TMI Blog1964 (7) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... r got manufactured, attract the provisions of Rules 7 and 9 of these rules or whether they enjoy exemption granted under the notification issued by the Central Government under Rule 8 of those rules No. 751 of 1961 (2) In this petition, we are concerned with Tarun Trading Co., a proprietary concern carrying on business as wholesale dealers in cotton textiles and of which the petitioner is the sole proprietor. According to the petition, an oral agreement was arrived at between the Ankleshwar Handloom Weavers Co-operative Purchaser Society Ltd., Ankleshwar (hereinafter referred to as the society) whereunder, the society agreed to supply power-loom cloth according to the varieties required by the petitioner. Under the agreement, it was agreed that the petitioner should pay the cost for yarn which the society would purchase from Messrs. Manoj Textile Mills, such payments being on behalf of the society, and the society was to supply cloth to the petitioner by adding to the cost of the yarn, what in the petition are called, manufacturing charges which included reasonable profits of the society. These charges were ₹ 0-2-3, ₹ 0-2-9 and ₹ 0-3-3 per yard, depe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner who was said to be out of Ahmedabad at the time. On or about January 29, 1961 the petitioner confirmed that statement, stating that Indravadan Shah was authorised by him to make that statement and that he would abide by it. On May 10, 1961 the Department issued a show cause notice why duty amounting to ₹ 34,727-10 nP. and penalty should not be recovered from the petitioner under Rule 9(2) of the said rules. On May 19, 1961 the petitioner gave his written explanation and after a personal hearing was given to him the Deputy Collector, Central Exercise, the respondent herein, passed his order dated September 11, 1961, calling upon the petitioner to pay ₹ 34,727-10 Np. as duty and a penalty of ₹ 750/- in respect of the said cotton fabrics supplied as aforesaid by the society to the petitioner. (6) It is an admitted fact Messrs Manoj Textile Mills consist of four partners, namely, the said Indravadan Shah and his three brothers and that Vijay Trading Co., which is the petitioner in Petition No.752 of 1961, consisted of two partners, namely, the said Indravadan Shah and his brother. It is not in dispute that the said Indravadan Shah principally managed the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adan Shah along with a letter dated November, 19, 1960, admittedly written by him on behalf of Tarun Trading Co. to the society. That statement shows that in respect of 47, 432 yards of cloth supplied to the petitioner, the petitioner had paid only ₹ 8,155-56 Np. directly to the society and the rest were paid only presumably as the price of the yarn to Manoj Textile Mills. This is clear from the letter of Indravadan Shah dated November 19, 1960 to the society. That letter is somewhat important otherwise also, for, it directed the society to credit to the petitioner the amount stated therein and said to have been paid to Messrs Manoj Textile Mills for the yarn, and wound up by stating that the petitioner would go to Ankleshwar and personally talk over the matter to the manager of the society. This letter together with the statement enclosed therewith dated November 12, 1960 clearly shows that it was Indravadan Shah who was really managing Tarun Trading Co. and not merely looking after that concern in a friendly way in the absence of its proprietor and since he was also a partner together with his brothers in the other two concerns, it can safely be presumed that it was he who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adan Shah had to admit in his aforesaid statement that the cotton fabrics in question were got manufactured by the Petitioner Company. Prima facie, therefore, apart from the question whether the Petitioner Company in law could be said to be the manufacturer, it was the petitioner who got the goods manufactured, supplying yarn to the society and paying to the society only the weaving charges. The statement of account dated November 12, 1960 sent by Indravadan Shah along with his letter dated November 19, 1960 to the society also shows that besides the labour charges, namely ₹ 8,155-56 Np., a further sum of ₹ 172/- was paid to the society and it was admitted before us that that amount represented packing charges. This fact, though by itself a small circumstance, shows that charges other than labour charges were not included in the rates agreed to between the petitioner and the society and that the society was paid such charges, such as packing charges, separately and therefore, the aforesaid rates cannot be said to represent manufacturing charges, as the petitioner sought to make out. The statement of Indravadan Shah thus clearly establishes that the Petitioner Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified by the Collector in this behalf, whether for consumption, export or manufacture of any other commodity in our outside such place, until the excise duty leviable thereon has been paid at such place and in such manner as is prescribed in these rules or as the Collector may require, and except on presentation of an application in the proper form and on obtaining the permission of the proper officer on the form. Clause (2) that rule provides that if any excisable goods are, in contravention of sub-rule (1), deposited in, or removed from, any place specified therein, the producer or manufacturer thereof shall pay the duty leviable on such goods upon written demand made by the proper officer, whether