered from the other partners. The Show Cause Notices did not charge the firm or its partners with abetment. Consequently, the penalties on M/s. Lamba Jewellers were set aside.
Conclusion:
1. Appeals by Manmohan Singh under the Customs Act and Gold (Control) Act were dismissed.
2. Appeal by Virender Singh under the Gold (Control) Act was dismissed, but the penalty under the Customs Act was set aside.
3. Appeals by M/s. Lamba Jewellers under both Acts were allowed, and the penalties were set aside.
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1989 (7) TMI 258
Issues Involved:
1. Classification of products under the Central Excise Tariff Act, 1985.
2. Eligibility for concessional rate of duty under Notification No. 160/86.
3. Interpretation of "socket" in the context of trade parlance versus dictionary meaning.
Detailed Analysis:
1. Classification of Products under the Central Excise Tariff Act, 1985:
The primary issue revolves around the classification of the products manufactured by the respondents, which include Cable Terminals and Sockets, Wire pins, In-line connectors, Ferrules, and Snap-on terminals. The respondents classified these products under Chapter sub-heading No. 8548.00 with a duty rate of 15% ad valorem. However, the appellants argued that these products should be classified under Chapter sub-heading No. 8536.90, attracting a higher duty rate of 20% ad valorem.
The Assistant Collector initially classified the products under sub-heading 8536.90, relying on the HSN Explanatory Note under Chapter Heading No. 85.36. The appellants supported this classification by referencing the dictionary definitions of "socket" from Chambers 20th Century Dictionary and the Concise Oxford Dictionary, which describe a socket as a "hollow into which something is inserted."
2. Eligibility for Concessional Rate of Duty under Notification No. 160/86:
The respondents did not contest the classification under sub-heading 8536.90 but sought a concessional duty rate of 15% ad valorem under Notification No. 160/86. The Collector (Appeals) granted this concessional rate, stating that the products did not fall under Serial No. (i) or (ii) of Entry No. 13 of the Notification. The appellants challenged this decision, arguing that the products should be classified as "sockets" and thus not eligible for the concessional rate.
The respondents argued that their products are not sockets but cable terminals, as understood in trade parlance and supported by ISI specifications (IS-8309:1976). They emphasized that their products are parts of electrical equipment and not electrical equipment themselves.
3. Interpretation of "Socket" in the Context of Trade Parlance versus Dictionary Meaning:
The Tribunal had to decide whether to rely on the dictionary meaning of "socket" or its meaning in trade parlance. The respondents' counsel argued that the Tribunal should consider the technical meaning and the common usage in trade practice, as supported by ISI specifications and the Explanatory Notes issued by the Customs Cooperation Council.
The Tribunal noted that the products manufactured by the respondents are used in various applications, such as transformers, switchgears, railways, electricity boards, rectifiers, and small electrical instruments. These products are distinct from conventional sockets, which are typically used in electrical circuits and covered by ISI specification No. 1293:1967.
The Tribunal referred to several judgments, including the Bombay High Court's decision in Advani Oerlikon Ltd. v. Union of India, which emphasized the importance of interpreting terms in fiscal statutes based on their popular meaning or the meaning attached to them by those dealing in them, rather than their scientific or technical definitions.
Conclusion:
The Tribunal concluded that the products manufactured by the respondents could not be classified as sockets based on their dictionary meaning. Instead, they should be understood in the context of trade parlance and their common usage in the industry. Therefore, the respondents' products are not sockets but cable terminals, and they are entitled to the concessional rate of duty at 15% ad valorem under Notification No. 160/86.
The appeal was dismissed, and the order of the Collector (Appeals) Bombay was upheld. The Tribunal emphasized that the meaning of terms in fiscal statutes should be based on their commercial sense and usage in trade, rather than relying solely on dictionary definitions.
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1989 (7) TMI 257
Issues Involved:
1. Whether the conversion of Phenol Formaldehyde (PF) resin into PF moulding powder amounts to "manufacture" under Section 2(f) of the Central Excises & Salt Act, 1944.
