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Showing 181 to 200 of 268 Records
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1989 (8) TMI 92
Issues Involved:
1. Maintainability of Petition under Article 226
2. Jurisdiction of Excise Authorities under Section 11A of the Central Excises and Salt Act, 1944
3. Classification of Goods under Tariff Items 67 and 68
4. Allegations of Fraud, Collusion, or Willful Misstatement
5. Provisional vs. Final Assessment
6. Review of Classification Lists
7. Liability of Graphite Fines to Excise Duty
Issue-wise Detailed Analysis:
1. Maintainability of Petition under Article 226
The court examined whether the petitioners were entitled to relief under Article 226 of the Constitution of India. The court referred to previous judgments, notably Universal Cables Ltd. v. Union of India, which established that if a notice is issued by an authority in excess of jurisdiction, the court can intervene under Article 226 to prevent unnecessary harassment. The court agreed with these observations and held that the petition was maintainable.
2. Jurisdiction of Excise Authorities under Section 11A of the Central Excises and Salt Act, 1944
The court examined whether the notice issued by the excise authorities was within the jurisdiction conferred by Section 11A of the Act. Section 11A allows recovery of duties not levied or short-levied within six months, extendable to five years in cases of fraud, collusion, or willful misstatement. The court found that the notice was issued beyond the six-month period and that there was no evidence of fraud, collusion, or willful misstatement to justify the extended period.
3. Classification of Goods under Tariff Items 67 and 68
The petitioner company classified its products under Tariff Item No. 68, while the excise authorities contended that they should be classified under Tariff Item No. 67. The court noted that the interpretation of these tariff items was a matter of legal interpretation and that the petitioners' interpretation was plausible. The excise authorities had approved the classification lists without modification, indicating acceptance of the petitioners' classification.
4. Allegations of Fraud, Collusion, or Willful Misstatement
The court found no evidence to support allegations of fraud, collusion, or willful misstatement by the petitioners. The court emphasized that mere misclassification does not constitute fraud or willful misstatement. The petitioners had provided full descriptions of the goods, and the excise authorities had approved the classifications accordingly.
5. Provisional vs. Final Assessment
The court examined whether the assessments were provisional or final. The excise authorities argued that the classifications were provisionally approved. However, the court found no evidence that the procedures for provisional assessment under Rule 9B were followed. The endorsements on the classification lists indicated final approval, not provisional.
6. Review of Classification Lists
The court noted that there was no evidence that the excise authorities had reviewed or modified the approved classification lists. The approval given to the classification lists was not subject to any subsequent review or modification. Therefore, any demand for short levy was unjustified without a proper review of the classification lists.
7. Liability of Graphite Fines to Excise Duty
The petitioners sought a declaration that graphite fines were not subject to excise duty. The court refrained from expressing an opinion on this issue, noting that the petitioners had themselves classified graphite fines under Item No. 68. The court suggested that the petitioners could pursue appropriate proceedings if they believed the classification was made under a mistake.
Conclusion
The court partly allowed the petition, quashing the notice and its corrigendum issued by the excise authorities, and restrained the respondents from enforcing the demand. The court did not grant relief regarding the excisability of graphite fines, leaving it open for the petitioners to pursue appropriate proceedings. Each party was ordered to bear its own costs, and any security amount was to be refunded to the petitioners.
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1989 (8) TMI 91
Issues Involved:
1. Liability to pay customs duty at the rate applicable on 28th February 1983 or the increased rate effective from 1st March 1983.
2. Validity of the circular advancing the closing hours on 28th February 1983.
3. Whether the petitioners were prevented from paying warehousing charges and taking delivery due to the actions of the warehouse staff.
Detailed Analysis:
1. Liability to Pay Customs Duty:
The core issue is whether the petitioners are liable to pay customs duty at the rate prevailing on 28th February 1983 or the increased rate effective from 1st March 1983. The petitioners had paid the customs duty applicable as of 28th February 1983 and completed all formalities except for the payment of warehousing charges. They were present at the warehouse on 28th February 1983 to pay these charges and take delivery of the goods, but were unable to do so due to the warehouse staff's actions. The court held that the petitioners were entitled to clear the consignments at the rate of customs duty paid on 28th February 1983, as they had fulfilled all necessary formalities except for the warehousing charges, which they were prevented from paying due to no fault of their own.
2. Validity of the Circular:
The circular issued on 18th February 1983 by the Bond Department, New Customs House, Bombay, advanced the closing hours for monetary transactions and deliveries on 28th February 1983. The court questioned the legal sanction of this circular, noting that the original circular was not produced, and only a cyclostyled copy was available. The court found no legal basis for the circular, which arbitrarily advanced the closing hours by one hour. The circular was struck down as invalid, reinforcing the petitioners' claim that they were unjustly prevented from paying warehousing charges and taking delivery of their goods.