such demand is delivered personally to him. or is left at his dwelling house, and shall also be liable to a penalty which may extend to two thousand rupees, and such goods shall be liable to confiscation. Rule 9A provides that the rate of duty and the tariff valuation (if any) applicable to goods cleared on payment of duty shall be at the rate of and valuation (if any) in force on the date on which duty is paid, or if the goods are cleared from a factory or a warehouse, on the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seded by any subsequent notification. The next notification which is relevant for our purpose is notification No, 74 of 1959 issued on July 31, 1959 and which provided that the Central Government thereby exempted formed of owners of cotton power-looms which was registered or which might be registered on or before March 31, 1961 under any law relating to co-operative societies from the whole of the duty leviable thereon subject to the four conditions were (a) that every member of the co-operative society was exempt from excise duty for three years immediately preceding the date of his joining such society, (b0 that total number of cotton power-looms owned by the co-operative society was not more than four times the members forming such society, (c) that a certificate was produced by each member of the co-operative society from the State Government concerned or such officer as may be named by the State Government that he was a bona fide member of the society and that the number of cotton power-looms in his ownership and actually operated by him did not exceed four and did not exceed four at any time during the three years immediately preceding the date of his joining the society and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th others by forming a society which, under their amalgamated co-operative effort, should produce cloth. The insistence was that the goods for which exemption could be claimed must be goods produced by the society. This is clear not only from the operative part but also from conditions (d) under which the exemption was available for a prescribed period from the date of commencement of production by the society. (11) Notification No. 70 of 1960 dated April 30, 1960 the notification dated July 31,1959 and in language no doubt different from the earlier notification, provided that the Central Government exempted thereby cotton fabrics produced on power-looms owned by any co-operative society or owned by or allotted to the members of the society and which society was registered or which might be registered on or before March 31, 19961, from the whole of the duty leviable therein, subject to the four conditions therein setout. As rightly urged by Mr. Nanavati this notification changed the language and used by expression produced on power-looms owned by a society or by its members or allotted to them, instead of the expression produced by a society . Another change introduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lord Simonds in Magot and St. Mallons Rural District Council v. New Ports Corporation 19952 AC 189 AT p. 191 in refuting the observations of Lord Denning. These decisions no doubt lay down the rule of construction with which no one can possibly have any quarrel. Nevertheless, the notification under construction must be read as a whole and not by laying emphasis on certain words or sentences divorced from their context. Read in this manner, the notification, as the previous notification did, lays down that the exemption granted thereunder is subject to the four conditions set out therein. It will be observed that these four conditions are substantially in the same terms as in the notification of July 31, 1959. The notification as the earlier one did, insists that (a0 every member of the co-operative society has been a manufacturer of cotton fabrics on power-looms and further, has been exempted from duty for three years immediately prior to his joining the society, (b) that the total number of looms owned by the society or allotted to its members does not exceed four times the number of its members, (c0 that each member produced a certificate that the power-looms owned by or allotte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing a society. Under the present notification, the society envisaged therein is a different type of society, wider in concept than the society contemplated in the earlier notification, for such a society can be one which owns its own looms or has members who own looms or who are allotted looms not exceeding four. Since the society now contemplated is one which owns its own looms or has members to whom power-looms are allotted, it follows that the membership of such society need not be confined to those who are owners of power-looms. Therefore, the production of cotton fabrics which would enjoy exemption can be made both by members who are owners of power-looms as also those who are not owners but to whom looms not more than four are allotted. The fact, however, that under clause (d) the exemption is made available for the prescribed period commencing from the date of production shows that the production that is contemplated is by the society and not by any outside agency. Since the notification recognises a society which has members to whom looms are allotted and such a society need not be one whose members can be only those who own looms, the goods produced on such looms, the good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notifications was meant primarily for the protection of petty producers of cotton fabrics, not owing more than four power-looms, from unreasonable competition by big