1966 (5) TMI 10 - HC - Central Excise

Summary

Issues Involved:
1. Jurisdiction of the civil court to entertain the suits.
2. Validity of the notices issued under Rule 10A versus Rule 10.
3. Applicability of Section 35 and Section 40 of the Central Excises and Salt Act, 1944.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Civil Court:
The defendant contended that the civil court lacked jurisdiction to entertain the suits, arguing that the action of the Central Excise Department in issuing notices demanding additional excise duty could not be questioned in a civil court. The court, however, held that if the Central Excise Officer acted beyond his powers or arbitrarily, the civil court had jurisdiction to examine the validity of the notices. The court referenced several judgments, including Secretary of State v. Masp & Co. and Firm I. S. Chetty & Co. v. State of Andhra Pradesh, to support the principle that non-compliance with fundamental statutory provisions renders proceedings illegal and without jurisdiction. Consequently, the civil court could interfere if the officer acted beyond the scope of his authority.

2. Validity of Notices under Rule 10A versus Rule 10:
The plaintiffs argued that the notices for additional duty were issued under Rule 10A but should have been under Rule 10, which has a three-month limitation period. The court found that the initial duty was paid on 29-4-1953, and the notices were issued after three months, making Rule 10 inapplicable. Rule 10A, being a residuary provision, applies only when Rule 10 does not cover the situation. The court agreed with the plaintiffs that the notices should have been issued under Rule 10 within the three-month period, and the action under Rule 10A was illegal. The court emphasized that Rule 10A could not be used to circumvent the specific provisions of Rule 10.

3. Applicability of Section 35 and Section 40 of the Central Excises and Salt Act, 1944:
The defendant argued that Sections 35 and 36 provided the exclusive remedies for grievances against decisions or orders by Central Excise Officers, and thus, the civil courts had no jurisdiction. Section 35 provides for appeals and revisions, while Section 40 bars suits against the Central Government or its officers for actions done in good faith under the Act. The court held that these sections did not apply if the officer acted beyond his powers or arbitrarily. The court noted that Section 40 protects actions done in good faith, but if the validity of the order itself is challenged, this protection does not apply. The court cited Union of India v. Vittappa Kamath and other cases to support this interpretation, concluding that the suits were not barred by Sections 35 or 40.

Conclusion:
The court dismissed the appeals, holding that the civil court had jurisdiction to examine the validity of the notices, which were improperly issued under Rule 10A instead of Rule 10. The Central Excise Officer acted beyond his powers, and the protections under Sections 35 and 40 of the Central Excises and Salt Act did not apply. The appeals were dismissed with costs.