1965 (5) TMI 2 - HC - Central Excise

Summary

Issues:
1. Violation of Central Excise Rules regarding non-payment of excise duty on mustard oil.
2. Challenge against the penalty and duty imposed by the petitioner.
3. Application for instalments in payment of imposed duty.
4. Detention of goods under Rule 230 of the Central Excise Rules.
5. Petition under Article 226 of the Constitution challenging the detention of goods.
6. Argument of discrimination and violation of Article 14 of the Constitution regarding Rule 230.
7. Analysis of Rule 230 and Section 11 of the Central Excises and Salt Act.
8. Interpretation of the term "exacting such duty" in Rule 230.
9. Deposit of a sum by the petitioner with the Registrar and its appropriation towards outstanding excise duty.

Analysis:
The petitioner, conducting business as 'Mahakali Oil Mills,' was found to have removed mustard oil without paying excise duty, in violation of Central Excise Rules. The Assistant Collector held the petitioner liable for the duty and imposed a penalty. Despite challenging the duty and penalty, the petitioner paid the penalty and sought instalments for the duty. After making partial payments, the petitioner stopped and received a notice for non-payment, leading to the detention of goods under Rule 230. The petitioner moved the High Court under Article 226, challenging the detention and seeking relief through a writ of Mandamus and Prohibition.

The petitioner argued that Rule 230 was discriminatory and violated Article 14 of the Constitution, comparing it to Section 11 of the Central Excises and Salt Act. However, the Court ruled that Rule 230 was a method to compel payment and secure assets for duty recovery, not an alternative to Section 11. The Court highlighted that Rule 230 applies to all defaulters and is a recognized power for duty realization, dismissing the discrimination claim.

The Court also noted the term "exacting such duty" in Rule 230, clarifying its meaning as compelling payment rather than extortion. The judgment advised revising the language of Rule 230 for clarity. The petitioner had deposited a sum with the Registrar, which could be appropriated towards the outstanding duty, subject to the final decision on the adjudication order. The Court discharged the Rule without costs, allowing the petitioner to pay the outstanding amount to avoid further action under Rule 230.