producers. The State therefore had made a valid classification between the goods produced in bug establishments and similar goods produced by small power-loom weavers in the mofussil, who were usually ignorant, illiterate and poor and suffered from handicaps to which big establishments wee not subject. Under the notifications, exemption was available to individual weavers who employed not more than five looms on their own account. The fact that they had banded together efficiency and to take advantage of State aid should not count against them. In rule 8, therefore, there has not been excessive delegation of power to exempt. Nor were the notifications bad in so far as they exempted certain classes of persons and not classes of goods from the excise duty. The duty of excise was on the production of certain goods, but it was payable by persons producing such goods. The exemption was also with reference to such goods a came within the description of excisable goods. Certain co-operative societies had been exempted under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without attempting to conjecture or speculate about the object for which it was issued, or without attempting any modifications in the language used therein, it is clear that as compared with the previous notification the scope of exemption was enlarged so as to give the benefit of exemption to goods produced by a society through its members were themselves not the owners of looms on which the goods were produced and the looms on which they were manufactured were looms either owned by the society itself or by its members or were looms allotted to its members. Since under the notification of January 5,1957 an individual could claim exemption on goods manufactured by him or on his behalf even though he might not be the owner of the looms on which such goods were manufactured, there was no reason why the exemption on the same lines should not be given to a society consisting of members who did not own looms but to whom looms were allotted. Under the notification of July 31, 1959 such a society, whose members were not the owners but who produced cotton fabrics on looms allotted to them, could not claim exemption though the members, if they had not joined such a society could have clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince that rule can only apply to one who produces and manufactures any excisable goods or who stores such goods in a warehouse, it will have to be considered whether the petitioner can be said to be either a producer or a manufacturer of the cotton fabrics in question. (14A) Section 2(f) does not define the words manufacture or manufacturer but lays down an inclusive definition. What the Legislature does is to say that do manufacture mean not only what its natural meaning conveys but shall also include any process incidental or ancillary to the completion of a manufactured product. So far as salt and tobacco are concerned, the Legislature includes various process set out separately therein. Therefore, one has first to turn to the natural and plain meaning of the word manufacture to find out the content of this definition. The natural meaning of manufacture is to make or fabricate or to bring into existence an article or a produce either by physical labour or by power. Therefore, leaving aside salt and tobacco, the definition of the word manufacture would mean making or bringing into existence an article or product by physical labour or power and would include any p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arges and they, in their turn paid to the societies at the rates agreed to between them and the societies. In this connection, Mr.Nanavati relied on two decisions, in Chintaman Rao v. State of Madhya Pradesh, AIR 1958 SC 388 and Shankar Balaji Waje v. State of Maharashtra, AIR 1962 SC 517, both of which were cases of bidi manufacturers arising under the Factories Act and where the Supreme Court has laid down the distinction between an employee and an independent contractor. On the strength of these two decisions, it was argued that the petitioner cannot be said to be an employer and the society or its members employees, that there was no contract of employment between them and that at best, the agreement between them made the society an independent contractor who, upon an order placed with it, manufactured the goods in question. Mr.Divan, while supporting Mr.Nanavati, approached the definition of manufacturer in a somewhat different way and urged that we should read the definition as if it provided that a manufacturer shall be construed accordingly and shall in so construing include a person who engages in the production or manufacture etc. Mr.Sorabji argued that the expression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inclusive and an enlarged definition. It is clear that the Legislature was not content by making merely those persons who, on a plain meaning of the term, can be called manufacturers and therefore, by using words but also , an expression of emphasis, wanted to include those persons who engaged themselves in the production or manufacture of goods on their own account and which goods were intended for sale. In the first category would fall all those persons who bring about into existence or make or fabricate an article or a product, but a manufacturer in that sense does not only mean who, by his own personal labour, makes an article or a product. A person who brings into existence an article or product through the instrumentally of an agent or a servant must also be regarded as a manufacturer falling within the natural meaning of the word manufacturer . An artisan for instance, who