1972 (3) TMI 85 - HC - Central Excise

Summary

Issues:
1. Challenge to excise duty demands for French Polish manufacturing.
2. Validity of demands under Rule 10A and Rule 9(2) of Central Excise Rules.
3. Interpretation of Notification Nos. 137/60-C.E. and 109/63.
4. Application of Rule 9(2) for levy of excise duty.

Analysis:
The petitioners, two firms manufacturing French Polish, challenged excise duty demands totaling &8377; 3,736.44 and &8377; 4,773.12 for the period 6-7-1963 to 26-6-1966. The demands were based on the firms not satisfying conditions under Central Excise Notification No. 137/60-C.E. and 109/63 due to a partner's interest in another French Polish producing concern. The firms were informed in 1965 to obtain licenses for French Polish manufacture under the Central Excises and Salt Act, which they did in 1965 after compounding earlier non-licensed production.

The demands were contested on grounds including the ultra vires nature of Rule 10A, which was challenged citing a similar ruling in a previous case. The Central Government Standing Counsel conceded that demands under Rule 10A could not be sustained but argued for their validity under Rule 9(2). However, the court held that Rule 9(2) could only apply to goods previously levied, not for initial levies, thus rejecting the application of Rule 9(2) to the case. Since no other statutory provision was cited to support the demands, they were quashed on this basis, rendering further interpretation of the notifications unnecessary.

In conclusion, the High Court allowed the writ petitions, quashing the excise duty demands for French Polish manufacturing by the firms. The demands were found unsustainable under Rule 9(2) due to lack of prior levy, leading to their invalidation. The court did not delve into other contentions raised by the petitioners regarding the notifications. No costs were awarded in the judgment.