1972 (9) TMI 53 - HC - Central Excise

Summary

Issues:
1. Challenge to excise duty demand for varnishes and paints
2. Validity of subsequent demands for excise duty
3. Interpretation of Rule 9(2) and Rule 10-A in relation to excise duty demands

Analysis:

Issue 1: Challenge to excise duty demand for varnishes and paints
The petitioner, engaged in manufacturing varnishes and paints, contested a demand for excise duty amounting to Rs. 49,249.20 for the period 1-1-1963 to 15-7-1964. The Assistant Collector of Central Excise, Madras, directed the withdrawal of the demand, citing the petitioner's eligibility for concessional rates under Notification No. 137 of 1960. However, subsequent demands were issued for different periods, leading to the petitioner filing a Writ Petition to challenge the demands.

Issue 2: Validity of subsequent demands for excise duty
The petitioner argued that the subsequent demands contradicted the earlier decision of the Assistant Collector of Customs directing the withdrawal of the initial demand. The High Court, however, held that the withdrawal was based on procedural grounds and did not absolve the petitioner from excise duty liability. The Court emphasized that fresh demands could be issued in accordance with statutory provisions and notifications, despite the prior withdrawal.

Issue 3: Interpretation of Rule 9(2) and Rule 10-A
The Court analyzed the applicability of Rule 9(2) and Rule 10-A to the demands. It determined that Rule 9(2) is a penal provision that requires goods to be removed in contravention of specific rules, which was not the case here. The demand under Rule 9(2) for the period 1-4-1959 to 15-7-1964 was deemed unsustainable. Regarding the demand for the latter period under Rule 10-A, the Court referred to previous judgments invalidating Rule 10-A. Consequently, both demands were set aside, and the Writ Petition was allowed with no order as to costs.

This comprehensive analysis of the judgment highlights the legal intricacies involved in challenging excise duty demands and interpreting relevant rules governing such matters.