makes a product or an article is a manufacturer but does not cease to be one because he makes such an article with the aid of or through instrumentality of his servants or workmen. The Legislature having thus provided for such a category of persons then proceeds to lay down the inclusive part of the defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be correct to say that the petitioner manufactured the goods in question by employing hired labour and therefore would not fall in the first part of the definition. Nevertheless, it cannot be doubted that by engaging the society as the independent contractor to weave cloth for him from the raw materials supplied by him and paying only weaving charges, the petitioners did engage on his own account in the manufacture of goods intended for sale and therefore, was a manufacturer. But it was argued that if the respondent has held the petitioner to be manufacturer on one set of facts, namely that he was a manufacturer because he had employed hired of labour, it would not be permissible to us to uphold that finding on the ground that he had engaged himself otherwise in the production of goods and that such a course would be tantamount to holding him a manufacturer on a different basis and on a different set of facts to which the respondent had not applied his mind. We do not think that this is a correct line of reasoning. In the show cause notice, the case of the Department clearly was that the petitioner had got manufactured these goods through the society and that allegation was based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e respondent can be said to have made was that instead of saying that the petitioner go manufactured the gods in question through an independent contractor, namely, the society, he stated that the petitioner manufactured the goods by employing hired labour, i.e., the society. The correct position was that by entering into an agreement with the society, the petitioner had got the gods manufactured and thus had engaged himself in the production or manufacture of the goods in question but not by entering into a contract of employment with the society. The mistake therefore was to consider the petitioner as a manufacturer under the first category of persons rather under he second category of person falling within the definition. But that does not mean, as emphasized both by Mr. Nanavati Mr.Sorabji that that finding we arrived at on a consideration of one set of facts and that that finding is sought to be upheld on another set of facts to which the authority had not applied its mind. That contention cannot be sustained and our conclusion is that the authority was right in the finding that, the petitioner was a manufacturer with in the meaning of section 2(f) of the Act. (18-19). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d obtained L-4 license as required by the Central Excise and Salt Act, 194. It is an admitted fact that the petitioner had never obtained such a license. By letters dated August 29, 1959 and October 27, 1961, the Excise Department had granted and confirmed exemption from excise duty payable on cotton fabrics manufactured by the society under the notification issued by the Central Government. It is not in dispute that between June 1, 1959 and September 30, 1959 the society carried out the weaving work on four power-looms only, though the Government had allotted to the society fifteen such power-looms, but eleven out of the fifteen power-looms allotted as aforesaid were kept under seals and were consequently not worked. On or after September 30, 1959 these eleven looms were released and the society was allowed to do its weaving work on all the fifteen power-looms allotted to it. On August 26, 1961 the exercise authorities recorded the statement of one Ghelabhai Jivanji Vashi, the manager of the society. In that statement, Vashi admitted that as the society was not conversant with purchasing sized beams and the work of selling manufactured goods, the society, under the said agreement, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . From the records of the society the authorities also found a joint resolution passed by the managing committee and the control committee of the society on November 17, 1960 in which the said committee had clearly stated that the society was doing the work of certain merchants from Bombay on being paid weaving charges. The profit and loss account of the society for the year 1960-61 also indicated that the society had been doing two types of work, (1) weaving work for other merchants on payment of labour charges, and (2) the work of manufacturing cotton fabrics by the society itself. Thus it is clear that between June 1, 1959 and January 3, 1961 the society carried out the work of weaving from yarn belonging to and supplied by the petitioner in consideration of the petitioner agreeing to pay the weaving charges at the rate of ₹ 00-19 nP per yard and that during the aforesaid period, the society cleared 3,19,460 yards of cotton fabrics and transported them to the petitioner in Bombay. The society removed these goods and supplied them to the petitioner during the aforesaid period under bills, a list of which is annexed a Exhibit I to the petition. The bills also indicate that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted April 16, 1962 was amended by a further notice dated April 23, 1962, where under instead of the amount of ₹ 1,69,263/- as the amount of duty payable on the said goods at the rate of 29,3 nP. per yard, the amount of ₹ 2,28,674-74 nP was demanded at the rate of basic duty at the rate of 15.5 nP and cess at 1.09 per square meter. The additional