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High Court Of Madhya Pradesh
G.P. Singh and S.M.N. Raino, JJ.
Universal Cables Ltd.
Versus
Union of India
Miscellaneous Petition 1571 of 1975 Of
Decided On : Sep 14,1976
(2) Tribunals - quasi-judicial authority - show cause notice - should mention the material which is proposed to be used against a person - rule of natural justice.
Natural justice requires that a quasi judicial authority must inform the person proceeded against the material which it proposes to use against him so that he may meet the inferences that are likely to be raised from that material. Even when the material used is within the knowledge of the person proceeded against he must be told that it would be used against him for, unless he is so informed he would have no opportunity of offering his explanation for meeting the inference that the authority seeks to draw from it.
A quasi judicial authority would be acting contrary to the rule of natural justice if it acts upon information collected by it which has not been disclosed to the party concerned and in respect of which full opportunity of meeting the inferences which arises out of it has not been given. 1969 Assam, LR (SC) 11 and AIR 1971 Bom. 386 relied on. [Para 12
(3) Central Excise Rules, 1944 - R. 173 - C - Collector passing orders on the basis of two dispatches of goods - these dispatches not mentioned in the show cause notice - petitioner could not offer any explanation - order violates rule of natural justice and bad in law. [Para 12
(4) Central Excise and Salt Act, 1944 - S. 4 (a) - assessable value mode of calculation - basis is cash price of article of 'like kind and quality' - price obtained from stray sales of defective material - cannot form basis for quality goods.
In determining the assessable value of the goods removed what has to be seen is the wholesale cash price of the article of "like kind and quality". Good quality rods and defective rods may be goods of the same kind, but certainly they are not of the same quality. Therefore, the price obtained for defective rods cannot in law form the basis for finding out the wholesale cash price for good quality rods. AIR 1973 SC 225 referred to. [Para 16
(5) Central Excise & Salt Act, 1944 - S. 4(a) - wholesale price - price at the place of wholesale supply to be considered.
Admittedly, there was a wholesale market at Renukoot where Hindalco was selling goods of like kind and quality. Therefore, in the absence of a finding of any wholesale market at Satna or any place nearer to it than Renukoot, the price prevailing at Renukoot could alone furnish the basis for valuation of the petitioner's goods. AIR 1973 SC 255, referred to. [Para 17
(6) Central Excise Rules, 1943 - Rr. 173-C and 173 Q - omission to mention correct price - is not contravention of Rule 173-C within the meaning of rule 173-Q.
Section 9 of the Central Excise and Salt Act, which provides for offences and penalty, makes a person liable to a criminal offence not only when he removes an excisable goods in contravention of any of the provisions of the Act or any rule made there under, or when he fails to supply any information which he is required by Rules made under this Act to supply but also when he supplies false information. Rule 173-Q on the other hand does not say that a person shall be liable to penalty when the information supplied by him is false. The omission in this respect in Rule 173-Q is pertinent and it shows that the rule does not intend to penalise a person for giving false information. AIR 1970 SC 1597 and 1971 SC 2039 referred to. [Paras 19 and 22
(7) Central Excise & Salt Act, 1944 - S. 40 (2) - bar of limitation - applies no judicial proceedings - proceedings for imposing penalty not covered by the section - Central Excise Rules, 1944 - Rr. 173-C & 173-Q.
The rule of ejusdem generis persuades to hold that the general words "other legal proceeding" in section 40 (2) are limited to the same category of legal proceeding of which 'suit' and 'prosecution' are examples. In other words, the expression "other legal proceeding" in the context of section 40 (2) bears a restrictive meaning conveying the idea of judicial proceedings or proceedings taken in a Court of law. [Para 24
The penalty proceedings taken by the Collector against the petitioner under rule 173-Q read with section 33 of the Act were not governed by the period of limitation prescribed by S. 40 (2) of the Act. [Para 28
(8) Interpretation of statutes - rule of ejusdem generic - principle of - conditions for application.
The rule of ejusdem generis is founded on the reasoning that had the Legislature intended the general words to be used in their unrestricted sense, it would have made no mention of the specific words as they, in such a case, would be superfluous. The rule applies when the following conditions exist: (i) the statute contains an enumeration of specific words; (ii) the subjects of enumeration constitute a class or category; (iii) that class or category is not exhausted by the enumeration; (iv) the general term follows the enumeration; and (v) there is no indication of a different legislative intent. AIR 1972 SC 1863 relied on. [Para 24
(9) Central Excise and Salt Act, 1944 - S. 35 (2) - import of the word 'final' - does not prohibit original proceedings - Central Excise Rules, 1944 - Rr. 10, 173-I, 173-J and 173-Q.
The word 'final' as it occurs in section 35 (2) only means that the order passed in appeal under section 35 (1) would not be open to any further appeal or revision except as mentioned in the section. Section 35 (2), does not prohibit taking of original proceedings such as proceedings for reassessment under Rule 10 or proceedings for imposition of penalty under Rule 173-Q on the ground that the assessee by contravening certain provisions or by making false statements evaded payment of duty. [Para 30
(10) Central Excise Rules, 1941 - Rr. 173-Q and 17 - breach of Rule 173-C proved - reach not technical - penalty under rule 173-Q may be imposed. [Para 34
(11) Central Excise and Salt Act, 1944 - S. 4 (a) - Central Excise Rules 1944 - R. 233 - Board cannot issue directions contrary to statutory provisions - Collector not bound to follow such directions.
