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TMI Blog1967 (3) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... iding a public road has to be traversed which is not enclosed and from which public cannot be excluded. It is in evidence that after this new siding was constructed, the appellant company requested the Excise authorities to amend the licence to include the new railway siding but this was refused. 2. On February 27, 1961, the appellant company loaded 20 wagons of paper after effecting clearance of these goods by payment of the excise duty under Rule 52 of the Excise Rules. On February 28, 1961 the appellant company loaded 13 more wagons and cleared them. These wagons were sealed by the railway administration and railway receipts were issued to the appellant company. The company also obtained gate pass. The wagons then passed into the control of the railway administration, but as a pilot engine was not available, the wagons were shunted into the new siding. The exit from the siding is only through the factory premises because the railway track comes to a dead-end on the other side. 3. The Deputy Superintendent of Central Excise wrote to the appellant company on March 1, 1961 that the wagons loaded on February 27 and 28, 1961 were found inside the factory premises till 9.45 A.M. on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not be reassessed to the enhanced duty. It is further submitted alternatively that the goods were removed from the factory, proper before the midnight of February 28, 1961 and therefore could not be assessed to the enhanced duty even if the latter part of Rule 9-A applied. A third contention that the order of the Central Government was bad because it gave no reason for the rejection of the application for revision was not pressed seriously. We shall examine the first two arguments only. 6. The duty of excise on paper and boards was increased by Section 13 of the Finance Act, 1961 (Act XIV of 1961) read with Item 17 of the Schedule. Under the Provisional Collection of Central Taxes Act (XVI of 1931) this duty became payable from the 1st day of March, 1961. The question, therefore, arises whether the goods are to bear the old duty or the new. This question depends upon the time at which the duty was payable on the goods in this case. That in its turn depends upon the true construction of Rule 9-A of the Central Excise Rules, 1944. The rule consists of two sub-rules, but we are concerned with the first sub-rule and first proviso to that sub-rule. The relevant portion of the rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the authority of the Rules, whether the payment of such duty or duties is secured by bond or otherwise. Rule 9 lays down the time and manner of payment of duty. The rule may be read here : ****** This rule prohibits the removal of goods from the factory or any premises appurtenant thereto until the excise duty leviable thereon have been paid. The factory and the premises appurtenant thereto has to be specified by the Collector. To this rule there are exceptions. One of them is that the goods may be deposited without payment of duty in a store-room or other place of storage approved by the Collector under Rule 27 or under Rule 47 any warehouse appointed or licensed under Rule 140. Another exception is that the goods may be removed on part-payment of duty leviable if the Government notifies and allows the goods to be so removed or the Collector if he thinks fit, approves the opening of the account current of the duty payable and the account-holder periodically makes deposits sufficient in the opinion of a Collector to cover the duty due on the goods intended to be removed from the place of manufacture or storage. As we are not concerned with export under bond we may not refer t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to re-enter or be retained in any part or premises of factory. We may now turn to Rule 9-A the interpretation of which has given rise to the present case. 10. The dispute, shortly stated, is as to the application of the two parts of Rule 9-A. According to Mr. B. Sen for the appellant company, the first part applied where duty is paid and the goods cleared and in such a case the critical point of time is the payment of duty and the point of time of the removal from the factory is not relevant. In the second part, according to him, the critical time is the removal of the goods from a factory or warehouse without payment of duty such as happens when they are removed under the provisos to Rule 9-A. In this view of the matter he contends that this case falls within the first part of Rule 9-A. On the other hand, the learned Solicitor General on behalf of the Union of India submits that the main rule is in the first part and the second part of the rule is an exception. He suggests that one part speaks of payment of duty and the other of removal and the difference in point of time is between clearance of duty in the case of unmanufactured goods and the actual removal of the goods from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ronous with the clearance of the goods because the gate pass can only be issued when the goods have actually been cleared for removal. The above construction of the Rules agree with the construction placed by the Board of Revenue in its ruling of 1957 where the effect of the sealing of the wagons by the Railway after loading and the issuance of railway receipts was considered. The Board ruled that such goods would not be considered as lying in the stock in the factory premises. When we add to it the fact in this case that duty was paid on the goods and gate pass was also issued, there remains little to argue except to say that the wagons being in the new siding must be treated as still in the factory. Here the difficulty in the way of the Union of India is that the Excise authorities themselves refused to recognise this portion as part of the factory. If the goods were put in the wagons after payment of duty, and the wagons were sealed and shunted out of the factory on a proper gate pass, not only under the ruling of the Board but also on the application of the Rules as explained here these goods became free of the enhanced duty. The recovery was accordingly erroneous. The duty col ..... X X X X Extracts X X X X X X X X Extracts X X X X
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