TMI Blog1960 (2) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... Duty of Excise. He also stated in that letter that he was having transactions with two mills in Jamkhandi known as the Mirza Oil Mills and Rameswara Oil Mills. He proceeded to state that he would honour the demand notice served on him for the payment of the excise duty payable by him for the years 1956-57 and 1957-58, but that since the amount demanded of him was very heavy he was not in a position to pay that amount in a lump sum. That was the reason why he prayed for permission to pay the amount by instalments. 2. It is not disputed that on the very same date he made two applications for the grant of licences to him to manufacture goods liable to Central Duty of Excise. The original applications made by him for that purpose have been produced before us. Both these applications were made by him on August 6, 1957, and were addressed to the Collector of Central Excise, Bangalore. The first of those applications related to the year ending on the 31st of December, 1956 and the second related to the year ending on the 31st of December, 1957. In those applications the petitioner applied for licences to manufacture vegetable non-essential oils, and the places where he proposed to manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the recovery of such excise duty. That rule makes every person who produces, cures or manufactures any excisable goods or who stores such goods, at warehouse, liable to pay the duty or duties leviable on such goods. Rule 9 prescribes the time and manner of payment of duty. While Sub-rule 1 of that rule provides for the payment by the manufacturer liable to pay excise duty before the removal of the excisable goods from the place where they are produced or manufactured, Sub-rule 2 provides for the collection of such duty even after the removal of those goods in contravention of the provisions of Sub-rule 1. Section 2(f) of the Act contains the definition of "manufacture" and "manufacturer". 6.It is not disputed that the vegetable oil which was extracted in the case before us from out of the groundnuts belonging to the petitioner were excisable goods within the meaning of that expression occurring in Section 3 of the Act. It is also not less disputed that the oil was oil which was manufactured within the meaning of the Act, although the controversy centres round the question as to who was the manufacturer. It is also not denied that vegetable non-essential oils like the groundnu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as a manufacturer of the oil, since the mills who crushed the petitioner's groundnuts in their mills have to be regarded as such manufacturers, the petitioner when he made his application for the grant of time for the payment of the excise duty demanded of him categorically admitted that he was the manufacturer of the oil, and indeed in his application which was presented on August 6, 1957, which is the very day on which he applied for instalments to pay the duty, he described himself as such manufacturer. The premises in which he was so manufacturing oil was referred to as the two mills in which, admittedly, his groundnuts were crushed. 10.The case for the excise department as set out in the counter-affidavit is that those mills in which the petitioner's groundnuts were crushed were not the manufacturers of the oil but that the real manufacturer was the petitioner himself. It is urged that the only groundnuts which were crushed in those two mills were those belonging to the petitioner and that the petitioner was himself the person who had de facto control over the business and operation of those mills. In the affidavit produced before us of which the deponent is the Assistant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m in the letter in which he admitted in so many words that he was the manufacturer of the oil and that he was liable to pay the duty demanded of him. The only right which was reserved in that part of the letter was the right to challenge the validity of the demand made by the Department on the facts admitted by him in that communication, and not the right to repudiate the truth of the admissions made by him or to question them. That letter which the petitioner wrote to the Range Officer lends strong support to the argument addressed before us by the learned Advocate-General on behalf of the Department that the crushing of the groundnuts in the two mills was really done by the petitioner himself. Now, as we have mentioned, the 50th entry in Appendix V entitles a manufacturer to some exemption in regard to the payment of excise duty. If the mills had been the manufacturers and not the petitioner, that exemption would have been available to the mills. But in paragraph 3 of the petitioner's letter this is what he stated :- "The exemption quantity that is going to be allowed to me for the year 1957-58 will be enjoyed by the Rameswar Oil Mills. I am willing to pay the excise duty for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers when he was called upon to pay the excise duty. At one stage of the argument, Mr. Javali contended that the excise duty which can be demanded under the Act was duty which related to the goods themselves and not one which was relatable to its manufacture or production. That being so, it was suggested that if the goods themselves were not in existence at the time the duty was demanded, such demand would be without the authority of the law. The provisions of Section 3 and Rules 7 and 9 form a complete answer to this argument. Those statutory provisions make it clear that it is the manufacturer of the excisable goods that is liable to pay the excise duty and Sub-rule 2 of Rule 9 makes it perfectly clear that it is not necessary that the excisable goods should be in the possession of the manufacturer at the time when the excise duty is demanded. On the contrary Sub-rule 2 of Rule 9 entitles the Department to demand the payment of the excise duty payable by the manufacturer even after the removal of the goods from the premises referred to in Sub-rule 1 and in contravention of the provisions thereof. As pointed out by Their Lordships of the Federal Court of India in the Province of Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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