2. Classification of PF moulding powder under the Central Excise Tariff (CET).
3. Applicability of Notification No. 83/83 and Notification No. 105/80 for duty exemption.
4. Validity of the penalty and confiscation imposed by the Collector of Central Excise.
Detailed Analysis:
1. Whether the conversion of PF resin into PF moulding powder amounts to "manufacture" under Section 2(f) of the Central Excises & Salt Act, 1944:
The appellants argued that conversion of PF resin into PF moulding powder did not amount to "manufacture" prior to the amendment of Section 2(f) of the Central Excises & Salt Act by the Finance Bill, 1984. They emphasized that the amendment explicitly included the conversion of resins into moulding powders as "manufacture," effective from 1-3-1984. The Tribunal, however, noted that the Tariff Item 15A, as it stood during the material period, covered within its scope moulding powder, and thus, the conversion of resin into moulding powder was taxable under Item 15A(1) by virtue of Explanation III, which included moulding powders. The Tribunal concluded that the conversion process was incidental or ancillary to the completion of the manufactured product, and therefore, the moulding powder was chargeable to duty.
2. Classification of PF moulding powder under the Central Excise Tariff (CET):
The appellants contended that PF moulding powder should be classified under Item No. 68 of the CET, which provided duty exemption for goods with total clearances less than Rs. 30 lakhs. However, the Tribunal held that PF moulding powder was correctly classified under Item 15A(1) due to Explanation III, which explicitly included moulding powders. The Tribunal referenced the Supreme Court's judgment in Dunlop India Ltd. and Madras Rubber Factory Ltd. v. Union of India, which stated that once an article is classified under a distinct entry, the basis of the classification is not open to question. Consequently, the Tribunal affirmed that PF moulding powder was chargeable to duty under Item 15A(1).
3. Applicability of Notification No. 83/83 and Notification No. 105/80 for duty exemption:
The appellants argued that they were eligible for duty exemption under Notification No. 83/83 and Notification No. 105/80, as their total clearances were below the specified threshold. However, the Tribunal found discrepancies between the R.G. 1 register entries and the private ledger entries, indicating that the appellants had cleared goods valued significantly higher than recorded in the statutory records. The Tribunal concluded that the appellants were not eligible for the benefit of Notification No. 83/83 in 1983-84 and were liable to pay duty as determined by the Collector.
4. Validity of the penalty and confiscation imposed by the Collector of Central Excise:
The Collector's order imposed a penalty of Rs. 6,00,000/- on the appellants and confiscated certain seized goods, allowing them to be redeemed on payment of a fine of Rs. 6,500/- plus the appropriate amount of duty. The appellants did not address any arguments regarding the penalty and confiscation during the appeal hearing. Consequently, the Tribunal did not record any findings on these aspects and upheld the Collector's order.
Conclusion:
The appeal was dismissed, affirming the Collector's order that PF moulding powder was chargeable to duty under Item 15A(1) of the CET and upholding the penalty and confiscation imposed. The Tribunal emphasized that the conversion of PF resin into moulding powder constituted "manufacture" and that the goods were correctly classified under Item 15A(1), making them liable for excise duty.
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1989 (7) TMI 256
Issues:
1. Seizure of gold ornaments from a bank locker.
2. Claim for the return of seized articles under Article 226 of the Constitution of India.
3. Dispute regarding ownership of the seized articles between the petitioner and her son.
4. Legal implications of the seizure under the Foreign Exchange Regulation Act, 1973 and Gold Control Act, 1968.
Detailed Analysis:
1. The petitioner filed a writ petition under Article 226 of the Constitution of India seeking the return of gold ornaments seized from her bank locker. The seizure was conducted by the Assistant Director Enforcement Directorate under the Foreign Exchange Regulation Act, 1973. The petitioner claimed that no action was taken against her regarding the seized articles. The respondents, including the Collector of Central Excise and Assistant Director Enforcement Directorate, were named in the petition.
2. The counter-affidavit filed by respondent No. 2 did not justify the seizure of the articles. The respondent mentioned a dilemma regarding to whom the articles should be returned, the petitioner or her son. The respondent alleged a contradiction in statements between the petitioner and her son regarding the ownership of the seized articles. However, the court found no substance in the respondent's arguments and ruled in favor of the petitioner.
3. The petitioner's husband was initially associated with the bank locker along with the petitioner and their son. After the husband's demise, the son's name was included to facilitate the locker's operation. The respondents did not contest these assertions. The court noted that no other person had come forward to claim the seized articles, strengthening the petitioner's claim of ownership. Consequently, the court held that the petitioner was entitled to the relief sought in the petition.
