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1993 (9) TMI 130
Interpretation of Explanation VIII to Section 11 of the Code of Civil Procedure, as introduced by the Code of Civil Procedure (Amendment) Act, 1976
Held that:- In this case, when the right and interest of the respondent were questioned in his suit against `K' the validity of the settlement deed and the terms thereof were gone into. The Civil Court found that `K' acquired life-estate under the settlement deed executed by his wife conferring vested remainder in the respondent and on its basis the respondent was declared entitled to an injunction against `K' who was prohibited not only from committing acts of waste, but also from alienating the properties in favour of third parties. The later suit of injunction to which the appellant was a party also binds the appellant. Therefore, even the decree founded on equitable relief in which the issue was directly and substantially in issue and decided, and attained finality would operate as res judicata in a subsequent suit based on title where the same issue directly and substantially arises between the parties. The appellant is a person deriving title from `K' who was a party in the former suit is also hit by the doctrine of lis pendens under Section 52 of the Transfer of Property Act.
Accordingly, we hold that the view of the Calcutta High Court is not good law and contra view is upheld. The judgments and decree under Exs. A-2 to A-5 operate as res judicata against the appellant, who derives his title from `K'. The appeal is accordingly dismissed.
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1993 (9) TMI 129
Notice of demand served upon by the Central Excise Authorities to pay the duty specified therein questioned - Held that:- The notices issued to the Respondent prior to the filing of the Writ Petition did not speak of the Explanation aforesaid; they did not spell out their stand clearly; they referred to the notification as such - though the Respondent referred specifically to the Explanation in his letters. Be that as it may, it was appropriate that the true factual situation is ascertained first before pronouncing upon the questions of law. If the factual situation alleged by the authorities is true, it changes the entire complexion of the controversy. We are, therefore, constrained to set aside the judgment of the High Court on the said ground. The result is that the declaration made by the High Court with respect to the validity of the Explanation in the Exemption Notification aforesaid stands set aside. The demand notices issued to the Respondents are also quashed herewith. We make it clear that it shall be open to the authorities to issue fresh demands upon the persons liable to pay the duty after investigating the necessary facts and an adjudication according to law. If and when they do so, it is made clear, the question of limitation shall not be raised by the Respondent for the period of pendency of these proceedings. It is not necessary to go into the question of maintainability of the Writ Petition which was raised in the High Court with reference to the provisions of the 42nd Amendment Act, then in force.
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1993 (9) TMI 128
Issues:
1. Whether the petitioners are manufacturing pipes from bars and are liable to pay excise duty.
2. Can this question be determined in a writ petition?
Analysis:
The judgment revolves around the dispute between the petitioners and the respondents regarding the manufacturing process of pipes and the liability to pay excise duty. The petitioners claim they manufacture pipes from strips and flats, not bars, and are thus exempt from excise duty. On the other hand, the respondents argue that the petitioners use bars in the manufacturing process and are liable to pay excise duty. The central issue is whether the petitioners are using bars or strips/flats to manufacture pipes and if this determination can be made in a writ petition.
The petitioners, a private Limited Company, set up a unit for manufacturing conduit pipes using Hot Rolled Strips/flats purchased from mills. They claim to use strips/flats below 3 mm thickness and a width of 75-182 mm to produce conduit pipes through a welding process. The dispute arose when the excise department ordered the petitioners to obtain a license and pay excise duty, alleging the use of bars in the manufacturing process.
The respondents argue that the petitioners are not exempt from excise duty as they are using bars below 3 mm thickness, not strips/flats as claimed. The respondents rely on gate-passes showing the purchase of bars by the petitioners. The petitioners counter this by reiterating their manufacturing process using strips/flats and denying the use of bars.
The court delves into the legal framework of excise duty under the Central Excises and Salt Act, 1944, emphasizing the requirement for manufacturers of excisable goods to obtain a license. The court analyzes the relevant exemption notification and the conditions for claiming exemption based on the type of raw materials used in manufacturing.
The court concludes that the determination of whether the petitioners use bars or strips/flats in the manufacturing process cannot be decided in a writ petition. It highlights that such technical questions require expert examination and are beyond the scope of the court's jurisdiction under Article 226 of the Constitution. The court dismisses the petitions, stating that the appropriate authority must resolve the factual dispute, and the petitioners had an alternative remedy through an appeal, which they did not pursue.
