1956 (3) TMI 50 - HC - Central Excise

Summary

Issues Involved:
1. Jurisdiction of Civil Court to order refund of amounts collected as Central excise-tax.
2. Legality of the collection of Central excise-tax on betel-nuts.

Issue-wise Detailed Analysis:

1. Jurisdiction of Civil Court to Order Refund of Amounts Collected as Central Excise-Tax:

The primary question was whether a Civil Court has the jurisdiction to order a refund of amounts alleged to have been illegally collected as Central excise-tax on betel-nuts. The appellant argued that the Civil Court lacked jurisdiction based on certain provisions of the Central Excises and Salt Act, 1944, particularly Section 40, which bars suits against the Central Government or its officers for acts done in good faith under the Act. The court examined the provisions of the Act, including Sections 3, 35, 36, and 40. Section 35 provided for appeals to the Central Board of Revenue, and Section 36 allowed for revisions by the Central Government. Section 40(a) specified that no suit, prosecution, or other legal proceeding shall be instituted for anything done under the Act after six months from the accrual of the cause of action.

The court referred to the interpretation of similar provisions in the Madras General Sales Tax Act, 1939, and concluded that the jurisdiction of civil courts was not ousted by the Central Excises and Salt Act. The court cited the decision in *The Province of Madras v. Satyanarayanamurthi*, which held that civil courts have jurisdiction to entertain suits regarding illegal tax levies. The court also referenced *Collector of Customs v. Gokuldas*, which stated that civil courts could correct errors apparent on the face of the record. Therefore, the court held that civil courts have jurisdiction to entertain suits for the recovery of illegally collected Central excise-duty.

2. Legality of the Collection of Central Excise-Tax on Betel-Nuts:

The second issue was whether the collection of Central excise-tax on the betel-nuts in question was illegal. The respondents argued that the tax was collected on pre-excise stock, which should not have been subject to the excise duty imposed by the Indian Finance Act of 1944. The court examined the facts of the case, including the pre-excise certificate (Exhibit A-1) issued by the Sub-Inspector of Central Excise, which confirmed that the betel-nuts were cured before 31st March 1944. The Assistant Inspector of Excise later issued a demand order (Exhibit A-2) for excise duty on the same stock, which led to the collection of Rs. 502 under protest.

The court found ample evidence to show that the betel-nuts in question were indeed pre-excise stock, cured before 1st April 1944, and thus not liable to excise duty. The court agreed with the lower appellate court's finding that the goods were pre-excise goods and exempt from taxation. The court concluded that the levy of tax on such goods was not done in good faith, as due care and attention were not bestowed in the assessment of the goods.

Conclusion:

The court upheld the decision of the lower appellate court, ruling that the civil court had jurisdiction to entertain the suit for the recovery of the illegally collected excise duty and that the collection of the tax was illegal. The Second Appeal was dismissed with costs.