3. Actions of the Warehouse Staff:
The petitioners claimed that they were present at the warehouse from 9 a.m. on 28th February 1983, ready to pay the warehousing charges and take delivery of their goods. However, due to heavy rush and the staff's inability to cope, they were unable to complete these transactions. The court noted that the staff's inability to handle the rush and the arbitrary advancement of closing hours by one hour were the primary reasons the petitioners could not pay the warehousing charges and take delivery. The court found that the petitioners could not be blamed for this situation and that the responsibility lay with the warehouse staff.
Conclusion:
The court concluded that the petitioners were entitled to clear their consignments at the customs duty rate prevailing on 28th February 1983. The circular advancing the closing hours on 28th February 1983 was struck down as invalid. The court ordered that the petitioners be allowed to pay the warehousing charges and take delivery of their goods, with the customs duty deemed to have been paid as of 28th February 1983. The bonds given by the petitioners at the interim stage were discharged, and the rule in all three petitions was made absolute with costs.
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1989 (8) TMI 90
Issues Involved:
1. Validity of Show Cause Notices and Requisitions.
2. Classification of Tyre Cord Warp Sheets under Central Excise Tariff.
3. Applicability of Excise Duty on Tyre Cord Warp Sheets.
4. Jurisdiction of the Respondent Authorities.
5. Prematurity of the Petitioner's Objections.
Issue-wise Detailed Analysis:
1. Validity of Show Cause Notices and Requisitions:
The petitioner challenged the Show Cause Notices dated October 31, 1980, November 4, 1980, November 29, 1980, January 30, 1981, and the requisition dated October 29, 1980. The petitioner argued that these notices and requisitions were irregular and illegal. However, the Court found that the notices and requisitions were neither irregular nor invalid. The Court emphasized that the petitioner should respond to the notices and provide explanations, allowing the matter to be adjudicated properly.
2. Classification of Tyre Cord Warp Sheets under Central Excise Tariff:
The petitioner contended that tyre cord warp sheets should not be classified as 'fabric' under Item Nos. 19 to 22 of the Central Excise Tariffs. The petitioner argued that technological advancements had changed the nature of the product, and it no longer fit the definition of 'fabric'. The respondent authorities, however, issued a Trade Notice No. 154/Cotton Fab.-10CE/80 dated September 30, 1980, classifying tyre cord warp sheets under Item No. 19 or 22 based on the content of fabric or yarn used. The Court did not find merit in the petitioner's challenge to this classification and held that the matter should be adjudicated by the respondent authorities.
3. Applicability of Excise Duty on Tyre Cord Warp Sheets:
The petitioner claimed that the tyre cord warp sheets, being an intermediary product in a continuous manufacturing process, should not attract excise duty. The petitioner argued that the application of non-vulcanised rubber and other materials did not amount to 'manufacture' as defined under Entry 84 of List I of the 7th Schedule to the Constitution. The Court referred to the amendments made by the Central Excises and Salt and Additional Duties of Excise (Amendment) Act, 1980, which included certain processes as 'manufacture'. The Court held that the respondent authorities were justified in issuing the notices and that the petitioner should respond to them to clarify the applicability of excise duty.
4. Jurisdiction of the Respondent Authorities:
The petitioner argued that the respondent authorities lacked jurisdiction to issue the impugned notices and requisitions. The Court referred to the principles laid down in A.I.R. 1962 S.C. Page 1893, stating that a writ of prohibition could be issued if a quasi-judicial authority acted without or in excess of jurisdiction. However, the Court found that the respondent authorities had the jurisdiction to issue the notices and adjudicate the matter. The Court emphasized that the Writ Court should not interfere with the adjudicating process unless there was a clear lack of jurisdiction or manifest injustice.
5. Prematurity of the Petitioner's Objections:
The Court found that the petitioner's objections were premature. The petitioner had the opportunity to respond to the show cause notices and present evidence to support their claims. The Court held that the petitioner should explain why the products did not attract excise duty and allow the respondent authorities to adjudicate the matter. The Court did not find any merit in the petitioner's challenge to the notices and requisitions.
Conclusion:
The Court concluded that the impugned notices and requisitions were valid and justified. The petitioner's objections were premature, and the matter should be adjudicated by the respondent authorities in accordance with the law. The Court discharged the Rule, vacated all interim orders, and did not award any costs.