amount was demanded as the rate of excise duty payable on cotton fabrics had been enhanced from 29.3 nP. per square meter to ₹ 00-45 nP per square meter as from April 22, 1962. On May 7,m 1962 the petitioner gave his written statement in reply to the said show cause notice and thereafter on August 11, 1962 the petitioner was given a personal hearing at which he appeared by counsel and at which Vashi was examined. The impugned order was passed on November 26, 1962 in which the Assistant Collector of Central Excise and Customs Surat, found that the petitioner had operated and functioned as a manufacturer of the said goods and as such, had removed them from the society's factory at Gandevi without payment of duty and ordered that the petitioner should pay as per the aforesaid demand the sum of ₹ 2,28,574-74 nP. bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of duty from June 22, 1959 to January 3, 1961, and (b) that even on the footing that the petitioner was a manufacturer, the society having been allowed to work on only four looms during the period from June 1, 1959 to September 30, 1959 the petitioner would be entitled to exemption from the entire duty on goods produced on looms during that period by virtue of notification dated January 5, 1957. (22) The stand adopted by Mr.Sorabji was that under the agreement, the petitioner was no doubt to supply yarn to the society, that ownership in that yarn remained all throughout in the petitioner and the position of the society was no more than that of a bailee. The society was to paid at the rate of ₹ 00-19 nP per yard for weaving cloth from out of this yarn and after the goods were ready, it was the obligation of the society to deliver the goods to the petitioner at Bombay and bear the transport charges therefor. Consequently, the position was that the society was in the position of an independent contractor having no relationship with the petitioners as between an employer and an employee. The act of manufacturing the goods was thus the act of the society and therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no question of the authority having found the petitioner a manufacturer on one set of facts and the Court holding him to be manufacturer on another set of facts to which the authority had not applied its mind. The facts on which the petitioner is held to be a manufacturer are the same and on which there is hardly any controversy between the parties. The only mistake that the authority maybe said to have made is that it used a wrong description namely, of the petitioner having employed hired labour instead of describing the society as an independent contractor. Whatever, the legal relationship between the parties was, and howsoever, it was described by the authority, the petitioner cannot cease to be a manufacturer within the meaning of S. 2(f) of the Act. (23) Coming now to the constitutional question raised by Mr.Sorabji we may at once make it clear that though the petition has raised a number of questions. Mr.Sorabji confined his challenge only to S. 8 of the Act and Rr.7 and 9., he was also frank enough to state that his contention was based almost solely on certain observations made by the Supreme Court in K.T. Moopil Nair v. State of Kerala, AIR 1961 SC 552 at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in such place and in such manner as is prescribed by these rules or as the Collector may require, and except on presentation of an application in the prescribed form and on obtaining permission of the proper officer on the form., there are two provisions to this rule, but we do not propose to detain ourselves on hem as they are not relevant for the purpose of this petition. Sub-clause (2) of Rule 9 provides that if any excisable goods are, in contravention of sub- rule (1), deposited in, or removed from, any place specified therein, the producer or manufacturer there of shall pay the duty leviable on such goods upon written demand made by the proper officer, whether such demand is delivered personally to him, or is left at his dwelling house, and shall also be liable to a penalty which may extend to two thousand rupees, and such goods shall be liable to confiscation. Rule 49 makes it clear that duty is payable only at the stage of removal of excisable good and not at the stage of manufacture or production. In order that the goods may not escape payment of duty, various checks are provided for in the rules. It is not necessary to go into all the rules, but it would be sufficient if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r place of storage approved by the Collector under Rule 47, the quantity removed for export without payment of duty and such other particulars as may be elsewhere prescribed or as the Central Board of Revenue or the Collector may require. Rule 55 requires that at the end of manufacturing period, or if manufacture is continuous, at the end of every quarter, the manufacturer shall sign and deliver to the proper officer a return in the proper form truly stating with respect tot the materials used in the manufacture, the weight of each description of finished goods produced and such other materials as the Central Board of Revenue or the Collector may, by general or special order, require. (23A) It is clear that from the time that the process of manufacture is set in motions until it is finished, these rules see to it that a detailed check by the excise authority is maintained, the officers, on the basis of these statements and returns maintained by the manufacturer, knowing what goods are manufactured and what quality and description or value they are. When all these stages are passed and the