1979 (2) TMI 107 - HC - Central Excise

Codopyrin - Duty illegally collected - Civil suit - Illegal orders - Applicability of - Strictures against Department

Issues Involved:
1. Maintainability of the plaintiffs' suit under Section 20(1) of the Act.
2. Maintainability of the plaintiffs' suit under Rule 127 of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956.
3. Bar of the plaintiffs' suit by the period of limitation prescribed by Section 20(2) of the Act.
4. Liability of the plaintiffs' preparation Codopyrin to excise duty as a patent or proprietary medicine.

Detailed Analysis:

1. Maintainability of the Plaintiffs' Suit under Section 20(1) of the Act:
The Court examined Section 20 of the Act, which bars suits or legal proceedings against the collecting Government or any officer for actions done in good faith. The Court found that this section deals with two subjects: the bar of jurisdiction in respect of certain suits and legal proceedings, and the limitation period for other suits. The Court concluded that Section 20(1) applies only to orders and acts done in good faith under the Act. If an order or act is not done in good faith or not under the Act, Section 20(1) does not apply. The Court held that the orders in question were not passed in good faith as they were based on statutory provisions that did not exist during the relevant period. Hence, Section 20(1) did not bar the plaintiffs' suit.

2. Maintainability of the Plaintiffs' Suit under Rule 127 of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956:
The Court analyzed Rule 127, which provides for appeals against orders of officers other than the Excise Commissioner. The Court noted that Rule 127(ii) states that an order passed in appeal is final, subject to the power of revision under Rule 128. The Court held that the Rules made by the Central Government must conform to the statute and cannot oust the jurisdiction of Civil Courts beyond what is provided in Section 20 of the Act. The Court concluded that Rule 127 does not oust the jurisdiction of Civil Courts except for suits falling under Section 20(1). Even if Rule 127 impliedly barred the jurisdiction of Civil Courts, the plaintiffs' suit was maintainable as it fell within the exceptions outlined by the Supreme Court in Dhulabhai's case and other precedents.

3. Bar of the Plaintiffs' Suit by the Period of Limitation Prescribed by Section 20(2) of the Act:
The Court examined the language of Section 20(2), which prescribes a six-month limitation period for suits, prosecutions, or other legal proceedings against the collecting Government or any officer for actions done under the Act. The Court noted significant differences between sub-sections (1) and (2) of Section 20, particularly the absence of the "good faith" requirement in sub-section (2). The Court held that sub-section (2) applies to actions done otherwise than in good faith. Since the orders in question were not passed in good faith, the plaintiffs' suit was not governed by Section 20(2) but by the ordinary limitation period of three years under the Limitation Act, 1963.

4. Liability of the Plaintiffs' Preparation Codopyrin to Excise Duty as a Patent or Proprietary Medicine:
The Court reviewed the impugned orders and found that the authorities had erroneously applied a statutory provision that did not exist during the relevant period. The Court held that Codopyrin, manufactured with the revised formula found in the British Pharmacopoeia, 1958 Edition, was not a patent or proprietary medicine and was not liable to excise duty. The orders were based on a misinterpretation of the applicable statutory provisions and were not passed in good faith. The Court concluded that the plaintiffs' preparation Codopyrin was not liable to excise duty.

Conclusion:
The Court dismissed the appeal, holding that the plaintiffs' suit was maintainable and not barred by Section 20(1) or (2) of the Act or Rule 127 of the Rules. The Court also held that Codopyrin was not liable to excise duty as it was not a patent or proprietary medicine. The Appellants were ordered to pay the costs of the appeal to the first respondents, and the Union of India was to bear its own costs. The first respondents were given liberty to withdraw the amount of security for costs given by the Appellants.

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