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1989 (8) TMI 89
Issues:
1. Exemption from filing price lists under Rule 173-C of the Central Excise Rules.
2. Show cause notice issued by the Collector of Customs and Central Excise.
3. Time granted for replying to show cause notice.
4. Compliance with instructions regarding the time for replying to show cause notices in Central Excise cases.
Exemption from Filing Price Lists:
The petitioner, a manufacturing company, sought exemption from filing price lists for Liquid Glucose due to significant market price fluctuations. The Collector initially granted this exemption but later issued a show cause notice proposing to withdraw it. The petitioner was allowed to declare prices on gate passes for specific consignments. The exemption was reviewed, leading to the show cause notice challenging the continuation of the exemption.
Show Cause Notice Issued by the Collector:
The Collector issued a show cause notice to the petitioner, alleging that the market price fluctuations of Liquid Glucose did not justify the exemption from filing price lists. The petitioner was given ten days to respond and was offered a personal hearing. The petitioner's counsel requested an extension of time to reply, citing the standard practice of allowing 30 days for responses in Central Excise cases.
Time Granted for Replying to Show Cause Notice:
The petitioner's counsel argued that the ten-day period provided for responding to the show cause notice was insufficient, contrary to the instructions requiring a minimum of one month for replies in Central Excise cases. The counsel requested at least one month to prepare a detailed response, but the Collector proceeded to withdraw the exemption after the stipulated ten-day period without granting an extension.
Compliance with Instructions Regarding Time for Replying to Show Cause Notices:
The petitioner contended that the show cause notice and subsequent withdrawal of exemption were invalid due to the Collector's failure to comply with the instructions mandating a minimum of one month for parties to respond to show cause notices in Central Excise cases. The Court held that the Collector's actions were in violation of the instructions, quashed the notice and withdrawal order, and allowed the authorities to proceed in accordance with the law, emphasizing the importance of adherence to prescribed timelines in such matters.
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1989 (8) TMI 88
Issues Involved:
1. Whether Section 48 of the Customs Act controls Sections 61 and 62 of the Major Port Trusts Act.
2. Validity of the confiscation order dated 1st September 1979 issued by the Collector of Customs.
3. Whether the petitioners were given a show cause notice and an opportunity to be heard as mandated by Section 124 of the Customs Act.
4. Impact of non-service of the confiscation order on the petitioners' right to appeal.
Issue-wise Detailed Analysis:
1. Whether Section 48 of the Customs Act controls Sections 61 and 62 of the Major Port Trusts Act:
The court rejected the contention that Section 48 of the Customs Act controls Sections 61 and 62 of the Major Port Trusts Act. It was clarified that the provisions under these two statutes operate independently in different fields. Section 48 of the Customs Act pertains to the sale of goods by the person having custody thereof, under the direction of the Customs Department. Conversely, Sections 61 and 62 of the Major Port Trusts Act grant the Port Trust independent authority to sell goods for reasons such as non-payment of rent or failure to clear goods from the warehouse within a stipulated time. The court emphasized that both authorities act independently, and their actions are not controlled by each other.
2. Validity of the confiscation order dated 1st September 1979 issued by the Collector of Customs:
The court found that the impugned order of confiscation under Section 111 of the Customs Act was issued without following the mandatory legal formalities. The confiscation order was set aside on the grounds of non-compliance with Section 124 of the Customs Act, which mandates issuing a show cause notice and providing an opportunity for representation and a hearing before confiscating goods. The court noted that no such notice was issued, and no opportunity for representation or hearing was provided to the petitioners.
3. Whether the petitioners were given a show cause notice and an opportunity to be heard as mandated by Section 124 of the Customs Act:
The court highlighted the absence of compliance with Section 124 of the Customs Act. It was undisputed that no show cause notice was issued to the petitioners, and they were not given an opportunity to make a representation or be heard. This failure to follow the prescribed legal formalities rendered the confiscation order invalid. The court emphasized the importance of these procedural safeguards, which ensure adherence to principles of natural justice and provide an opportunity for the petitioners to contest the classification of goods.
4. Impact of non-service of the confiscation order on the petitioners' right to appeal:
The court found that the confiscation order was never served on the petitioners, depriving them of their right to appeal. The petitioners only became aware of the order when they filed a previous petition in 1983. The non-service of the order denied the petitioners a valuable opportunity to contest the order before an appellate forum. The court rejected the respondents' argument regarding the delay in filing the petition, noting that the petitioners were unaware of the confiscation order and its implications. The court concluded that the non-service of the order and the lack of procedural compliance rendered the order legally non-existent.
Conclusion:
The petition succeeded, and the confiscation order dated 1st September 1979 was set aside. The court ruled that the impugned order was invalid due to non-compliance with mandatory procedural requirements, including the issuance of a show cause notice and providing an opportunity for representation and hearing. The court emphasized the independent operation of the Customs Act and the Major Port Trusts Act and rejected the contention that Section 48 of the Customs Act controlled Sections 61 and 62 of the Major Port Trusts Act. The rule was made absolute with no order as to costs.
