1971 (11) TMI 53 - HC - Central Excise

Summary

Issues Involved:
1. Validity of notice under Section 80 of the Code of Civil Procedure.
2. Bar of suit under Section 11 of the Code of Civil Procedure.
3. Time-bar under Section 40 of the Central Excise and Salt Act, 1944.
4. Recovery of penalty from legal heirs under Section 11 of the Central Excise and Salt Act, 1944.
5. Nature of the penalty and its recoverability from the assets of the deceased.

Detailed Analysis:

1. Validity of Notice under Section 80 of the Code of Civil Procedure:
The trial court held that the notice served by the plaintiff under Section 80 of the Code of Civil Procedure was invalid. However, upon review, it was found that the notice met all the requirements stipulated under Section 80. The court concluded that the notice was valid, and no illegality was pointed out by the learned counsel for the respondent.

2. Bar of Suit under Section 11 of the Code of Civil Procedure:
The trial court held that the suit was barred by Section 11 of the Code of Civil Procedure. The lower appellate court, however, contended that the decision of the previous suit filed by Jai Narain Paliwal did not preclude the plaintiff from asserting her non-liability to pay the penalties. The High Court agreed with this view, noting that the plaintiff's cause of action arose from the order dated 13th November 1962, and thus, the previous suit did not operate as res judicata.

3. Time-bar under Section 40 of the Central Excise and Salt Act, 1944:
The trial court opined that the order imposing the penalty was not time-barred. The High Court reviewed Section 40, which states that no suit shall be instituted after six months from the accrual of the cause of action. Since the plaintiff's suit was filed within six months of the order dated 13th November 1962, it was held that the suit was within the limitation period, and Section 40 did not bar the suit.

4. Recovery of Penalty from Legal Heirs under Section 11 of the Central Excise and Salt Act, 1944:
The core issue was whether the penalty could be recovered from the legal heirs of Jai Narain Paliwal. Section 11 of the Act allows recovery of sums due to the government from the 'said person' through the Collector as arrears of land revenue. The High Court emphasized that the term 'said person' refers specifically to the defaulter and does not extend to legal heirs or representatives. The court concluded that the penalty was a personal liability of Jai Narain Paliwal, which abated with his death and could not be recovered from the plaintiff through summary proceedings.

5. Nature of the Penalty and Its Recoverability from the Assets of the Deceased:
The High Court noted that penal statutes must be construed strictly. The penalty imposed on Jai Narain Paliwal was of a penal nature and not a tax or excise duty. Therefore, the summary proceedings under Section 11 of the Act could not be applied against the legal heirs. The court referenced a circular issued by the Central Board of Revenue, which stated that no demand for duty could be raised against legal heirs or representatives. Consequently, the court held that the penalty could only be recovered through a regular suit and not as arrears of land revenue.

Conclusion:
The High Court allowed the appeal, setting aside the judgments and decrees of the lower courts. It decreed the plaintiff's suit for a permanent injunction, restraining the defendant from realizing the penalty amount of Rs. 2,000 from the plaintiff. The court clarified that the defendant could pursue other legal remedies available under the law.