1977 (7) TMI 52 - HC - Central Excise

Summary

Issues:
1. Liability of a tobacco grower to pay Central Excise duty after transferring ownership of tobacco.
2. Interpretation of Rule 29 of the Central Excise Rules regarding curer's liability for payment of duty.
3. Determining the proper officer to report the transfer of ownership of tobacco.

Detailed Analysis:
1. The petitioner, a tobacco grower, had transferred 1106 kgs of tobacco to a licensed dealer under a valid transport permit. The Central Excise Officer demanded excise duty from the petitioner, citing Rule 29 of the Central Excise Rules, which states that the curer's liability continues until the transfer of ownership is reported and acknowledged by the proper officer. The petitioner argued that his liability ceased upon transferring the tobacco under a valid permit. The respondents did not dispute the transfer but claimed the petitioner failed to report the transfer to the proper officer at Bhavani, where the licensed dealer operated.

2. Rule 29 of the Central Excise Rules imposes liability on the curer for payment of excise duty until the transfer of ownership is reported and acknowledged by the proper officer. The petitioner contended that he had reported the transfer to the Central Excise Officer at Dharapuram, where he conducted curing operations, and the officer acknowledged it. The court analyzed Rules 19, 24, 26, and 31, emphasizing the requirement to report ownership transfer to the proper officer. The definition of "proper officer" under Rule 2(xi) was crucial in determining the officer within whose jurisdiction the curer operated as the proper officer to report the transfer.

3. The dispute revolved around the interpretation of the term "proper officer" and the reporting requirements under Rule 29. The court clarified that the petitioner's obligation was to report the transfer to the Central Excise Officer at Dharapuram, where he conducted curing operations and was accountable for the stocks. The court held that once the petitioner satisfied the officer at Dharapuram about the transfer of ownership, his liability under Rule 29 ceased. The court set aside the demand for excise duty, emphasizing that the petitioner had fulfilled reporting obligations to the proper officer within his jurisdiction.

In conclusion, the judgment clarified the curer's liability for excise duty under Rule 29, emphasizing the importance of reporting ownership transfer to the proper officer within the curer's jurisdiction. The court's interpretation of the rules and definition of the proper officer played a crucial role in determining the petitioner's liability, ultimately setting aside the demand for excise duty.