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1989 (8) TMI 87
The High Court of Bombay dismissed a petition regarding the import of defective M.S. Sheets for home consumption, as subsequent notifications did not affect the exemption and the 30% limit only applied to basic excise duty, not auxiliary duty and C.V. duty. The petitioner was required to pay 12% interest on the disputed duty amount. Another related petition was also dismissed with no costs awarded. The respondents were allowed to encash the bank guarantee.
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1989 (8) TMI 86
Issues:
1. Classification of products under Central Excises and Salt Act, 1944.
2. Bar on refund application due to law of limitation.
3. Observations made by the appellate authority regarding the effective date of classification change.
Classification of products under Central Excises and Salt Act, 1944:
The petitioner, a manufacturer of Harrow Discus and Agrico tools, initially classified its products under Tariff Item No. 51A. Subsequently, the Tribunal held that the classification was incorrect and allowed the appeal, directing a fresh decision on classification. The High Court emphasized that the Tribunal's order was explicit and did not dictate the date of effect for the classification change. The Court clarified that the refund entitlement would be based on the Assistant Collector's classification decision, not the Tribunal's order date.
Bar on refund application due to law of limitation:
The Assistant Collector of Central Excise rejected the petitioner's refund application, citing it as time-barred. The petitioner appealed this decision, leading to a remand by the appellate authority for factual verification. The High Court acknowledged the need for factual examination and ruled in favor of the petitioner, emphasizing that the refund eligibility hinged on the Assistant Collector's classification decision.
Observations made by the appellate authority regarding the effective date of classification change:
The respondent No. 2, the appellate authority, made an observation in the order that the classification change would be effective from the date of the Tribunal order and not retroactively. The High Court scrutinized this observation, noting that it could be perceived as a directive to the Assistant Collector on the refund computation period. The Court held that such an observation was impermissible as the refund determination should align with the Assistant Collector's classification decision, independent of the Tribunal order date.
In conclusion, the High Court allowed the writ application, emphasizing the need for clarity in the matter and directing the Assistant Collector to expedite the resolution. The Court highlighted that the petitioner's entitlement to refund would be contingent upon the Assistant Collector's decision on the correct classification of the products, irrespective of the Tribunal's order date.
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1989 (8) TMI 85
Issues:
1. Constitutionality of Section 77 of the Gold Control Act, 1968 in relation to Article 20(2) of the Constitution of India.
Analysis:
The petitioners in this case faced prosecutions for offenses under Section 85(1) of the Gold Control Act, 1968. They had already been subject to proceedings under Sections 71 and 74 of the Act for confiscation and penalty related to seized gold articles. The Collector of Central Excise had passed orders in these proceedings. The petitioners filed Original Petitions seeking a declaration that Section 77 of the Act is unconstitutional and requested the quashing of the ongoing prosecution proceedings based on Article 20(2) of the Constitution of India.
The main contention revolved around whether the proceedings under Sections 71 and 74 amounted to prosecution and punishment, thus barring the petitioners from facing a second prosecution. It was argued that these sections only dealt with confiscation and penalty, not prosecution for offenses. The Act distinguished between confiscation/penalty proceedings and prosecution proceedings in a Criminal Court. The imposition of penalty did not amount to punishment for an offense under the Code of Criminal Procedure, as it was an administrative process separate from prosecution.
The Supreme Court's decisions in various cases, including Maqbool Hussain v. State of Bombay and Asstt. Customs Collector, Bombay v. L.R. Molwani, were cited to support the argument that confiscation and penalty proceedings under similar Acts were not considered prosecution proceedings under Article 20(2) of the Constitution. The addition of a judicial member to the Appellate Tribunal did not transform the nature of the proceedings into judicial or prosecution proceedings. The Appellate Tribunal's decisions did not result in convictions or acquittals, thus not constituting punishment.
Ultimately, the court rejected the petitioner's contention that Section 77 of the Act was unconstitutional. The court emphasized that the addition of a judicial member to the appellate body did not change the nature of the proceedings or the validity of Section 77. The court held that even without Section 77, prosecution proceedings could be initiated despite ongoing or concluded proceedings under Sections 71 and 74 of the Act. Therefore, the Original Petitions were dismissed, and the court issued a carbon copy on usual terms.
