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Issues Involved:
1. Whether a pre-end in process article manufactured is exigible to duty under the provisions of the Central Excises and Salt Act, 1944. 2. If so, when such duties have not been paid over the years, whether such duties can be realized by the Government. 3. Whether the manufacturer can enforce a refund of duties paid on items subsequently held not dutiable in an application under Article 226 of the Constitution. Issue-wise Detailed Analysis: 1. Exigibility of Pre-End Process Article to Duty: The judgment primarily addresses whether rough-rolled zinc, used for punching zinc calots, falls under the definition of "sheets or strips" as per Tariff Item 26B(2) of the Central Excises and Salt Act, 1944. The court examined the definition of "manufacture" under Section 2(f) and the taxable event under Section 3 of the Act, emphasizing that excise duty is levied on the manufacture or production of goods, irrespective of their sale. The court referenced several precedents, including the Supreme Court's interpretation in cases like Union of India v. Tata Iron & Co. Ltd. and Union of India v. Ramlal Manuskhrai, to establish that the commercial recognition of an article is crucial in determining its dutiability. The court concluded that the identifiable test for what constitutes "sheets or strips" must be based on commercial recognition and standards like those set by the Indian Standards Institution. 2. Realization of Unpaid Duties: The court examined whether duties not paid over the years could be realized by the government. The judgment scrutinized Rule 9(2) of the Central Excise Rules, 1944, which deals with the removal of excisable goods without payment of duty. The court referenced the Supreme Court's decision in N.B. Sanjana v. The Elphinstone Spinning and Weaving Mills Co. Ltd., which held that Rule 9(2) applies only in cases of clandestine removal of goods without assessment. The court found no evidence of clandestine removal in the present case, as the goods were produced and removed following the approved site plan and procedures. Consequently, the court held that the notice under Rule 9(2) was invalid but could be treated as a notice under Rule 10, which deals with short-levy or non-collection of duty due to inadvertence or misstatement, applicable for a period of one year prior to the notice. 3. Enforcing Refund of Duties Paid: The court addressed the manufacturer's claim for a refund of duties paid on zinc calots, which were subsequently held not dutiable. The court noted that the petitioner had paid the duty under a mistaken belief that it was payable and sought a refund based on the Appellate Collector's order dated January 3, 1975, which held zinc calots not assessable to duty. The court considered the principles of unjust enrichment and the limitation period for claiming refunds. It referenced the Andhra Pradesh High Court's decision in Gurram Sreeramulu Gariapati Anjaneyulu & Co. v. The State of Andhra Pradesh, which emphasized that refunds are subject to estoppel, waiver, limitation, and other relevant factors. The court directed that the Appellate Collector re-determine the dutiability of rough-rolled zinc and, based on that determination, decide on the refund claim. The court also noted that the petitioner could seek a set-off against any duty payable on zinc sheets and strips if found dutiable. Separate Judgments and Orders: The court set aside the Appellate Collector's order dated January 3, 1975, regarding the dutiability of rough-rolled zinc and directed a re-hearing. The demand notice dated April 26, 1974, and the show cause notice were stayed until the re-determination. The court outlined specific directions for the Appellate Collector to follow, including giving reasonable opportunity to the parties for further evidence. The court also provided for adjustments or refunds based on the final determination and allowed the petitioner to institute further proceedings for claiming refunds if entitled under the law. Conclusion: The judgment meticulously analyzed the issues of dutiability, realization of unpaid duties, and the enforceability of refunds, providing detailed directions for re-determination and emphasizing the importance of commercial recognition and procedural compliance in excise duty matters.
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