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1993 (9) TMI 127
Issues Involved:
1. Validity of the assessment orders dated September 23, 1986.
2. Applicability of the MODVAT Scheme and the benefit of deemed credit.
3. Burden of proof regarding the type of input used.
4. Retrospective application of the order dated August 29, 1986.
5. Prematurity and maintainability of the writ petition.
Issue-wise Detailed Analysis:
1. Validity of the assessment orders dated September 23, 1986:
The appellants challenged the assessment orders dated September 23, 1986, which disallowed the credit claimed under the MODVAT Scheme and directed the deposit of significant amounts. The learned Single Judge set aside these orders, finding that the appellants were not given an opportunity to be heard, thus violating the principles of natural justice. This decision was upheld, emphasizing that the appellants should have pursued the matter before the appropriate authorities after the assessment orders were set aside.
2. Applicability of the MODVAT Scheme and the benefit of deemed credit:
The MODVAT Scheme, introduced in the Finance Bill, 1986, allowed manufacturers to claim credit for duty paid on inputs used in the manufacture of final products. The Central Government's order dated April 7, 1986, specified that certain inputs, including iron and steel, could be deemed to have paid duty without producing documents evidencing payment. The learned Single Judge held that this benefit was available from March 1, 1986, to August 28, 1986, and that the order was subject to three specified conditions. The judgment clarified that the scheme's primary intention was to avoid the "cascade effect" of paying duty on duty.
3. Burden of proof regarding the type of input used:
The learned Single Judge ruled that the initial burden of proof lies on the manufacturer to take a definite stand regarding the type of input used. The department could then accept or contest this claim. The appellants argued that once the scrap was shown to be purchased and lying in stock, they were entitled to deemed credit, and the burden should shift to the department. However, the judgment upheld that manufacturers must provide specific evidence of the type of input to claim the appropriate credit rate, as different rates applied to different inputs (e.g., Rs. 80 per tonne for iron scrap and Rs. 365 per tonne for steel scrap).
4. Retrospective application of the order dated August 29, 1986:
The order dated August 29, 1986, stated that no credit under MODVAT would be available for waste and scrap of steel exempt from excise duty or charged at a nil rate. The learned Single Judge held that this order was not retrospective and did not affect the benefits available under the order dated April 7, 1986, for the period from March 1, 1986, to August 28, 1986. This interpretation was affirmed, ensuring that the appellants could claim deemed credit for the specified period.
5. Prematurity and maintainability of the writ petition:
The respondents argued that the writ petition was premature since a show cause notice had been issued, and the appellants had an effective alternative remedy under the Act. The learned Single Judge rejected this preliminary objection, finding that the writ petition was neither premature nor incompetent. This decision was upheld, allowing the appellants to challenge the assessment orders directly in the High Court.
Conclusion:
The appeals were dismissed, affirming the learned Single Judge's findings. The appellants were required to take a definite stand regarding the type of input used and provide evidence to support their claims for deemed credit under the MODVAT Scheme. The judgment emphasized that the scheme was intended to avoid the cascade effect of duty on duty, not to unduly enrich the industry. The respondents were entitled to costs assessed at Rs. 3,000 per case.
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1993 (9) TMI 126
Issues Involved:
1. Whether an oral hearing should be given before deciding an application mentioned in the second proviso to Section 4-M of the Imports and Exports (Control) Act, 1947.
2. Whether the principles of natural justice necessitate an oral hearing in such cases.
Issue-wise Detailed Analysis:
1. Oral Hearing Requirement:
The core issue was whether an oral hearing is mandatory before deciding an application under the second proviso to Section 4-M of the Imports and Exports (Control) Act, 1947. The case was referred to a larger bench due to conflicting decisions by two Division Benches.
One Division Bench (S. Ranganathan and Sunanda Bhandare, JJ.) in C.W. P. 2820/87, held that there was no statutory requirement for an oral hearing before imposing a condition to furnish a bank guarantee. The petitioner's written applications were considered, and thus, there was no failure of natural justice.
Another Division Bench (B.N. Kirpal and C.L. Chaudhary, JJ.) took a different view, emphasizing that an oral hearing should be provided before deciding such applications. They noted that the decision on the application has serious consequences on the final outcome of the main appeal, and principles of natural justice would require an oral hearing.
2. Principles of Natural Justice:
The larger bench delved into the principle of "audi alteram partem" (hear the other side), which is fundamental to natural justice. Various judgments from the Supreme Court and High Courts were cited to support the contention that a reasonable opportunity to present one's case is essential.