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1989 (8) TMI 84
Issues Involved:
1. Legality of conditions imposed by the Customs Authorities for the release of imported goods.
2. Applicability and interpretation of Exemption Notification No. 224/85-Cus., 158/85-Cus., and 225/85-Cus.
3. Requirement of producing manufacturer's catalogues/literature.
4. Requirement of providing an explanation regarding valuation in terms of surface area.
5. Necessity of End Use Bond and Bank Guarantee.
Issue-wise Detailed Analysis:
1. Legality of Conditions Imposed by the Customs Authorities:
The petitioner challenged the conditions imposed by the Customs Authorities for the release of imported goods, arguing they were "wrongful, illegal and without jurisdiction." The Customs Authorities required the petitioner to produce an End Use Bond, a Bank Guarantee for the difference between standard and concessional rates of duty, manufacturer's catalogues/literature regarding the use in the leather industry, and an explanation regarding valuation in terms of surface area. The Court found that the conditions imposed by the Customs Authorities were not stipulated in the exemption notifications and thus could not be strictly supported in law. The Court emphasized that administrative acts cannot go contrary to statutory notifications.
2. Applicability and Interpretation of Exemption Notification No. 224/85-Cus., 158/85-Cus., and 225/85-Cus:
Both parties admitted that the exemption notifications provided benefits to importers of stamping foils for use in the leather industry. The petitioner argued that the Customs Authorities had no jurisdiction to demand compliance with conditions not provided in the notifications. The Court agreed, referencing the case of Modi Rubber Limited v. Union of India, which established that conditions for exemption should be part of the notification itself and not imposed through administrative directions or guidelines.
3. Requirement of Producing Manufacturer's Catalogues/Literature:
The Customs Authorities demanded the production of manufacturer's catalogues to verify the use of stamping foils in the leather industry. The petitioner contended that this requirement was unreasonable and not mandated by the exemption notifications. The Court ruled that the production of manufacturer's catalogues was not relevant at the time of the release of goods. It was held that the onus of proving the use of stamping foils in the leather industry could be met through the execution of an End Use Bond, making the demand for catalogues unnecessary.
4. Requirement of Providing an Explanation Regarding Valuation in Terms of Surface Area:
The Customs Authorities also required an explanation regarding the valuation of stamping foils in terms of surface area. The petitioner argued that this requirement was not stipulated in the exemption notifications. The Court agreed, finding no necessity for such an explanation for the release of the imported goods. The Court held that the End Use Bond would suffice to ensure that the stamping foils were used in the leather industry.
5. Necessity of End Use Bond and Bank Guarantee:
The Court found that the requirement for an End Use Bond was justified and necessary to ensure that the stamping foils were used in the leather industry. However, the requirement for a Bank Guarantee was deemed unnecessary, as previously determined by both the Trial Court and the Appeal Court. The Court concluded that the End Use Bond and other necessary documents would adequately safeguard the interests of the revenue.
Conclusion:
The writ petition was allowed in part. The Customs Authorities were directed not to insist on the production of manufacturer's catalogues/literature or explanations regarding valuation in terms of surface area for the release of the imported goods. However, the petitioner was required to execute an End Use Bond and other necessary documents to the satisfaction of the Customs Authorities, ensuring that the stamping foils would be used in the leather industry. There was no order as to costs.
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1989 (8) TMI 83
Issues:
1. Writ petition seeking Mandamus to cancel orders passed by Customs authorities and refund duty.
2. Interpretation of Section 27 of the Customs Act regarding limitation for filing refund claims.
3. Application of principles of natural justice in customs refund cases.
4. Consideration of legal precedents on refund of duty paid under mistake of law.
5. Jurisdiction of writ court under Article 226 to order refund without following statutory provisions.
Analysis:
1. The writ petition was filed by the Orissa State Electricity Board seeking a Mandamus to cancel orders passed by the Collector of Customs (Appeal) and the Assistant Collector of Customs and refund a sum of Rs. 9,54,983.42. The petitioner alleged violation of natural justice and non-application of mind by the Customs authorities in passing the impugned orders.
2. The main contention was that the Customs authorities failed to consider that the limitation period under Section 27 of the Customs Act, 1962 did not apply to the petitioner's case. The Appellate Authority dismissed the claim for refund as time-barred under Section 27, which requires refund claims to be filed within six months from the date of duty payment unless paid under protest.
3. The petitioner argued that since the duty was not paid under protest, the six-month limitation period applied. The court examined Section 27 of the Customs Act, emphasizing the importance of timely refund claims and the statutory provisions governing such claims.
4. Legal precedents were cited by the petitioner's counsel to support the claim for refund of duty paid under a mistake of law. The court considered the applicability of the theory of unjust enrichment and the need to follow statutory provisions like Section 27 of the Customs Act in refund cases.
5. The court also discussed the jurisdiction of the writ court under Article 226 of the Constitution to order refunds without adhering to statutory provisions. It highlighted the importance of following the law and procedural requirements in refund cases, emphasizing that the writ court's role is to correct jurisdictional errors or manifest injustices.
