1990 (5) TMI 49 - HC - Central Excise

Summary

Issues:
1. Conviction under Section 9(B) of the Central Excise Act for evasion of duty.
2. Interpretation of the term "evades" in the context of excise duty payment.
3. Application of Section 9(B) of the Act in cases of non-payment of assessed duty.
4. Legal consequences of removal of goods from a warehouse without payment of excise duty.

Analysis:
The judgment pertains to a revision challenging the conviction of the petitioners under Section 9(B) of the Central Excise Act for evasion of duty. The petitioners were initially convicted by a Judicial Magistrate and later by the Judicial Commissioner, Ranchi. The petitioners argued that removal of tobacco from a warehouse already assessed to tax does not constitute evasion of duty. They contended that non-payment of duty on assessed goods does not amount to evasion as the duty is recoverable under the Act and Rules. On the other hand, the opposite party argued that the petitioners' failure to pay duty and removal of tobacco constituted evasion of duty.

The High Court referred to a previous case where it was held that the term "evades" in the Act implies underhand dealings or attempts to escape duty payment through deceptive means. Mere non-payment of assessed duty does not fall within the purview of evasion as per Section 9(B) of the Act. The Court emphasized that the Act provides procedures for duty recovery, and non-payment of assessed duty does not automatically amount to evasion. In the present case, the petitioners were accused of surreptitiously removing chewing tobacco from a warehouse without proper permits or duty payment.

The Court concluded that the petitioners' actions did not constitute evasion of excise duty as the goods were already assessed to duty. The government could recover the duty through prescribed procedures even if the duty was not paid initially. Therefore, the basis of the petitioners' conviction under Section 9(B) was found to be erroneous, and the revision was allowed. The Court clarified that the decision was based on the definition of "evasion" and not merely on non-payment of assessed duty. The petitioners were not convicted for permit contraventions, and Section 9(B) is not intended for such cases.

Ultimately, the High Court set aside the judgments of both lower courts, holding that the petitioners' conviction under Section 9(B) was incorrect in the given circumstances. The Court's analysis focused on the distinction between non-payment of assessed duty and evasion of duty, emphasizing that the latter involves deceptive practices to avoid duty payment, which was not established in this case.