1974 (9) TMI 110 - HC - Central Excise

Summary

Issues Involved:
1. Jurisdiction of the Civil Court.
2. Limitation period for the suit.
3. Claim for interest.
4. Deduction of trade discount under Section 4 of the Central Excise and Salt Act, 1944.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Civil Court:
The primary issue was whether the Civil Court had jurisdiction to entertain the suit given that the Central Excises and Salt Act, 1944, provides a complete code with adequate machinery for relief. The court held that the Civil Court had jurisdiction as there was no express exclusion clause in the Act. The court emphasized that non-compliance with the fundamental provisions of the Act rendered the excise authorities' actions invalid and inoperative, thus falling within the jurisdiction of the Civil Court. The court cited the Supreme Court's decision in Dhulabhai v. State of Madhya Pradesh, which allows Civil Court jurisdiction in cases where the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure or where the provisions of the Act have not been complied with.

2. Limitation Period for the Suit:
The court addressed the question of whether the suit was barred by limitation. The suit period was from January 1, 1962, to September 30, 1965. The court found that the suit was filed within the limitation period for declaration and injunction. However, part of the claim for refund of the amount illegally collected was time-barred. Specifically, the amounts of Rs. 12,989.50 for 1962 and Rs. 8,615.28 for 1963 were barred by limitation under Article 24 of the Limitation Act, 1963, which prescribes a three-year period for recovery of money payable by the defendant to the plaintiff.

3. Claim for Interest:
The court examined whether the interest claimed by the plaintiff was allowable. The plaintiff had claimed interest by way of damages, arguing that they had to borrow money from banks due to the excise duty paid. However, the court found that the plaintiff had collected the excise duty from dealers and consumers, and thus did not suffer any loss by way of damages. Consequently, the claim for interest was not justified, and the trial court had erred in allowing it.

4. Deduction of Trade Discount under Section 4 of the Act:
The key issue was whether the trade discount claimed by the plaintiff should be deducted from the wholesale cash price for the purpose of computing excise duty. The court found that the trade discount of 15% was uniformly given to all dealers and distributors for standard electric motors. The court held that the excise authorities' refusal to allow the deduction of the trade discount was illegal and in contravention of Section 4 of the Act. The court emphasized that the wholesale cash price, not the retail price, should be the basis for levying excise duty, and any deviation from this principle amounted to non-compliance with the provisions of the Act.

Conclusion:
The court partially allowed the appeal. The plaintiff was entitled to recover Rs. 54,137.22 with proportionate costs and running interest at 6% from the date of the suit till payment. The decree regarding the declaration and injunction was confirmed, but the claims for certain amounts and interest were disallowed as they were time-barred or not justified.