In conclusion, the court dismissed the writ petition, finding no merit in interfering with the Customs authorities' decision on the grounds of limitation. The court emphasized the importance of following statutory provisions like Section 27 of the Customs Act in refund cases and upheld the principle of timely filing refund claims to ensure legal compliance.
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1989 (8) TMI 81
Whether wrapping is used as a component part of finished excisable goods attracting the benefit of the Notification No. 18A/83-C.E., dated 9th July, 1983?
Held that:- To be able to be marketed or to be marketable, it appears to us, in the light of facts in the appeals, that it was an essential requirement to be goods, to be wrapped in paper. Anything required to make the goods marketable, must form part of the manufacture and any raw material or any materials used for the same would be component part for the end product. In our opinion, the Tribunal was right in setting aside the order of Collector rejecting the claim to exemption in respect of such wrapping paper in terms of the proviso to Rule 9(1). There is no ground to interfere in these appeals, hence dismissed.
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1989 (8) TMI 80
Whether Section 11A of the Act applies or not?
Held that:- the tribunal was in error in applying the provisions of Section 11-A of the Act. There were no materials from which it could be inferred or established that the duty of excise had not been levied or paid or short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Act or of the rules made thereunder. The Tribunal in the appellate order has, however, reduced the penalty to ₹ 5000/- and had also upheld the order of the confiscation of the goods. In view of the fact that the claim of the revenue is not sustainable beyond a period of six months on the ground that these dhoop sticks, etc. were not handicrafts entitled to exemption, we set aside the order of the tribunal and remand the matter to the Tribunal to modify the demand by confining it to the period of six months prior to issue of show cause notice and pass consequential orders in the appeal on the question of penalty and confiscation. Appeal allowed.
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1989 (8) TMI 79
Whether the appellant entitled to the concession granted by the Central Government under Rule 8(1) of the Central Excise Rules, 1944 through notification No. 46 of 1972, subsequently amended by notification Nos. 153 of 1973 dated 24-7-1973, and 25 of 1975 dated 1-3-1975?
Held that:- The terms of the notification do not have the effect of excluding cases where the manufacture of soap is done out of rice bran oil but the entire process is not carried out by the assessee Itself. The question which one has to ask is: does the assessee manufacture soap partly or wholly out of indigenous rice bran oil? and the answer, we think, can only be in the affirmative. We, therefore hold that the assessee is entitled to the exemption under the notification referred to above and that the departmental authorities and the Tribunal erred in not granting the said exemption to the assessee. The appeals are, therefore, allowed.
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1989 (8) TMI 78
Whether paper core is used in the manufacture of paper as component part?
Held that:- use of paper core is necessary for rewinding of paper if it is delivered to the customer in rolls and would come within the purview of the expression "any process incidental or ancillary to the completion of a manufactured product" used in the definition of the term "manufacture" in Section 2(f) of the Act and for the same reason paper core would also be constitutent part of paper and would thus fall within the term "component parts" used in the Notification insofar as manufacture of paper in rolls is concerned. Paper core, however, cannot be said to be used in the manufacture of paper in sheets as component part. We are conscious that the relevant tariff item uses the word "paper" but since paper in rolls and paper in sheets are nothing but different forms of paper, both of them would be excisable goods as paper under the relevant tariff item.
Appeal succeeds and is allowed to this extent that it is held that in the manufacture of paper rolls delivered to the customers for use as roll paper, paper core is used as component part.
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1989 (8) TMI 77
Whether for determining the assessable value of the excisable goods sold by the assessee in drums or containers provided by its customers the value of such drums/containers would also have to be included on a correct interpretation of charging sections, namely, Sections 3 and 4 of the Act?
Held that:- on the facts of this case, it is clear that the goods were not sold in drums generally in the course of the wholesale trade. There was evidence that 90% of the goods were delivered at the time of removal without being put in drums. There was no evidence that there was any necessity of packing or putting these in drums prior to their sale. It was not necessary that the articles were to be placed in drums for these to be able to generally to enter the stream of wholesale trade or to be marketable. On the other hand, there was evidence that in the wholesale trade, these goods were delivered directly in tankers and deliverable as such. But as a matter of fact, delivery in drums was only to facilitate their transport in small quantities. The manufacture of the goods was complete before these were placed in drums. The completely manufactured product was stored in tanks. From these tanks the goods were removed directly and placed in vehicles for their movement - for 90% of the sales, the vehicle of removal was tankers and 10% of the sales, the vehicle of removals was drums. In the premises, the value of the drums with regard to the fusel oil/styrene monomer irrespective of whether these were supplied by the assessee or not, are not includible in the assessable value of the Styrene Monomer.
