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1987 Supreme(Cal) 232
High Court Of Calcutta
Sudhir Ranjan Roy
STATESMAN LTD. - Appellant
Versus
ASSISTANT-COLLECTOR OF CENTRAL EXCISE - Respondent
C. O. 17047 Of 1985
Decided On : 07/09/1987
A.K.JOARDAR, Bhaskar Gupta, BISWARANJAN GHOSAL, D.K.MUKHERJI, DILIP KUMAR PAL, SAMIR CHAKRABORTY
Excise duty is a duty on manufacture of goods and is leviable on the manufacturer or producer. The sole beneficiary of an exemption notification issued in exercise of the power under Rule 8 (1) of the Central Excise Rules, is the manufacturer or producer and not the consumer.
Headnote:
CENTRAL EXCISE - EXEMPTION - NEWSPRINT - WASTAGE ARISING IN THE PROCESS OF PRINTING - SALE OF WASTAGE BY CONSUMER - LIABILITY TO PAY EXCISE DUTY - CENTRAL EXCISE RULES, 1944, RULES 8 (1), 9 (2), 173F, 173G, 193C - CENTRAL EXCISES AND SALT ACT, 1944, SECTION 11A - NOTIFICATION NO. 163/67-CE, DATED 21-7-1967, AS AMENDED BY NOTIFICATION NO. 72/76-CE, DATED 16-3-1976.
Fact of the Case:
The petitioner, The Statesman Limited, is a company incorporated under the provisions of the Indian Companies Act, 1913 and has its registered office at Statesman House, No. 4, Chowringhee Square, Calcutta. The business of the Company is the publication and sale of newspapers including The Statesman which is published daily both in Calcutta and New Delhi. The subject matter of the challenge in the instant writ petition is a purported show cause demand notice dated October 3, 1985 issued by the Assistant Collector of Central Excise, Calcutta-1 Division. By the said show cause notice (in short, the impugned notice) the Company has been required to show cause why Central Excise duty to the tune of Rs. 19,29,583.23 for the period from May 1980 to May 1985 should not be demanded and paid by the Company under Rule 9 (2) of the Central Excise Rules (in short, the Rules) framed under the Central Excise and Salt Act, 1944 and Section 11a thereof.
Finding of the Court:
The impugned show cause notice is absolutely malafide and without jurisdiction. The petitioner is merely a consumer of the newsprint and not its manufacturer. Having purchased the newsprint for valuable consideration it is open to the petitioner to sell the wasted portions thereof to outsiders whether such wastes occur in the process of printing or not for such sale it is not at all necessary to keep the Central Excise authorities informed.
Issues: Whether the petitioner, a consumer of newsprint, is liable to pay excise duty on the waste portions of the newsprint sold by it.
Ratio Decidendi: Excise duty is a duty on manufacture of goods and is leviable on the manufacturer or producer. The sole beneficiary of an exemption notification issued in exercise of the power under Rule 8 (1) of the Central Excise Rules, is the manufacturer or producer and not the consumer. The petitioner is merely a consumer of the newsprint and not its manufacturer. The second proviso to the exemption notification, which allows the use of waste arising in the process of printing of newspapers for any other purpose without payment of duty, has no manner of application to a consumer. The petitioner is not liable to pay excise duty simply for selling the waste.
Final Decision: The writ petition succeeds and the respondents are directed by the issue of a writ in the nature of mandamus to withdraw, recall and cancel the impugned show cause notice dated October 3, 1985, being Annexure 'a1 to the writ petition and to refrain from giving any effect or further effect thereto or taking 'any action thereon.
( 1 ) THIS is a strange and peculiar case where the Central Excise authorities have proceeded to realise excise duty not from the manufacturer or producer but from a consumer out and out and that too on the basis of an exemption notification.
( 2 ) THE facts : the petitioner, The Statesman Limited, is a Company incorporated under the provisions of the Indian Companies Act, 1913 and has its registered office at Statesman House, No. 4, Chowringhee Square, Calcutta. The business of the Company is the publication and sale of newspapers including The Statesman which is published daily both in Calcutta and New Delhi.
( 3 ) THE subject matter of the challenge in the instant writ petition is a purported show cause demand notice dated October 3, 1985 issued by the Assistant Collector of Central Excise, Calcutta-1 Division. By the said show cause notice (in short, the impugned notice) the Company has been required to show cause why Central Excise duty to the tune of Rs. 19,29,583. 23 for the period from May 1980 to May 1985 should not be demanded and paid by the Company under Rule 9 (2) of the Central Excise Rules (in short, the Rules) framed under the Central Excise and Salt Act, 1944 and Section 11a thereof. The allegations on the basis of which the said impugned notice has been issued are as follows :-"on scrutiny of the records of the said assessee, it is noticed that the said assessees are receiving newsprint falling under Item No. 17 of the Central Excise Tariff from different factories and enjoying exemption under Notification No. 163/67, dated 21-7-1967 the waste arising out of opening waste of the newsprint and reel ends of the newsprint are being sold by them in the market as waste. In terms of said notification the waste arising in the process of printing of newspaper may be used for any other purpose without payment of duty if the proper officer is satisfied that waste is genuine and cannot be used again. From the very name it indicates that the wastes as aforementioned are not arising in the process of printing therefore the said assessee are not entitled to get the benefit of exemption as stipulated in the abovementioned notification. Further, the said assessee suppressed such selling of the above waste and also did not submit any declaration to the department in this regard. From their records the evasion of Central Excise duty to the tune of Rs. 19,29,583. 23 has been calculated. "according to the petitioner, the said impugned notice has been issued in abuse of power and without application of mind and also for extraneous reasons since on the allegations made in the said notice, no case for payment of any excise duty has been made out. As a matter of fact, the impugned notice has been issued without jurisdiction and is ultra vires the Central Excises and Salt Act and the Rifles framed thereunder.
( 4 ) NEWSPAPERS such as those published by the Company is printed on a special type of paper called "newsprint". The newsprint available in the country are obtained from indigenous sources and are also imported. Being an essential commodity the distribution of newsprint is controlled by the Government through the Newsprint Control Orders which are framed from time to time in exercise of powers under the Essential Commodities Act, 1955.
( 5 ) EVERY Licensing Year, the Ministry of Information and Broadcasting, Government of India announces the Newsprint Allocation Policy. In terms of the said policy, the newspapers are required to submit applications in prescribed forms for newsprint quota to the Registrar of Newspapers for India, New Delhi and on receipt of the said applications, the Registrar of Newspapers allots both imported and indigenous newsprint on the basis of circulation, page-level and size of the paper. In the Newsprint Allocation Policy the Government allows certain wastage. Such wastage was 8% for imported and 9% for indigenous newsprint for 1980-81. From 1981-82 onwards the wastage has be
