1960 (7) TMI 1 - HC - Central Excise

Manufacturer - Effect of being partner - Exemption - Denial to amounts violation of fundamental rights - Alternative remedy

Summary

Issues:
1. Interpretation of notifications regarding exemption of duty on vegetable non-essential oils for manufacturers.
2. Whether partners in a firm can be considered as manufacturers individually.
3. Jurisdiction of the respondent in issuing notices Exts. P1 to P4.
4. Violation of fundamental right under Article 19(1)(g) by denying exemption benefits.

Analysis:

1. The petitioners, four firms engaged in extracting vegetable non-essential oil, challenged notices Exts. P1 to P4 issued by the Deputy Superintendent of Central Excise, Trichur M.O.R., regarding the exemption of duty on such oil. The Central Government, under Rule 8 of the Central Excise Rules, had exempted the first 75 tons completely and the next 50 tons partially from duty. The issue was whether the respondent correctly treated partners in the firms as manufacturers within the notifications' scope. The notices implied that each partner was a manufacturer, but limited the exemption benefits to partners common to multiple firms, leading to ambiguity.

2. The respondent argued that any misinterpretation would be an erroneous exercise of jurisdiction rather than a lack of jurisdiction, suggesting the need for appeal under the Act. The legal status of a firm was discussed, with references to Indian Partnership Act and relevant case laws. The court emphasized that a firm could be considered a distinct legal entity for business purposes, similar to a corporation. The term "manufacturer" in the notifications was deemed to apply more suitably to a firm engaged in manufacturing, rather than individual partners, rendering the notices illegal.

3. The court deliberated on whether the respondent acted without jurisdiction or committed an error in issuing the notices. The petitioners contended that denying exemption infringed their fundamental right under Article 19(1)(g) to carry on trade. Citing a Supreme Court precedent, the court noted that interference under Article 226 could be warranted in cases of fundamental rights infringement, even if alternative remedies existed. The Madras High Court decision highlighted that Article 226 could be invoked when fundamental rights were at stake, irrespective of challenging the constitutionality of a statute.

4. Ultimately, the court concluded that the notices Exts. P1 to P4 constituted an illegal levy outside the scope of the notifications, violating the petitioners' fundamental rights. As a result, the court quashed the notices, allowing the petitions in favor of the petitioners without imposing costs. The judgment underscored the importance of upholding fundamental rights and ensuring compliance with legal provisions in matters of taxation and exemptions.