Appeals have to be allowed and the orders of the Tribunal set aside. The Tribunal was in error in holding that as at the time of removal, goods were delivered from the factory in packed condition and the containers were not returnable to by the buyer, the value of the drums is to be included. It is reiterated that in order to be deliverable, it is not necessary that the goods should be delivered in packed condition and that the containers were not necessary to make the goods marketable.
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1989 (8) TMI 73
Whether Standing Order No. 3 framed under section 466(1)(A)(f) read with section 147 of the Bombay Provincial Corporations Act, 1949 as illegal and without the authority of law?
Held that:- So far as the authority of the Commissioner under section 466 of the Act is concerned and the manner in which the Standing Orders are framed, it is clear that the Commissioner had the authority and the Standing Orders have been framed in accordance with the procedure prescribed under section 466 and, therefore, on that count, the judgment of the High Court could not be sustained.
So far as the charging of supervision fees is concerned, it reasonably appears to be a charge for the services rendered, from the affidavit filed by the Officers of the appellant-Corporation and, therefore, the High Court was not right in coming to the conclusion that this fee was not justified as it is not established that it reasonably satisfies that it is in consideration of the services or privilege conferred on the transporter on goods in transit.
Therefore, the judgment of the High Court could not be sustained. The appeal is, therefore, allowed. The judgment of the High Court is set aside and it is held that Standing Order No. 3 passed by the appellant-Municipal Corporation is valid and enforceable.
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1989 (8) TMI 72
Whether starch hydrolysate was actually marketable?
Held that:- In view of the fact that there was positive evidence that starch hydrolysate was never marketed and in view of the further fact that, in the light of the nature of the goods being highly unstable, it is highly improbable that the goods were capable of being marketed and there being, in spite of opportunities, no evidence produced at all that the goods, in fact, were capable of being marketed, in our opinion, it must be held as did the Tribunal that the starch hydrolysate was not dutiable under the Act.
As the Revenue has failed to discharge its onus to prove that starch hydrolysate was dutiable. In the premises, the Tribunal cannot be said to have committed any error. The appeal must, therefore, fail and is, accordingly, dismissed.
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1989 (8) TMI 71
Whether penalty as provided in section 464 of the Act could be imposed by the terminal tax authority or it could not be imposed unless the appellant is convicted and found guilty by a competent Magistrate as contemplated in section 463 of the Act?
Held that:- It is no doubt true that, as regards the offences, a specific provision has been made in section 469 for appointment of a municipal Magistrate but, in respect of penalties, there is no specific provision authorising any officer or authority to exercise jurisdiction under the section where, for evasion of tax, penalty could be levied, like section 464 but it could not be doubted that section 59 gives a very wide power to the Municipal Commissioner either to exercise these powers himself or to delegate them. It is not in dispute that, in exercise of powers under section 59, the Municipal Commissioner had the authority and exercising the powers under section 491 of the Act by notification dated September 17, 1973, he delegated the functions under section 464 to the taxing authorities and it is the conclusion that the taxing authorities were competent under the scheme of this Act to impose the penalty to the tune of ten times of the tax which is payable.
The contention advanced by learned counsel for he appellant that the penalty under section 464 could not be imposed without a conviction by a criminal court is not sustainable in law. Appeal dismissed.
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1989 (8) TMI 70
Issues Involved:
1. Taxation of Rs. 4,72,742 received for surrender of import entitlements.
2. Addition of Rs. 43,000 to the book results of the Pondicherry Unit.
3. Disallowance of Rs. 4,498 loss on the sale of Government securities.
4. Refusal to entertain an additional ground for allowance of Rs. 45,930 on account of differential excise duty.
5. Levy of interest under section 18A(6).
6. Deduction of Rs. 1,63,609 as a trade liability.
Detailed Analysis:
Issue 1: Taxation of Rs. 4,72,742 Received for Surrender of Import Entitlements
The court addressed whether the sum of Rs. 4,72,742 received by the assessee for surrendering import entitlements under the Cotton Textile Export Incentive Scheme was rightly taxed as business income. The assessee argued that this amount was a capital receipt and not liable to tax. However, referencing a previous decision in CIT v. Swadeshi Cotton Mills Co. Ltd. [1980] 121 ITR 747, the court held that the amount was a revenue receipt, directly resulting from the business of manufacturing and exporting cloth and yarn. Thus, the court answered in favor of the Revenue, affirming that the amount was taxable as business income.
Issue 2: Addition of Rs. 43,000 to the Book Results of the Pondicherry Unit
The court examined the addition of Rs. 43,000 to the assessee's income due to discrepancies between the stock value declared to the bank and the actual stock held. The Tribunal upheld this addition based on similar discrepancies noted in the previous year, which had been affirmed by the court in Swadeshi Cotton Mills Co. Ltd. v. CIT [1980] 125 ITR 33. Consequently, the court answered in favor of the Revenue, validating the addition.