Key cases referenced include:
- Shri Mandir Sita Ramji v. Lt. Governor of Delhi and Others: Emphasized the duty to afford an opportunity of being heard before deciding objections.
- S.L. Kapoor v. Jagmohan and Others: Stressed that the absence of an express provision for a hearing does not imply its exclusion.
- Mohinder Singh Gill and Another v. The Chief Election Commissioner, New Delhi and Others: Highlighted the pervasive nature of natural justice in administrative and adjudicative actions.
- Ridge v. Baldwin: Asserted that good administration demands fair play in action.
- Shivraj Fine Art Litho Works v. Assistant Collector, Central Excise: Held that dismissing an application for waiving pre-deposit without a hearing violates natural justice.
- Smart P. Ltd. v. Income-Tax Appellate Tribunal: Affirmed that principles of natural justice apply even where a hearing is not specifically provided.
- Union of India v. Jyoti Prakash Mitter: Indicated that normally, an opportunity for an oral hearing should be given.
Conclusion:
The larger bench concluded that as far as possible, oral hearings must be given to the concerned parties. The decision on the pre-deposit application is crucial as it affects the petitioner's substantive statutory right of appeal. Therefore, the petitioner should be given an oral hearing to demonstrate their prima facie case and financial hardship. The principle of "audi alteram partem" should be given its true meaning, and this principle can be properly implemented if oral hearings in such cases are provided.
Judgment:
The larger bench overruled the decision in Amrutlal Ganpatrai Panchal's case, holding that oral hearings must be given before deciding applications under the second proviso to Section 4-M of the Act. The petitions were allowed, the impugned order was quashed, and the petitioners were directed to appear before the concerned authority for an oral hearing. There was no order as to costs.
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1993 (9) TMI 125
Issues:
1. Interpretation of customs duty and countervailing duty on imported goods.
2. Application of Exemption Notification No. 69 dated June 15, 1968.
3. Validity of countervailing duty levy under Entry/Item 15A.
4. Consideration of Public Notice No. 85 dated March 20, 1972 in customs proceedings.
5. Discretion of authorities in permitting alternate pleas during customs proceedings.
Detailed Analysis:
1. The appellant, a manufacturer of Gramophone records, imported Poly Vinyl Chloride (P.V.C.) L.P. Biscuit material from Yugoslavia, treated as modified resins by customs authorities. Customs duty at 100% and countervailing duty of Rs. 94,274.35 were levied under relevant tariff entries. The appellant contended the imported material was pure resins, not modified, and sought a 50% duty rebate under Exemption Notification No. 69 dated June 15, 1968.
2. Exemption Notification No. 69 dated June 15, 1968, granted a 50% duty exemption on resins imported from U.A.R. or Yugoslavia. The dispute arose from the classification of the imported material as modified resins under Item 82(3) of the Indian Customs Tariff. The Revenue's stance was that the material was indeed modified resins, a view upheld in revision.
3. The appellant's counsel argued that if the imported material was not resins but modified resins, countervailing duty levy under Entry/Item 15A was impermissible. Reference was made to Public Notice No. 85 dated March 20, 1972, stating that additional duty is not applicable to modified resins falling outside the specified category under Item 15A(1)(ii) of the Central Excise Tariff.
4. The appellant contended that the Government erred in denying the benefit of Public Notice No. 85 and levying both customs duty and countervailing duty. However, the appellate authority and the Government were found to have not acted arbitrarily in rejecting the appellant's plea based on a notice issued after the import period. The appellant's failure to raise the alternate plea earlier was considered, and the appeal was dismissed with no costs.
5. The judgment clarified that the appellant could raise the alternate plea before appropriate authorities if advised to do so. Additionally, it was noted that the appellant had also filed a writ petition (No. 584 of 1974) on the same subject matter, with further proceedings scheduled for a later date.
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1993 (9) TMI 124
Detention certificate - Issue of Demurrage charges - Held that:- So far as this case is concerned, we direct that the detention certificate should be issued without reference to para 4 of the said public notice or any similar public notice. Since the Respondents will not be absolved of the obligation to pay the demurrage charges altogether by reason of the detention certificate the Trustees of the Port of Bombay, (Respondent No. 2) are directed to consider sympathetically the request of the respondent No. 1 [M/s. Krishna Sales (P.) Ltd., Delhi] for waiver of these demurrage charges.
