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1994 Supreme(Mad) 291
High Court of Judicature at Madras
THE HONOURABLE CHIEF JUSTICE MR. K.A. SWAMI & THE HONOURABLE MR. JUSTICE SOMASUNDARAM
Tamilnadu Chromates Limited - Appellant
Versus
Union of India - Respondents
W.A. No. 204 of 1994 and Writ Petition No. 20170 of 1993
Decided On : 17 March 1994
The provisions of Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 do not suspend the levy and collection of excise duty on goods manufactured by a sick industrial company.
Headnote:
SICK INDUSTRIAL COMPANY - EXCISE DUTY - PAYMENT - SUSPENSION - SECTION 22(1) OF THE SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985 - SCOPE AND APPLICABILITY - CENTRAL EXCISES AND SALT ACT, 1944 - SECTION 3 - CENTRAL EXCISE RULES, 1944 - RULES 9 AND 49 - INTERPRETATION.
Fact of the Case:
The petitioner, a sick industrial company declared under the Sick Industrial Companies (Special Provisions) Act, 1985, sought to quash an order of the Assistant Collector of Central Excise demanding payment of excise duty for the removal of goods manufactured by the company. The petitioner contended that Section 22(1) of the Act suspended all proceedings for execution, distress, or the like against the properties of a sick industrial company, and that the demand for excise duty amounted to such a proceeding.
Finding of the Court:
The court held that the demand for excise duty did not amount to a proceeding for execution, distress, or the like within the meaning of Section 22(1) of the Act. The court noted that the excise duty was not an arrear, but rather a tax payable on the removal of goods for sale. The court also noted that the provisions of the Central Excises and Salt Act, 1944 and the Central Excise Rules, 1944, which govern the levy and collection of excise duty, had not been suspended by the Act.
Issues: Whether the demand for excise duty by the Assistant Collector of Central Excise amounted to a proceeding for execution, distress, or the like against the properties of a sick industrial company within the meaning of Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985.
Ratio Decidendi: The court interpreted Section 22(1) of the Act narrowly, holding that it only suspended proceedings that were coercive in nature and that directly affected the properties of the sick industrial company. The court found that the demand for excise duty did not meet this criteria, as it was not a coercive measure and did not directly affect the company's properties.
Final Decision: The court dismissed the writ petition and the writ appeal, holding that the petitioner was not entitled to remove the goods without payment of excise duty.
K.A. SWAMI, C.J
The petitioner is the appellant. The appeal is preferred against the order dated 21st December, 1993 passed by the learned single Judge on W.M.P. 31506 of 1993 filed in W.P. 20170 of 1993. When the writ appeal came up for consideration, we considered it necessary to hear the writ petition, therefore the writ petition was directed to be posted along with this writ appeal. Accordingly, Writ Petition 20170 of 1993 is also posted for hearing along with this appeal. We have heard both sides. As the decision in the writ petition will also dispose of the writ appeal, we first consider the writ petition.
2.The petitioner/appellant has sought for quashing the order No. G. IV/16/104/92 Policy, dated 27-10-1993 passed by the third respondent and to direct respondents 1 to 3 to forbear from insisting payment of the central excise duty by the petitioner company or taking any proceedings for recovering the same during the operation of the scheme framed by the Board for Industrial and Financial Reconstruction (hereinafter referred to as B.I.F.R.) in case No. 16/90, dated 3-6-1993 and to pass such orders as are deemed necessary in the facts and circumstances of the case. It manufactures sodium bi-chromate, yellow sodium sulphate and basic chromate sulphate. These chemicals are used in the manufacture of paper, paints and in leather tanning. The petitioner has been declared as a sick industry by the B.I.F.R. on 12-2-1991 under Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as the Act). It made a representation on 1-9-1992 before the Assistant Collector of Central Excise for grant of excise loan. That application was forwarded to the Collector by the Assistant Collector on 23-9-1992. On 3-6-1993, the B.I.F.R. in Case No. 16/90 passed an order framing a scheme for the petitioner company. Pursuant to that, on 27-10-1993, the petitioner company addressed another letter to the 3rd respondent, Assistant Collector of Central Excise, seeking permission to remove the goods, without payment of central excise duty. It is not in dispute that the chemicals manufactured by the petitioner are subject to excise duty. They cannot be removed from the petitioner's factory in the course of sale, without payment of excise duty. The 3rd respondent by the order dated 27-10-1993 bearing number C. No. IV/16/104/92 Policy has informed the petitioner that there is no provision in the Central Excise Rules to remove the goods, without payment of excise duty on the ground that the petitioner is a sick industry, therefore the 3rd respondent has informed the petitioner that the request made for removing the goods without payment of excise duty cannot at all be granted.
3.The contention of the petitioner is that as the petitioner company has been declared as sick industry as per the provisions of the Act, the excise duty cannot be demanded having regard to the provisions contained in Section 22(1) of the Act as long as the industry continues to be a sick industry and the scheme framed for it is in operation.
4. On the contrary, it is the contention of the respondents that it is no doubt true that the petitioner company is declared to be a sick industry and there is a scheme framed under the provisions of the Act and that scheme is also in operation, but, nevertheless, the payment of excise duty for removal of the goods does not fall within the scope of Section 22 of the Act, hence it is not at all open to the petitioner company to remove the excisable goods from the factory for the purpose of sale without paying the excise duty.
5.Section 3 of the Central Excises and Salt Act, 1944 specifically provides that there shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in India and a duty on salt manufactured in or imported by land into, any part of India as and at the rates set forth in the Sched
