1965 (11) TMI 20 - HC - Central Excise

Summary

Issues:
Claim of illegal demands for excise duty exemption under Central Excise and Salt Act, 1944.

Analysis:
The case involved a dispute regarding excise duty exemption under the Central Excise and Salt Act, 1944. The petitioners, who were manufacturers of pigments, colours, paints, enamels, varnishes, blacks, and cellulose lacquers, claimed that demands for excise duty were illegal as they were not granted the exemption provided by government notifications. The exemption was based on specific quantities of goods manufactured by small manufacturers. The petitioners began manufacturing in 1958 without obtaining a license under the Act, and demands were issued for excise duty on their production during certain periods. The Department contended that the statutory exemption could only be enjoyed by manufacturers operating under proper excise control, which included obtaining a license as required by Section 6 of the Act.

The Court examined the provisions of the Act and the rules framed under it. Section 3 of the Act provided for the levy and collection of excise duties, while Section 6 mandated obtaining a license for manufacturing excisable goods. Rule 9 outlined the procedure for payment of duty and required obtaining permission before removing goods from the manufacturing premises. The petitioners had not obtained a license during the relevant period and had removed goods without paying the excise duty. The Court noted that the grant of exemption must be in accordance with the notification provisions and that exemptions are to be strictly construed.

Regarding the government notifications providing exemptions, the Court analyzed the language and intent of the notifications issued in 1956 and 1960. The 1960 notification granted exemption only for goods cleared for home consumption, and the liability to pay duty arose at the time of clearance. The Court emphasized that the exemption could only be claimed at the time of clearance when duty was paid. Since the petitioners had not paid duty at the time of clearance and the demands were made under Rule 10A, the claim for exemption was deemed invalid. Similarly, the 1956 notification exempted goods if the total output did not exceed 50 tons, but the duty exemption was tied to the time of clearance. As the petitioners had not paid duty at the time of clearance, their claim under this notification also failed.

Ultimately, the Court dismissed the petitions, ruling against the petitioners' claim for excise duty exemption. No costs were awarded in the case.