TMI Blog1975 (1) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1944, and (hereinafter referred to as "the said Act"). 2. The short facts giving rise to this Petition are that the 1st Petitioners a limited company, inter alia, own and run a Division known as "Film Centre" and inter alia carry on the business of printing and processing cinematograph films. The 2nd Petitioner is a Director and a shareholder of the 1st Petitioners, and a citizen of India. It is the case of the Petitioners that in respect of the cinematograph films, the 1st Petitioners were paying Excise duty prior to 1st April, 1969, under Item No. 37 of the said Act, which reads as under : *** 3. Under Item No. 37 the Excise authorities did not levy any excise duty upon the Censor Certificate length of the film and the 1st Petitioners also did not recover the same from their customers. It is the case of the 1st Petitioners that the Excise authorities by practice or otherwise did not levy any duty upon such portion of the film which related to the Censor Certificate length and in fact, the film was allowed to be removed from the factory without the levy of such duty and this practice continued for a period of about 10 years. 4. Thereafter it appears that the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent called upon the 1st Petitioners to make payment of the said amount of Rs. 52,205.91 ps. It is these orders and letters of demand made by the Respondents against the 1st Petitioners that has been challenged by the Petitioners in this Petition. It may be stated that by a Notification issued by the Central Government the portion of the film viz., Censor Certificate length has been exempted from the levy of duty from 20th February, 1970. 5. Only two grounds of attack have been raised before Court out of the several grounds which have been stated in the Petition. There are that Respondent Nos. 1, 2 and 4 have not exercised their independent mind but have been dicted by the directions in the letter dated 10th February, 1969. It is contended that by reason of this direction these Respondents were not in a position to exercise their independent and unfettered mind and were solely guided in their decision by reason of this directive dated 10th February, 1969. It was urged that the powers exercised by these authorities were of quasi-judicial nature and that the power cannot be controlled by the direction issued by the Central Board of Excise and Customs. It was the duty of these au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f attack related to the order which was admittedly passed by a quasi judicial authority being illegal on the ground that the authorities were controlled by direction or mandate issued by the Central Board of Excise and Customs and hence no independent application of mind was made by the authorities concerned. Reliance was placed on the following observations of the Court at page 51, in paragraph 8 : "If the power exercised by the Collector was a quasi judicial power - as we hold it to be - that powers cannot be controlled by the directions issued by the Board. No authority however high placed can control the decision of a judicial or a quasi-judicial authority. That is the essence of our judicial system. There is no provision in the Act empowering the Board to issue directions to the assessing authorities or, the appellate authorities in the matter of deciding dispute between the persons who are called upon to pay duty and the department. It is true that the assessing authorities as well as the appellate authorities are Judge in their own case, yet when they are called upon to decide disputes arising under the Act they must act independently and impartially. They cannot be said t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the film, the length of the film used for the purpose of the Censor's Certificate and the authorities directed to levy duty under the said Item No. 37. In the affidavit in reply it is admitted that the original demand has been issued in pursuance of this direction. The letter dated 17th April, 1969, annexed as part of Exh. A, (Colly), to the Petition, issued by the Senior Grade Inspector of the Central Excise leaves no doubt on this portion. Relevant portion of the said letter reads as under : "I have been directed by the higher authorities to inform you, that the Central Board of Excise and Customs, New Delhi are of the view that the length of the film used for exhibiting the certificate issued by the Central Board of Film Censors should also be included in the total length of the Film in each print of a feature film and short etc. for the purpose of assessment to excise duty under Tariff Item No. 37(II) of the Central Excise Board immediately." 8. The said letter does not specifically deal with the period with which the Court is concerned in the present Petition but at the same time to reopening of the assessment has been made by a reason for the said directive. Prior theret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uashed upon the ground that Respondent Nos. 1, 2 and 4 have relied upon this directive dated 10th February, 1969. It may be stated that Mr. Dalal argued on behalf of the Respondents that the directions could not bind the Central Government under its Revisional powers and therefore, even assuming that the orders of the authorities other than the Central Government were vitiated by reason of this directive, the order of the Central Government in revision is valid. In my opinion, if as observed by the Supreme Court in the above case, such directions make a mockery of the judicial process and the same are in their inception without jurisdiction, then the final order also must fail. 10. This brings me to the second and last contention of Mr. Kapadia for the Petitioners, that the Censor's Certificate length of the film is not an "excisable goods" within the meaning of section 2(d) of the said Act, because it is not "goods". His argument is that before any excise duty can be leviable the article must be something which can ordinarily come to the market to be bought and sold. In so far as the Censor's Certificate length of the film is concerned it has no market whatsoever because it is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities levied duty upon this refined oil. The question was whether any duty was leviable thereon. In that case, the Supreme Court laid down two broad propositions : (1) that excise duty is on the "Manufacture of goods" and not on sale; (2) in order that excise duty may be leviable the article has to be "goods" before any excise duty can be levied. At page 795 of the said Judgment in paragraph 17 the Court observed : `to become "goods" an article must be something which can ordinarily come to the market to be bought and sold.' 12. Therefore, the question has to be considered in the light of these two principles viz., whether the Censor Certificate length is a "manufacture which includes a process and whether thereafter it is "goods". Mr. Dalal emphasized and when the Censor Certificate length of the film was printed and processed, it is "manufactured" and duty was leviable on it. Further it was "goods" because it could not be removed without the same being affixed to the main exposed film which has a market. On the other hand, Mr. Kapadia on behalf of the Petitioners argued that no doubt that the same was processed and printed and thus manufactured within the meaning of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the calculation of duty at the time of removal from the factory. As observed by the Supreme Court in the aforesaid case of Union of India and another v. Delhi Cloth and General Mills Ltd. and others, reported in AIR 963 S.C. page 791; at page 793 paragraph 8, that excise duty is on the manufacture of the goods and not on the sale. The goods are manufactured prior to the removal from the factory and the excise duty is levied as soon as the article is manufactured. Therefore, what has to be considered in each case is, at what stage is the article "goods" in the sense that it is something which can ordinarily come to the market to be bought and sold. If the same is not an article, which can be bought and sold in the market it is not "goods" even if the same is manufactured. If therefore, the said Censor Certificate length of the film is not "goods" then the provisions of the said Act are not attracted. Item No. 37 of the Tariff Act has no application and the Respondents therefore, had no jurisdiction to levy duty and the impugned orders and the demand notices were therefore issued without jurisdiction and must be quashed and set aside. 14. In the result, I allow, the Petition a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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