Issue 3: Disallowance of Rs. 4,498 Loss on the Sale of Government Securities
The assessee claimed a business loss of Rs. 4,498 on the sale of Government securities, which was disallowed as a capital loss. The court noted that the assessee was not a dealer in shares and securities and found no nexus between the loss and the business carried on. Citing Sir Shadilal Sugar and General Mills Ltd. v. CIT [1981] 132 ITR 666, the court held that the loss was not a business loss and answered in favor of the Revenue.
Issue 4: Refusal to Entertain an Additional Ground for Allowance of Rs. 45,930 on Account of Differential Excise Duty
The court considered whether the Tribunal erred in refusing to entertain an additional ground for the allowance of Rs. 45,930 on account of differential excise duty. The Tribunal had rejected this additional ground because it was not raised before the lower authorities. However, referencing CIT v. Nelliappan [1967] 66 ITR 722 (SC) and CIT v. Mahalakshmi Textile Mills Ltd. [1967] 66 ITR 710 (SC), the court held that the Tribunal has the discretion to allow new grounds in appropriate cases. The court found that the Tribunal erred in not allowing the additional ground and answered in favor of the assessee.
Issue 5: Levy of Interest under Section 18A(6)
The court deliberated on whether the Tribunal was justified in holding that no appeal lay against the interest charged under section 18A(6). The Tribunal's decision was supported by a Full Bench decision in CIT v. Geeta Ram Kali Ram [1980] 121 ITR 708. Consequently, the court answered in favor of the Revenue, affirming that no appeal was maintainable.
Issue 6: Deduction of Rs. 1,63,609 as a Trade Liability
The court reviewed whether the Tribunal was correct in allowing a deduction of Rs. 1,63,609 as a trade liability. The Tribunal had allowed this deduction, reducing the original claim of Rs. 1,80,000, which was disallowed by the Income-tax Officer on the grounds of it being a penalty and not relating to the year in dispute. Referencing Saraya Sugar Mills (P.) Ltd. v. CIT [1979] 116 ITR 387, the court held that damages paid for delayed provident fund contributions are not admissible deductions. Thus, the court answered in favor of the Revenue.
Conclusion:
- Question 1: In the affirmative, in favor of the Revenue.
- Question 2: In the negative, in favor of the Revenue.
- Question 3: In the affirmative, in favor of the Revenue.
- Question 4: In the affirmative, in favor of the assessee.
- Question 5: In the affirmative, in favor of the Revenue.
- Question 6: In the negative, in favor of the Revenue.
In view of the divided success, the parties are left to bear their own costs.
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1989 (8) TMI 69
Issues Involved:
The petitioner sought to quash demand notices charging interest under section 139(8) and section 217 of the Income-tax Act, 1961 for assessment years 1980-81, 1981-82, and 1982-83, contending that interest was not leviable due to being assessed under section 147 and absence of mention of interest in the assessment orders.
Analysis of Judgment:
Assessment under Section 147:
The petitioner was assessed under section 147 for the first time, as evident from the assessment orders passed under section 143(3) read with section 147 of the Act. The initiation of assessment proceedings through notices under section 148 was justified due to the petitioner not filing a voluntary return under sections 139(1) and 139(4) of the Act. The Karnataka High Court held that an assessment under section 147 is not a regular assessment, and in this case, the assessment under section 143(3) with section 147 cannot be considered regular.
Validity of Interest Charges:
The petitioner argued that interest under section 139(8) and section 217 is chargeable only for regular assessments, not under section 147. The absence of mention of interest in the assessment orders was highlighted to contest the legality of levying interest through demand notices. The court referred to precedents like Charles D' Souza v. CIT and CIT v. Ram Chandra Singh to support the petitioner's contentions.
Court's Decision:
The court found that the assessment under section 143(3) read with section 147 does not constitute a regular assessment, aligning with decisions from other High Courts. Consequently, the demand for interest under section 139(8) and section 217 was deemed unsustainable. The writ application was allowed, quashing the interest demands in the notices. A writ of mandamus was issued to prevent enforcement of the interest levies. Notably, the court did not award costs in this case.
Significance of Interest under Section 139(8):
The court emphasized that interest under section 139(8) serves as commercial compensation for delayed tax payment due to late filing of returns, citing relevant legal precedents like CIT v. Prayaglal Agarwala and Co. and Central Provinces Manganese Ore Co. Ltd. v. CIT. The court's decision to quash the interest demands was in line with the commercial nature of interest under section 139(8).
This comprehensive analysis of the judgment highlights the key legal arguments, court's reasoning, and the final decision regarding the quashing of interest demands under section 139(8) and section 217 for assessments under section 147.
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