(12) Tribunals - acting in quasi-judicial capacity - not bound by directions contrary to statutory provisions.
The Board has a statutory power under Rule 233 to issue supplementary instructions; but these instructions; cannot go against the statutory provisions and fetter the quasi judicial powers of the excise authorities.
The method of valuation of excisable goods is laid down in section 4 of the Act. The Board cannot prescribe different method of valuation by issuing supplementary instructions. The excise authorities in assessing excise duty perform a quasi-judicial function and have to follow the principles of valuation laid down in section 4 and the directions issued under the authority of the Board in that matter were not binding on them. AIR 1969 SC 48 relied on. [Para 35
(13) Constitution of India - Art, 226 - alternative remedy being pursued - no bar in issuing a writ in a proper case.
In the instant case, on the facts admitted and found, there was no contravention of any rule within the meaning of Rule 173 - A and the penalty proceedings were misconceived. There was denial of natural justice in taking into account the material which was not put to the petitioner. Further, the Collector in finding out the assessable value of properzi rods removed by the petitioner during the relevant period, proceeded on wrong principles contrary to those laid down in section 4. In the circumstances, it would not be a sound exercise of discretion to dismiss, the writ petition on the ground that the petitioner can get redress in the appeals filed by it. [Para 36
(14) Central Excise Rules, 1944 - Rr. 173 - C & 173 - Q - imposition of heavy penalty - whether justified.
Per Raina, J - I would like to reserve my opinion on the question whether the imposition of such a heavy penalty was in any case justified in view of the decision of the Supreme Court. AIR 1970 SC 253 referred to. [Para 38
( 1. ) BY this petition under article 226 of the Constitution the petitioner, Universal Cables Ltd. , calls into question 13 orders passed by the Collector, Central Excise, Nagpur on 10th/11th September, 1975, under Rule 173q of the Central Excise Rules, 1944, imposing penalty to the tune of nearly Rs. 2andfrac12; crores in respect of properzi rods removed by the petitioner from its properzi mill from 1st May, 1970 to 23rd May, 1971. The petitioner also prays for quashing of 15 show cause notices which were issued by the Assistant Collector before the said 13 orders were passed by the Collector.
( 2. ) THE petitioner is an existing Company within the meaning of the Companies Act, 1956. The petitioner carries on business of manufacturing and dealing in cables and conductors required for transmission of electricity. The petitioner has its cable factory at Satna. For the purpose of manufacturing cables and conductors, the petitioner requires aluminium wire rods commonly known as properzi rods as an essential raw-material. The petitioner has a properzi mill at Satna for converting aluminium ingots into properzi rods. The petitioner acquires aluminium ingot primarily from two leading manufacturers in India, namely, Hindustan Aluminium Corporation Ltd. , Renukoot (Hindalco) and Indian Aluminium Co. Ltd. , Belgaum (India ). The petitioner converts the aluminium ingots into rods and uses them in its cables factory. In order to fully utilise the capacity of the properzi mill, the petitioner also converts aluminium ingots belonging to other cable or conductor manufacturers. These others manufacturers send aluminium ingots of Hindalco or Indal Brand to the petitioner who converts the ingots into rods and realises conversion charges.
( 3. ) BEFORE 1st March, 1970, excise duty on aluminium including ingots, wire rods etc. , was linked with weight. As the duty was the same on ingots and wire rods, on duty was payable on the manufacture of properzi rods from duty-paid aluminium ingots. From 1st March, 1970, excise duty on aluminium ingots, wire bars and wire rods became leviable on the basis of rate ad valorem. However, by a notification dated 1st March, 1970, exemption from duty was granted in respect of aluminium ingots, wire bars, wire rods etc. By this exemption, no excise duty was payable on the manufacture of aluminium wire bars and rods including properzi rods. But by another notification issued on 26th March, 1970, exemption granted in respect of aluminium wire bars and wire rods including properzi rods was withdrawn. The result, therefore, was that from 26th of March, 1970, excise duty became leviable on properzi rods on ad valorem basis. There was some confusion for certain period about the effect of the withdrawal of this exemption and the procedure laid down for removal of properzi rods under the Central Excise Rules was not strtictly followed till 26th April, 1970. We are, however, not concerned with this period in this petition.
( 4. ) THE procedure for removal of preperzi rods by the producers and manufacturers is contained in Chapter V1i-A of the Central Excise Rules. This chapter applies to such excisable goods as the Central Government may by notification issued under Rule 173-A specify. By a notification issued on 11th May, 1968, this Chapter has been applied to a number of excisable goods including aluminium. This Chapter consists of Rules 173-A to 173-Q. Before removing any excisable goods, every assessee has to file before the proper officer for approval a list in such form as the Collector may direct under Rule 173-B showing full description of the goods produced or manufactured by him the Item number of the First Schedule to the Act under which each such goods fall, the rate of duty leviable on each such goods and other particulars as the Collectors as the Collector may require. The proper officer after such inquiry as he deems fit approves the list with such modifications as are considered necessary and retur
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