goods are to be removed, a person removing the goods has to make an application under r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by rules 213 and 214, or apply for a provisional assessment under rule 9B. That rule provides that a manufacturer, curer or owner of goods warehoused may, in cases where assessment if goods involves two or more alternative basis, request the proper officer to assess the goods provisionally at lower or the lowest of the rates of duty applicable (a) pending furnishing by such manufacturer, curer or owner of complete information as regards the value, description of quality of the goods, or if such information has already been furnished, pending supply of proof thereof, or (b) pending completion of any chemical or other test to which the goods may be subjected by such officer, and such officer may, at his discretion, direct that duty on such goods may be provisionally assessed and prescribe the time limit within which the complete information, or proof of information already furnished shall be supplied by such manufacturer, curer or owner in respect of the goods so assessed. Such manufacturer, curer or owner in that event has to execute a bond in the proper form, with such surety or sufficient security, in such amount, or under such conditions as the Collector approves, binding himself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , if insistence on deposit would cause hardship, not to insist upon such deposit. It is, therefore, clear that so long as the goods are in a warehouse and are removed therefrom and are, therefore, under the control of the authorities, the deposit of the duty amount has not be made and an appeal has to be entertained without such deposit. (23b) The new Act came into force as from February 1, 1963. The memo of appeal in the instant case was sent to the appellate authority on February 2, 1963 and therefore, must have been received by that authority not earlier than February 2, 1963, i.e., after the Act came into force and therefore S.129 would apply. In the present case, the goods in question were not under the control of the Department, but in spite of that fact and though the goods were removed without payment of duty, there was still a right in the petitioner to apply for dispensing with the deposit amount under the proviso to S.129 (1). An application was in fact made for dispensing with the deposit, but it is clear from the record that the application was not based on the footing of any hardship but on the ground that the appellate authority was not entitled to insist upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, held that with reference to S. 5A of the Travancore-Cochin Land Tax Act, 1955, as amended by the Act X of 1957, violative of Art. 19(1)(f) and as constituting unreasonable restriction on the right to hold property. Section 5A, which was inserted by the amending Act X of 1957 gave power to the Government to make a provisional assessment of basic tax payable by a person in respect of land held by him and which was still unsurveyed land, and upon such assessment, such person became liable to pay the amount covered in the provisional assessment. The Act was challenged on the grounds also in particular, on the ground of inequality and being discriminatory, thus offending Art. 14. But, for our present enquiry, we are not so much concerned with the decision qua Art. 14 as with the observations made with reference to the challenge under Art. 19. After setting out S.5A, the learned Chief justice observed that that section was also equally because it imposed an unreasonable restriction on the right to hold property safeguarded in Art. 19(1)(f). Section 5A declared that the Government was competent to make a provisional assessment of the basic tax payable by a holder of unsurveyed land. Wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature or the quality of the land and also irrespective of whether the land was productive or not. It contained no procedure whatsoever, and left the executive to evolve such procedure as it thought best, leaving no room for the subject to take objections to the assessment and having also no provisions for a right of appeal. The Central Excise and Salt Act cannot be compared or placed on analogy with the Travancore-Cochin Act, for as already pointed out, the rules made under the Act have provided for (1) a detailed assessment, (2) the right of he assessee to raise objection, and (3) for a right of appeal in the first instance and thereafter a revision. It is true that unlike other fiscal statutes such as the Income Tax and the Sales Tax Acts, there is no provision for filing returns, but that is because the tax is of a totally different character, namely, on goods, and leviable only at the stage of removal. As already stated, the rules provide a detailed machinery for checks, right from the stage when manufacture commence until the goods are ready for removal, in the course of which the manufacturer has to file statements of raw materials used in the manufacture, of goods manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of the tax and the particular provisions of that Act and in particular those S. 5A of the Act. He relied upon Glaxo Laboratories (India) Private Ltd v. A.V.Venkateswaran, 61 Bom LR 1: (AIR 1959 Bom 372), where, on the provisions of the Sea Customs Act, 1878 which are somewhat similar to those in the Act before us, the High Court of Bombay drew a distinction between the provisions which provided for assessment and those which provided for confiscation, payment of duty in lieu of confiscation and penalty, and held, after examining both the English and the Indian