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1993 (9) TMI 123
Issues:
1. Whether the criminal proceedings against the petitioners should be quashed based on the exoneration in departmental adjudication proceedings.
Detailed Analysis:
The judgment involves two petitions arising from the same facts, where the petitioners were implicated in a case involving smuggling activities. The Customs officers intercepted an auto rickshaw carrying goods of foreign origin, leading to subsequent searches at various premises. The petitioners were accused based on statements and recoveries made during the investigation. Departmental proceedings resulted in the exoneration of the petitioners, with penalties imposed on them being set aside by the Tribunal. However, criminal complaints were filed against them under relevant sections of the Customs Act, leading to the current request for quashing of the proceedings.
The main contention raised by the petitioners was that continuing the prosecution against them, despite being exonerated in the departmental adjudication proceedings, would amount to an abuse of the legal process. Their argument was supported by citing previous court decisions that deemed prosecution on the same set of facts and evidence as improper and unjust when the appellate authority had found the accused innocent. The petitioners argued that the orders of the Tribunal had exonerated them completely, and therefore, the criminal proceedings should be quashed to prevent misuse of the legal process.
On the other hand, the department's counsel argued that the framing of charges had already taken place, and the appropriate remedy for the petitioners was to challenge the charge under the relevant legal provisions. The department contended that departmental adjudication and criminal prosecution were distinct proceedings that could run simultaneously, emphasizing the procedural differences in recording evidence. The department's stance was that exoneration in one proceeding did not guarantee acquittal in the other.
The judgment referenced previous cases where similar issues had been addressed. In one case, the court had ordered the quashing of criminal proceedings after the petitioner was exonerated in departmental adjudication. Another case highlighted that requiring the petitioners to seek remedies under a different provision would be a mockery of justice. Ultimately, the court found that the petitioners had been exonerated by the Tribunal in the departmental proceedings, and the penalties imposed had been set aside, leading to the decision to quash the criminal proceedings against them under Section 482 of the Criminal Procedure Code. The court relied on legal precedents and deemed it a suitable case for exercising its power to quash the criminal proceedings against the petitioners based on their exoneration in the departmental adjudication process.
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1993 (9) TMI 122
Issues:
1. Confiscation of gold items under the Gold (Control) Act, 1968.
2. Delay in disposal of appeal.
3. Allegations of intentional evasion of receipt of registered notice.
4. Compliance with Section 153 of the Customs Act, 1962 for service of order.
5. Validity of notice sent by registered post.
6. Petitioner's request to redeem gold ornaments on payment of fine.
Analysis:
1. The petitioner's father, a licensed gold dealer, had certain gold items confiscated under the Gold (Control) Act, 1968. The petitioner, conducting the business, received Ext. P-1 order confiscating the seized gold items with an option to redeem the gold ornaments on payment of a fine of Rs. 5000 within three months.
2. The petitioner filed an appeal, alleging an 8-year delay in disposal. Despite expressing readiness to pay the fine, the appeal was rejected via Ext. P-6 order. The petitioner claimed non-receipt of the registered notice informing him of the appeal's rejection, hindering his ability to pay the fine within the stipulated period.
3. The respondent argued that a registered notice was sent to the petitioner, but he intentionally evaded receipt. The contention was that the petitioner should have paid the fine within three months of Ext. P-6 order, and his alleged evasion precluded him from claiming readiness to redeem the gold ornaments.
4. The compliance with Section 153 of the Customs Act, 1962 for service of orders was crucial. The provision mandates service through registered post or affixing on the customs house notice board. The respondents contended that displaying Ext. P-6 order on the notice board sufficed, but the petitioner disputed this interpretation.
5. The notice sent by registered post was analyzed, showing no mistake in the address. However, the petitioner's non-receipt was attributed to an "not known" endorsement, raising doubts about the adequacy of service. The petitioner's argument that he only knew of Ext. P-6 order through a different communication was considered valid.
6. Given the lack of compliance with Section 153 and uncertainties regarding notice delivery, the petitioner's request to redeem the gold ornaments on payment of the fine was upheld. The court directed the respondents to allow redemption upon payment of the specified amount, thereby granting relief to the petitioner.
Conclusion:
The court allowed the original petition, permitting the petitioner to redeem the confiscated gold ornaments upon payment of the redemption fine. The judgment highlighted the importance of proper service of orders and upheld the petitioner's claim based on the lack of notification and compliance with legal procedures.
