1994 (3) TMI 105 - HC - Central Excise

Issues Involved:
1. Quashing of the order dated 27-10-1993 by the third respondent.
2. Forbearance from insisting on payment of central excise duty by the petitioner company.
3. Applicability of Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985.
4. Interpretation of Section 3 of the Central Excises and Salt Act, 1944 and Rules 9 and 49 of the Central Excise Rules.

Detailed Analysis:

1. Quashing of the Order Dated 27-10-1993 by the Third Respondent:
The petitioner sought to quash the order dated 27-10-1993 passed by the third respondent, which denied the petitioner's request to remove goods without payment of central excise duty. The court noted that the chemicals manufactured by the petitioner are subject to excise duty and cannot be removed from the factory without payment of such duty. The third respondent informed the petitioner that there is no provision in the Central Excise Rules to remove goods without payment of excise duty, even if the petitioner is a sick industry.

2. Forbearance from Insisting on Payment of Central Excise Duty by the Petitioner Company:
The petitioner contended that as a sick industry declared under Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985, excise duty cannot be demanded during the operation of the scheme framed by the Board for Industrial and Financial Reconstruction (B.I.F.R.). The respondents argued that despite the petitioner's status as a sick industry, the payment of excise duty for removal of goods does not fall within the scope of Section 22 of the Act, and thus, the petitioner cannot remove excisable goods without paying the duty.

3. Applicability of Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985:
Section 22(1) of the Act states that no proceedings for execution, distress, or the like against any properties of the industrial company shall lie or be proceeded with further, except with the consent of the Board or the Appellate Authority. The petitioner argued that the requirement to pay excise duty amounts to distress or the like, as the company is not in a position to pay. The court referred to the Supreme Court's interpretation in Maharashtra Tubes Ltd. v. State Industrial & Investment Corporation of Maharashtra Ltd. and Another, which held that coercive measures against a sick company are suspended during the pendency of B.I.F.R. proceedings. However, the court concluded that the demand for payment of excise duty does not amount to distress or coercive action, as the duty is collected from the purchaser during the sale transaction.

4. Interpretation of Section 3 of the Central Excises and Salt Act, 1944 and Rules 9 and 49 of the Central Excise Rules:
Section 3 of the Central Excises and Salt Act, 1944, mandates the levy and collection of excise duties on all excisable goods. Rules 9 and 49 specify that excisable goods cannot be removed from the place of manufacture without payment of duty. The court emphasized that the provisions of Section 3 and Rules 9 and 49 must be complied with, as there is no suspension of these provisions by Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985. The court also noted that there is no provision in the Act that exempts sick industries from paying excise duty.

Conclusion:
The court dismissed the writ petition and the writ appeal, holding that the demand for payment of excise duty does not amount to distress or coercive action under Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985. The court observed that compliance with the provisions of the Central Excises and Salt Act, 1944, and the Central Excise Rules is necessary, and the petitioner may approach the Central Government for any relief under the relevant provisions of the Rules. No order as to costs was made.

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