1980 (7) TMI 112 - HC - Central Excise

Summary

Issues:
1. Whether hand-made bidis were liable to excise duty after being included as excisable goods under the Finance Act.
2. Whether the stock of bidis existing before the imposition of excise duty was liable to excise duty.
3. Interpretation of the term "manufacture" under Section 2(f) of the Act in relation to bidis.
4. Whether bidis can be considered fully manufactured when packed in pudas or unit containers.
5. Validity of excise duty charged on bidis by the Excise Authorities.

Analysis:
1. The petitioner, a bidi manufacturer, argued that hand-made bidis were not liable to excise duty before being included as excisable goods under the Finance Act. However, the Excise Authorities issued demand notices for excise duty on the petitioner's existing stock of bidis post the inclusion. The petitioner contended that the stock was not liable to duty, leading to a series of dismissals of review, appeal, and revision applications before filing a petition under Article 226 of the Constitution.

2. The key argument was whether bidis were fully manufactured when packed in pudas or unit containers. The authorities held that bidis needed to be packed in unit containers to be considered fully manufactured. The Assistant Collector, Collector, and Central Government all concurred that bidis were not ready for delivery without being packed in unit containers, as per the usual trade practice of bidi manufacturers. The Central Government specifically found that bidis were typically packed in unit containers before delivery to customers, supporting the imposition of excise duty from 1st March 1975.

3. The interpretation of "manufacture" under Section 2(f) of the Act was crucial. The Act defined "manufacture" to include processes incidental to completing a product, with a specific clause for manufactured tobacco. The authorities emphasized that the practice in the trade was to pack bidis in unit containers before delivery, indicating that bidis were not fully manufactured without this step.

4. The Court rejected the petitioner's argument that bidis could be considered fully manufactured when packed in pudas before unit containers. It was deemed a question of fact, supported by the Central Government's findings on trade practices. The authorities were justified in charging excise duty based on the usual practice of packing bidis in unit containers before delivery.

5. Ultimately, the petition was dismissed without costs, and the security amount was ordered to be refunded to the petitioner. The Court upheld the Excise Authorities' decision to charge excise duty on the petitioner's stock of bidis, considering the standard trade practice of packing bidis in unit containers before delivery as a crucial factor in determining the manufacturing stage for excise duty purposes.