TMI Blog1953 (1) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... at towards the end of 1946 the pledgors (M/s. M. James Canterbury Co.) went away to Pakistan without making any arrangement of the goods lying in their Entally warehouse and leaving an overdraft of about Rs. 60,000. On January 12, 1949 the predecessor-in-interest of the appellants wrote a letter to the Collector of Central Excise, Calcutta, stating that the goods which were in the warehouse at Entally had been removed to their own godown for the protection of their own interest under the supervision of the Deputy Superintendent, Central Excise, Sealdah Circle, and asked for permission to sell the goods for realization of their dues on getting a warehouse licence. This licence was granted to the appellants predecessor on their execution a bond for Rs. 4,000/- for the observance of all the provisions of the Central Excise Rules, 1944. 3.It appears that the appellants made some unsuccessful attempts to sell the tobacco which was stored in their own godowns. On the 27th of December, 1949, the Excise authorities serve two notices upon the appellants demanding payment of Rs. 12,225-0-0 and Rs. 34,317-12-0 as duty upon 1,630 lbs. and 45,757 lbs. of non-duty paid tobacco for the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is appeal. 8.In this case the demand notices were served for "Non-duty paid stock lying in the warehouse for more than three years - Rule 160 of the Central Excise Rules, 1944 - Learned Counsel appearing for the appellants has argued that the liability under Rule 160 of the Central Excise Rules has to be discharged only by the absolute owner of the goods and as the appellants are not the owners of the goods but only pledgees they are not liable to pay the duty under Rule 160. The relevant portion of Rule 160 runs as follows :- "If any goods…………..are not removed from the warehouse within three years from the date on which they were first warehoused…………the owner of the goods shall forthwith pay the full amount of the duty chargeable thereon…………" 9.On a plain reading of Rule 160, it seems that the liablility created by it attahces only to the owner of the goods. The question, therefore, is whether the appellants can be called the owner of the goods within the meaning of Rule 160. We must confess at the outset that this question is not free from difficulty and we heared elaborate arguments as to the true meaning of this word as used in the Central Excise Rules of 1944. There can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the appellants and they obtained a licence for it on executing a bond. If we give effect to the appellants' argument that the word "owner" as used in the rules means an absolute owner the result will be that the liability to remove the goods from the appellants' godown in Netaji Subhas Road on the expiry of three years will attach to M/s. M. James Canterbury Co., who are neither the owners of the godown nor are in possession of the goods. To accept the appellants interpretation of the word "owner" would make Rule 145 absolutely unworkable. 11.Then comes Rule 160 which provides that if the goods are not removed within three years from the date on which they were first warehoused, the "owner" of the goods shall forthwith pay the duty chargeable thereon. 12.From a consideration of these rules it is clear, in the first place that the liability which is enforced under Rule 160 is the liability created by Rule 7 and in the second place that under Rule 7 the liability attaches not only to the absolute owner of the goods but to any person who stores the goods in the warehouse. It is, therefore, reasonable to infer that when Rule 160 says that the owner of the goods shall forthwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty under Rule 142 will also fall upon another person. For these reasons as well as are lead to the conclusion that the "owner" as used in these rules, viz., Rules 142 and 143, means any person who is in possession of the goods and has only a partial interest therein. 18.On a consideration of the scheme of the Act and the rules framed thereunder it seems to us that the intention was to realize excise duties from any person who is in possession of the goods even though such a person had only a partial interest in the goods. This conclusion is supported by the definition of the words "sale" and "purchase" as given in Section 2 (h) of the Act, where these words have been defined to mean any transfer of possession of goods by one person to another in the ordinary course of trade or business for cash or deferred payment or other valuable consideration. The importance of this definition is that it does not use the word transfer of ownership but only refers to transfer of possession. 19.Under Rule 29, the curer's liability to pay the duty continues until the curer sells the unmanufactured products to another person and the transfer of ownership has been reported to and acknowledged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , however, it seems that this contention cannot be accepted. It is true that the original demand notices were served upon the appellants sometimes between the 27th of December, 1949 and the 30th December, 1949 but the appellants were pursuing their remedies under the Central Excise Act and the rules and the final notice of demand was served upon the appellants on the 29th of August, 1950. The relevant portion of the notice dated August 29, 1950 runs as follows :- "It has been finally ordered by the Central Board of Revenue, New Delhi to realize the Govt. dues lying pending with you as per this office demand notices………. In case of failure on your part to deposit the Government dues within 10 days of the receipt of this letter certificate action as laid down under Section 11 of the Central Excises and Salt Act, 1944 will be initiated against you." 24.Under Rule 161 of the Central Excise Rules the sanction of the Central Board of Revenue had to be taken in order to take certificate action against the appellants. Rule 161 provides for three modes for realization of the excise duty. The Excise authorities may either proceed upon the bond executed by the owner of the goods or may rea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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