1965 (11) TMI 19 - HC - Central Excise

Issues Involved:
1. Determination of value for duty under the Central Excise and Salt Act, 1944.
2. Validity of notices of demand under Rule 10A of the Central Excise Rules.
3. Provisional assessment under Rule 10B of the Central Excise Rules.
4. Limitation under Rule 10 of the Central Excise Rules.

Detailed Analysis:

1. Determination of Value for Duty under the Central Excise and Salt Act, 1944:
The petitioners, manufacturers of rubber and canvas goods, including shoes, were subject to excise duty under the Finance Act, 1954. The value for duty purposes was to be determined as per Section 4 of the Central Excise and Salt Act, 1944. This section specifies that the value should be the wholesale cash price at the factory or nearest market. The petitioners argued that their sales to Messrs. Santlal Bansidhar were at the correct wholesale cash prices and that Santlal Bansidhar was not their sole selling agent but an outright purchaser. The court noted that the respondents failed to prove that Messrs. Santlal Bansidhar was a wholesale market or the sole selling agent, thus making the prices charged by Santlal Bansidhar irrelevant for duty assessment.

2. Validity of Notices of Demand under Rule 10A of the Central Excise Rules:
The petitioners received multiple notices of demand for short-levied duty under Rule 10A, which they contested on grounds of lack of opportunity to show cause. The respondents claimed the demands were based on differences between prices charged by Santlal Bansidhar and the petitioners. The court held that since Messrs. Santlal Bansidhar were not proven to be the sole selling agents or part of a wholesale market, the demands based on their prices were invalid.

3. Provisional Assessment under Rule 10B of the Central Excise Rules:
The respondents argued that the assessments were provisional, pending final verification of prices. The petitioners denied this, stating that all assessments prior to May 22, 1958, were final. The court examined endorsements on A.R. 1 forms and found no evidence of provisional assessments before May 22, 1958. The court concluded that the story of provisional assessment was negated by the endorsements and the lack of a bond before May 22, 1958.

4. Limitation under Rule 10 of the Central Excise Rules:
The petitioners argued that the demands were barred by the three-month limitation period prescribed by Rule 10. The court agreed in part, finding that some periods covered by the notices were indeed barred by limitation. Specifically, parts of the periods from October 1, 1957, to December 31, 1957, and from December 17, 1956, to June 3, 1958, were barred. However, the period from January 1, 1958, to December 31, 1958, was not barred.

Conclusion:
The court quashed the demands based on the prices charged by Messrs. Santlal Bansidhar, as these prices were irrelevant for duty assessment. The theory of provisional assessment was also rejected for the bulk of the goods covered by the demands. The court directed the respondents to re-adjust the petitioners' current account accordingly and made no order as to costs.

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