1963 (9) TMI 3 - HC - Central Excise

Duty Liability (Central Excise) - Recovery - Demand - Evidence - Natural justice - Cross-examination

Issues Involved:
1. Jurisdiction of the impugned order.
2. Violation of principles of natural justice in the assessment procedure.
3. Arbitrariness and conjecture in the quantum of assessment.
4. Maintainability of the petition under Article 226.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Impugned Order:
The petitioner argued that the excise duty should have been levied upon Sarat Textiles Ltd., the lessee, instead of the petitioner personally. However, the court found that the duty under the Central Excises and Salt Act, 1944, is an 'excise duty' levied upon the goods produced or manufactured, and recoverable from any person who produces or manufactures such excisable goods. The petition itself stated that the goods produced during the lease period were by the petitioner, not Sarat Textiles. Hence, the court dismissed this contention.

The petitioner also argued that no 'place' had been specified by the Collector under Rule 9(1), thereby invalidating actions under Rule 9(2). The court clarified that specification by the Collector relates to any 'premises' appurtenant to the place of manufacture, not the place of manufacture itself. Thus, no specification is necessary for the place of manufacture, and the petitioner's argument was dismissed.

2. Violation of Principles of Natural Justice:
The petitioner contended that the principles of natural justice were violated as he was not allowed to cross-examine witnesses and the assessment was arbitrary. The court noted that Rule 9(2) does not specify a procedure for levy, and the petitioner was given an opportunity to show cause and was heard personally. The court held that a right to confront witnesses is not an essential requirement of natural justice where the statute is silent, and the petitioner had the opportunity to make a written explanation and a personal hearing. The court found no violation of natural justice principles.

3. Arbitrariness and Conjecture in the Quantum of Assessment:
The petitioner argued that the quantum of assessment was arbitrary and based on conjecture. The court noted that the respondent relied on the application made by Sarat Textiles for a licence to import artificial silk yarn, which indicated that the fabrics produced contained more than 60% artificial silk. The court found that the petitioner failed to provide positive evidence to counter this finding. Additionally, the court observed that the respondent had given relief by applying Rule 69 MMMM, assessing based on the looms worked, and no penalty was added. The court dismissed the contention of arbitrary assessment.

4. Maintainability of the Petition under Article 226:
The court addressed a preliminary objection regarding the maintainability of the petition. The petitioner had appealed to the Central Board of Revenue and filed a revision application before the Government of India, both of which were rejected due to non-deposit of the demanded amount. The court cited the Supreme Court decision in Collector of Customs v. East India Commercial Co., which held that the doctrine of merger applies to administrative orders. Since the appellate and revisional orders merged into the final order of the Central Government, the petitioner could not obtain relief without impugning the revisional order and impleading the Central Government, which was outside the court's jurisdiction. Consequently, the petition was dismissed on this ground.

Conclusion:
The court dismissed the petition on the grounds of maintainability, lack of jurisdiction, and failure to demonstrate a violation of natural justice or arbitrary assessment. The petitioner was advised to seek relief under general law if appropriate. The application was dismissed, and the rule discharged without any order as to costs.

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