4. Respondent No. 1, in a separate application, asserted that he was unnecessarily impleaded in the petition and requested his name to be removed from the parties. He also mentioned the legal provisions under the Gold Control Act, 1968 and the Foreign Exchange Regulation Act, 1973, regarding the seizure of the articles. The petitioner argued that since no action was taken under the Gold Control Act within the stipulated time frame, the seized articles should be unconditionally returned. The court, however, did not delve into the merits of these claims and directed respondent No. 2 to return the seized articles to the petitioner from the bank locker specified in the seizure memo.
5. The court allowed the petition, ordering the return of the seized articles and made no ruling on costs. The judgment highlighted the petitioner's entitlement to the relief sought based on the circumstances presented and the lack of substantial evidence supporting the respondents' objections.
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1989 (7) TMI 255
Issues:
- Assessment of duty on imported car
- Applicability of duty rate
- Date for determining rate of duty
- Impact of change in berthing of ship on duty assessment
- Relevance of rate of exchange for duty valuation
Analysis:
The appeal in this case concerns the assessment of duty on a car imported by Maj. K.C. Kapur. The issue arose when the ship carrying the car arrived at Bombay Port, but due to a change in berthing, the car was not immediately unloaded, leading to a dispute over the applicable duty rate. The appellant argued that the increased duty rate should not apply as the ship had initially arrived when the lower duty rate was in force. The Customs House, however, relied on the amended Bill of Entry to charge duty based on the higher rate applicable after the ship was re-berthed.
Upon careful consideration, the Tribunal examined the relevant provisions of the Customs Act, 1962. Section 31 of the Act requires the delivery of an Import Manifest before unloading goods, and Section 15(1)(a) specifies that the duty rate is determined based on the date of presenting the Bill of Entry. In this case, the ship had been granted entry inwards, cargo was partially unloaded, and a Bill of Entry was filed before the ship was re-berthed. The Tribunal emphasized that the act of importation was completed when the ship entered the port, was berthed, and started unloading, as per legal precedents cited from Australian and Indian High Courts.
Based on the above analysis, the Tribunal concluded that the duty rate applicable to the imported car should be based on the date when the Bill of Entry was presented, i.e., 25-2-1986, and not on the date of re-berthing. Therefore, the assessment applying the higher duty rate was deemed legally unsustainable. Additionally, the appellant's argument regarding the rate of exchange for duty valuation was rejected, as Section 14 of the Customs Act mandates using the exchange rate on the date of presenting the Bill of Entry for valuation purposes.
In light of the above findings, the appeal was disposed of in favor of the appellant, emphasizing the completion of the importation process upon the ship's initial arrival and berthing, and the correct determination of the duty rate based on the relevant legal provisions.
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1989 (7) TMI 254
Issues: Exemption eligibility based on value of excisable goods, classification of excisable goods, limitation period for demand.
Analysis:
1. Exemption Eligibility: The appellants manufactured pressure cookers and aluminium utensils during 1979-80 and 1980-81, seeking exemption under Notification No. 71/78 for pressure cookers and unconditional exemption for aluminium utensils under Notification No. 244/77-C.E. The Central Excise Department alleged that the appellants wrongly availed exemption by not considering the value of aluminium utensils post-amendment. The appellants argued misunderstanding, not malintent, and cited confusion regarding excisable goods' definition. The Tribunal acknowledged that exempted goods are considered excisable goods for value computation, rejecting the appellants' claim.
2. Limitation Period: The Central Excise Department issued show cause notices in 1981 without alleging suppression or misstatement, leading the appellants to argue that demands before 12-12-1980 were time-barred. The Tribunal examined the absence of clear allegations in the notices and referenced a Supreme Court judgment emphasizing the need for positive evidence of intentional withholding of information for extended limitation. As no deliberate withholding was proven, the Tribunal limited the demand to six months before the show cause notice date.
3. Judgment: The Tribunal partially allowed the appeals, recognizing the appellants' misunderstanding but upholding the denial of exemption based on the value of all excisable goods. Additionally, the limitation period for demand was restricted to six months due to the lack of evidence of intentional information withholding. The judgment highlights the importance of clear allegations and positive evidence in excise duty cases to establish liability beyond the standard limitation period.
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1989 (7) TMI 253
The petition under Article 226 sought the release of seized currency, National Saving Certificates, and Fixed Deposit Receipts. A raid led to seizure of these items along with drugs. The court directed the Magistrate to decide the criminal case within three months. The writ petition was disposed of.
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