Back
SUPREME COURT OF INDIA
M. HIDAYATULLAH, S.M. SIKRI, AND C.A. VAIDIALINGAM, JJ.
Orient Paper Mills Ltd., Appellant
Versus
Union of India Respondent.
Civil Appeal No. 30 of 1966, D/-16-3-1967.
Advocates appeared
M/s. B. Sen and Bishan Narain, Senior Advocates, (Mr. B. P. Maheswari, Advocate, with them), for Appellant; Mr. S. V. Gupte, with them), for Appellant; Mr. S. V. Gupte, Solicitor General of India and Mr. S.G. Patwardhan, Senior Advocate, (M/s. R.N. Sachthey and S. P. Nayyar, Advocates, with them), for Respondent.
CENTRAL EXCISE - DUTY - LEVY AND COLLECTION - TIME OF PAYMENT - GOODS CLEARED ON PAYMENT OF DUTY - CRITICAL TIME - PAYMENT OF DUTY OR REMOVAL FROM FACTORY - RULE 9-A OF CENTRAL EXCISE RULES, 1944.
Fact of the Case:
The appellant company, a public limited company, manufactured and sold wholesale paper and boards at Brajrajnagar in Orissa. The company held a license under the Central Excise Act and its factory and premises were demarcated under the Central Excise Rules. In 1960, the company constructed a new railway siding outside the original factory premises where bamboos and other raw materials were stored and a platform for loading and unloading was constructed. This extension was not included in the factory or its premises or precincts for purposes of the Excise Rules. On February 27 and 28, 1961, the company loaded wagons of paper after effecting clearance of these goods by payment of excise duty under Rule 52 of the Excise Rules. The wagons were sealed by the railway administration and railway receipts were issued to the company. The company also obtained a 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 Deputy Superintendent of Central Excise wrote to the 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 March 1, 1961, and the goods were therefore liable to be assessed at the higher rates of excise duty current from March 1, 1961. The company contended that the wagons were duly sealed after the completion of loading in his presence, were taken out of the factory premises, and were not in the factory when the new rates came into force. The company relied on Rule 9-A of the Central Excise Rules, 1944, and submitted that duty was payable at the rate in force on the date on which the duty was actually paid. The Deputy Superintendent demanded payment of differential excise duty, which was paid under protest. The company filed an application for revision against the order of the Collector of Central Excise, Calcutta and Orissa, before the Government of India, which was rejected. The company filed an appeal by special leave against the last order.
Finding of the Court:
The court held that the critical time for determining the rate of duty payable on goods cleared on payment of duty under Rule 9-A of the Central Excise Rules, 1944, is the payment of duty, and not the removal of the goods from the factory or warehouse. In the present case, the duty was paid on the goods and a gate pass was issued before the enhanced duty came into force. Therefore, the goods were not liable to be assessed at the higher rates of excise duty.
Issues: Whether the critical time for determining the rate of duty payable on goods cleared on payment of duty under Rule 9-A of the Central Excise Rules, 1944, is the payment of duty or the removal of the goods from the factory or warehouse.
Ratio Decidendi: The court interpreted Rule 9-A of the Central Excise Rules, 1944, and held that the critical time for determining the rate of duty payable on goods cleared on payment of duty is the payment of duty, and not the removal of the goods from the factory or warehouse. The court reasoned that the rule provides for two situations: (1) where duty is paid and the goods are cleared, and (2) where the goods are removed from a factory or warehouse without payment of duty. In the first situation, the rate of duty is the rate in force on the date on which duty is paid. In the second situation, the rate of duty is the rate in force on the date of the actual removal of the goods from the factory or warehouse. The court found that the present case fell within the first situation, as the duty was paid and the goods were cleared before the enhanced duty came into force.
Final Decision: The court ordered that the differential excise duty collected from the company be refunded, and that the company's costs be paid by the respondent.
Judgment
HIDAYATULLAH, J. : The appellant is a public limited company which carries on the business of manufacturing and selling wholesale paper and boards at Brajrajnagar in the State of Orissa. The appellant company holds a licence under the Central Excise Act in Form L-4 prescribed by the Central Excise Rules, 1944. The appellant company s factory and its premises and precincts have been demarcated under the said Rules. The Factory is traversed by railway lines, because the appellant company enjoys the benefit of a private siding. In 1960, the appellant Company constructed a new railway siding outside the original factory premises where bamboos and other raw materials were stored and constructed a platform for loading and unloading .This extension has not been included in the factory or its premises or precints for purposes of the Excise Rules. It is presumably so, because to reach the new siding, 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 loaded 20 wagons of paper after effecting clearance of these goods by payment of the excise duty under R. 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 new 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 March 1, 1961 and the goods were therefore liable to be assessed at the higher rates of excise duty current from March 1, 1961. The appellant company contended before the Deputy Superintendent that the wagons were duly sealed after the completion of loading in his presence, were taken out of the factory premises and were not in the factory when the new rates came into force.. The appellant company relying upon R. 9-A of the Central Excise Rules, 1944 submitted that duty was payable at the rate in force on the date on which the duty was actually paid. In the alternative, the appellant company submitted that the goods having been cleared or removed from factory premises before the midnight of February 28,1961 could not be made liable for the enhanced duty which came into force from March 1, 1961. These contentions were not accepted by the Deputy Superintendent who demanded payment of Rs. 45,475.83 from the appellant company as differential excise duty. The amount was paid under protest and without prejudice to the rights of appeal and representation to the proper authorities under the Excise Act.
4. The matter was then placed by the appellant company before the Assistant Collector, Central Excise, Cuttack and the company requested that the differential duty be refunded as it has been illegally collected. The Assistant Collector rejected the claim and confirmed the collection of differential duty. The appellant company appealed to the Collector of Central Excise, Calcutta and Orissa but the appeal was dismissed on March 12, 1962. The appellant company then filed an application for revision against the order of the Collector of Central Excise, Calcutta and Orissa before the Government of India (Central Excise Revision Application No. 473 of 1964). The application for revision was rejected by the Government of India on June 7/18, 1963. No reason was given in the order comm
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
