1977 (6) TMI 101 - HC - Central Excise

Summary

Issues:
Duty liability on centrifugals not in operation, Duty liability for removed centrifugals, Interpretation of Central Excise Rules, Maintainability of writ petitions

Analysis:
The judgment by Gangadhara Rao, J. addresses multiple writ petitions filed by Khandsari Sugar Mills regarding duty liability on centrifugals not in operation and for removed centrifugals under the Compounded Levy Scheme. The petitioners opted for the scheme under Rules 92A to 93F of the Central Excise Rules, 1944, which allowed duty payment for each centrifugal instead of the total production of sugar. The primary issue was whether duty should be paid for centrifugals not in operation or removed from the factories.

The court examined Rules 92A, 92B, and 93C, which govern the Compounded Levy Scheme. It was highlighted that the rules required manufacturers to apply annually to opt for the scheme, with duty rates fixed by the Central Government based on factors like average production per week and size of centrifugals. Duty payment was to be made weekly, and duty liability was linked to the functioning of centrifugals as per the scheme's provisions.

The judgment emphasized that duty payment was tied to the production of sugar by working centrifugals. The court noted that duty need not be paid for centrifugals that were removed or not operational, as they did not contribute to sugar production. The rules did not mandate duty payment for non-functioning or removed centrifugals, aligning with the scheme's principles of payment linked to operational centrifugals.

Additionally, the court rejected the argument that duty should be paid even for centrifugals removed before installation, clarifying that duty liability commenced only when centrifugals started producing sugar in a season. The judgment also addressed the maintainability of the writ petitions, allowing them as the petitioners had made representations to the Collector without receiving any formal orders or communication, making further appeals impractical.

In conclusion, the court allowed the writ petitions, directing the authorities not to collect duty on centrifugals not in existence or removed from the factories as per specific dates mentioned in each petition. Each party was instructed to bear its costs, and the judgment provided a detailed analysis of duty liability under the Compounded Levy Scheme based on the Central Excise Rules, 1944.