1978 (3) TMI 102 - HC - Central Excise

Collusion - Meaning - Rule 10. - Mis-statement - Scope of - Alternative remedy - Existence of - Constitution

Summary

Issues Involved:
1. Maintainability of the writ petition.
2. Applicability of Rule 10 or Rule 10A of the Central Excise Rules, 1944.
3. Interpretation of "mis-statement" in Rule 10.

Issue-wise Detailed Analysis:

1. Maintainability of the Writ Petition:
The appellants contended that the writ petition was not maintainable as an appeal lay against the notice of demand under Section 35 of the Central Excises and Salt Act, 1944, invoking clause (3) of Article 226 of the Constitution. However, the court observed that clause (3) expressly excludes sub-clause (a) of clause (1) of Article 226, which provides for the enforcement of rights conferred by Part III of the Constitution. The respondent sought to enforce its right to property under Article 31, included in Part III. The court rejected the appellants' contention that the demand was made under the authority of law, as the notice of demand was issued under Rule 10A and not Rule 9(2), which relates to clandestine removal of goods without assessment. The court cited the Supreme Court's decision in N.B. Sanjana v. The Elphinstone Spinning and Weaving Mills Co. Ltd., emphasizing that Rule 9(2) was inapplicable since the goods were not removed clandestinely or without assessment.

2. Applicability of Rule 10 or Rule 10A:
The principal point for consideration was whether Rule 10 or Rule 10A applied to the facts and circumstances of the case. The court noted that the respondent had applied for the assessment of excise duty in A.R. 1 forms, describing the goods as "5% Rag D.S. Azure Laid Gateway 51/78, 522.8 Kg." The excise duty was paid under Item 17(3) of the First Schedule to the Act. However, the impugned notice of demand alleged that the goods were Bond papers, assessable under Item 17(2), and demanded the differential duty. The court found that the notice of demand was issued beyond the three-month period prescribed by Rule 10, making the demand barred if Rule 10 applied. The appellants argued that Rule 10A applied due to the respondent's alleged deliberate mis-statement. The court, however, concluded that Rule 10 applied, as it includes mis-statements, whether bona fide or deliberate, and the demand was thus barred.

3. Interpretation of "Mis-statement" in Rule 10:
The court examined the meaning of "mis-statement" in Rule 10, noting that it was not defined in the Act or the Rules. The court considered dictionary definitions, which varied between "to state wrongly or falsely" and "state wrongly." The court concluded that "mis-statement" in Rule 10 includes both innocent and fraudulent mis-statements. This interpretation was supported by an unreported decision of the Bombay High Court and the Supreme Court's decision in N.B. Sanjana v. The Elphinstone Spinning and Weaving Co. Ltd. The court rejected the appellants' reliance on decisions from the Gujarat High Court and the Madras High Court, as the facts in those cases differed significantly. The court also dismissed the appellants' reliance on a decision of the Calcutta High Court, as it was not relevant to the issues in this appeal.

Conclusion:
The court upheld the learned Judge's finding that Rule 10 applied to the facts and circumstances of the case, making the impugned notice of demand barred by limitation. Consequently, the appeal was dismissed with no order for costs.