1974 (9) TMI 53 - HC - Central Excise

Summary

Issues Involved:
1. Legality of excise duty recovery on tin-containers and freight.
2. Maintainability of the suit without exhausting remedies provided by the Central Excises and Salt Act, 1944.

Summary:

Issue 1: Legality of Excise Duty Recovery on Tin-Containers and Freight

The respondents, Mansingka Industries Private Limited, contended that the Union of India had illegally recovered excise duties on the value of tin-containers and freight under the Central Excises and Salt Act, 1944. The trial court decreed in favor of the respondents, ordering a refund of Rs. 60,334.66. The respondents argued that the excise duty should be based solely on the value of the vegetable product (hydrogenated oil) and not include the cost of tin-containers and freight. The appellants contended that the vegetable product could not be sold without the container, making the container part of the product. However, the court found no statutory basis for including the cost of tin-containers and freight in the excisable value, citing that excise duty should only be levied on the manufacturing cost and profit, excluding post-manufacturing expenses. The court affirmed that the cost of tin-containers and freight are post-manufacturing costs and should not be included in the excisable value.

Issue 2: Maintainability of the Suit Without Exhausting Remedies Provided by the Act

The appellants argued that the suit was barred under Section 40 of the Act of 1944 and that the respondents should have exhausted the remedies provided by the Act, such as appeal under Section 35 and revision under Section 36. The court referred to the Supreme Court's decision in Dhulabhai v. State of M.P., which held that civil court jurisdiction is not excluded unless the statute provides an adequate remedy. The court found that Section 40 of the Act of 1944 did not bar the suit for recovery of illegally collected duty, as it only provided immunity for acts done in good faith under the Act. The court concluded that the jurisdiction of civil courts was not barred by Section 40, and the suit was maintainable.

Conclusion:

The court affirmed the trial court's decree, holding that the excise duty on the value of tin-containers and freight was illegal and that the suit was maintainable. The appeal was dismissed with costs.