decisions, that the assessment order under S.87 of Sea Customs Act was an administrative order whereas the order regarding confiscation and penalty was quasi-judicial order. Mr. Sorabji, however, disputed the correctness, of the Bombay view, in view of the observations of the Supreme Court in Moopil Nair's case, AIR 1961 SC 552. But there is a clear distinction between an assessment under R.52 and a demand under R. 9(2). The impugned order is obviously not an order under R. 52 but an order under 9(2) which is a provision contemplating a situation different from the one under R.52 and the order made under R.9 (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is difficult to appreciate the provisions of S.3 or R.7 can be assailed on the grounds when they do not deal with assessment or collection. (28a) Then remains R.9 for consideration. The first clause of R.9 provides that no excisable gods shall be removed from any place where they are produced, cured or manufactured etc., whether for consumption, report or manufacture of any other commodity in or outside such place unless excise duty leviable thereon has been paid at such place or such manner as it is prescribed by the rules or as the Collector may require, and except on presentation of an application in the proper form and on obtaining permission of the proper officer on the form. This clause only men as that no person shall remove the goods from any of the place mentioned in this art of the rule unless an application under R.52 is made in the form prescribed thereunder and an assessment under that rule is made and duty so assessed is paid and permission to remove them is granted. The first clause of the rule, therefore, lays down prohibition against without payment of duty and has nothing to do with assessment which, as we have more than once said, is made under R.52. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confiscation or penalty may be adjudged by the officers specified there in Section 33 occurs in Chapter VI which is headed as Adjudication of confiscation and penalties . There is thus in clear terms a duty to adjudge cases of confiscation and penalties by a judicial process and the function is clearly judicial or at lest quasi-judicial function and therefore subject to the principles of natural justice, even though the rules may not provide a procedure and a machinery for the determination of such questions. But there is no challenge to the orders in question in this petition and in the petitions following this petition on the ground that the principles of natural justice were violated. The petitioner was served with a notice to show cause. He filed his written statement and was given a personal hearing when he was represented by counsel, and I was then that the respondent passed the impugned order. It is, therefore, clear that after the authority makes a demand under rule 9(2) the producer or manufacturer who has removed the goods in contravention of clause (1) of he rule has her opportunity to raise an objection either on the ground that he is not liable or on the quantum of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n when the appeal was dismissed on the ground of failure to deposit, the petitioner did not go in revision challenging the order. In Chaturbhai M.Patrel v. Union of India AIR SC 424 though the challenge was to sections 6 and 8 of this Act and the rules made thereunder and the goods in question were tobacco, the situation was somewhat analogous to the one before us. The petitioner there was a dealer in tobacco and owned a private bonded warehouse and held licence for the same. The petitioner's warehouse was checked by the excise officer who finding some irregularity, sealed the warehouse and subsequently took possession of the registers and other documented. Thereafter, the officer removed certain bags of stems of tobacco from the warehouse and stored them in some other place. The petitioner made a representation against these orders to the Collector of Central Excises and some correspondence ensued between them thereafter to show cause why penalty should not be imposed upon him for contravention of certain Central Excise Rules and why the aforesaid bags should not be confiscated. Finding the charges against the petitioner proved, the Collector ordered confiscation of the bags i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l statutes, the party who applies for removal is called upon to furnish details in his application on which the authority is enabled to make assessment. On such assessment, as already stated the applicant has two remedies if he is aggrieved, under rule 9B demanding provisional assessment in which case he has a right to give further information or to adduce proof of the information already furnished by him, or to go in appeal. As held by this Court in Chandulal Jetjalal Jayaswal v. State of Gujarat, ILR (1964) Guj. 96 at pp. 135 to 139 : (AIR 1964 Guj 59 at pp.73 to 75) the right of appeal, provided it is not hollow or farcical, saves the administrative power or the function from being an unreasonable restriction. The fact that there is a provision for filing such an application with the details filled in by the producer or the manufacturer, coupled with the fact that there are provisions in the Act and the rules enabling such a party to demand provisional assessment, entailing a right to adduce evidence, and the right of appeal and revision, clearly shows that the ratio laid down in Moolpil Nair's case AIR 1961 SC 552 cannot apply to the Act and the rules before us, The proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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