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1993 (9) TMI 121
The High Court of Judicature at Allahabad heard a case involving a petitioner with an L-4 license for manufacturing Duplex Board. The Central Excise authorities seized records from the petitioner's factory and issued a show cause notice. The Collector confirmed a central excise demand of Rs. 22,67,723 and imposed a penalty of Rs. 50 lakhs. The petitioner appealed to the Customs, Excise and Gold Appellate Tribunal, which reduced the duty to Rs. 12,00,000 and penalty to Rs. 5,00,000. The High Court rejected the petitioner's contention that the Tribunal did not consider financial hardship, stating that the Tribunal had reduced the amounts based on financial considerations. The High Court refused to interfere with the Tribunal's decision as it was an interlocutory order and the appeal was still pending.
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1993 (9) TMI 120
Issues: Provisional assessment of imported goods, dispute over classification of ball bearings, detention of goods by customs authorities, release of goods to the petitioner.
Provisional Assessment of Imported Goods: The petitioner imported ball bearings from China and submitted the bill of entry for processing to the Customs Authorities. An order was passed for provisional assessment with additional duty. Subsequently, the officer ordered the opening of 5% cases for inspection to verify the classification of the goods. Samples were drawn, and it was noted that the party failed to produce a catalogue initially. Later, a catalogue was produced, and the bill of entry was assessed based on the order of the Additional Collector.
Dispute Over Classification of Ball Bearings: The petitioner contended that the imported ball bearings were not deep groove ball bearings, which attract higher customs duty. The petitioner presented various catalogues to support this claim. The court acknowledged the confusion regarding the classification but emphasized that the provisional assessment order was made in accordance with the order of the Additional Collector.
Detention of Goods by Customs Authorities: Despite the provisional assessment indicating that the imported goods were not deep groove ball bearings, the respondent authorities detained the goods. The court held that while the authorities could initiate proceedings for misdescription, they were not justified in detaining the goods based on the order of 25th August, 1993. The court directed the authorities to release the ball bearings to the petitioner upon furnishing specified security.
Release of Goods to the Petitioner: The court disposed of the writ application by ordering the release of the goods to the petitioner in accordance with the order dated 25th August, 1993. The release was subject to the petitioner furnishing the required security. The court clarified that the release order did not prevent the authorities from initiating adjudication proceedings or final assessment of the petitioner's case on its merits. No affidavit in opposition was filed, and the court recorded that the allegations in the petition were not admitted. All parties were directed to act on the signed copy of the order.
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1993 (9) TMI 119
Issues Involved:
1. Compliance with EPCG Scheme conditions.
2. Interpretation of bank guarantee requirements.
3. Applicability of Notification No. 160 of 1992.
4. Time limit for executing bank guarantee and legal undertaking.
5. Potential prejudice to revenue.
Issue-wise Detailed Analysis:
1. Compliance with EPCG Scheme conditions:
The petitioners, owners of a Textile Mill, applied for a licence under the EPCG Scheme to import capital goods at a concessional duty rate of 15% instead of 50%. The licence was issued on 17-1-1992, covering specific machinery. The petitioners faced issues with the bank guarantee and legal undertaking requirements, as outlined in the respondents' letter dated 13-5-1993. The respondents argued that the petitioners had not fulfilled the conditions of the EPCG Scheme, specifically the execution of a bond and bank guarantee within six months from the date of the licence.
2. Interpretation of bank guarantee requirements:
The petitioners contended that the bank guarantee requirement should be based on the actual duty saved on the imported goods rather than the Face Value of the licence. They argued that the duty incidence is only on the goods actually imported, and thus, the bank guarantee should correspond to the duty saved on those goods alone. The court agreed with this interpretation, emphasizing that the scheme's objective is to incentivize exports and not to impose undue burdens on importers.
3. Applicability of Notification No. 160 of 1992:
The respondents cited several judgments to argue that the petitioners had not complied with the conditions for concessional duty under the notification. However, the court distinguished these cases, noting that the petitioners had, in fact, complied with the relevant conditions. The court emphasized that once the notification applies, it should be interpreted liberally in favor of the petitioners, aligning with the scheme's objective to promote exports.
4. Time limit for executing bank guarantee and legal undertaking:
The petitioners missed the six-month deadline for executing the bank guarantee and legal undertaking, as stipulated in Clause 102 of the Handbook of Procedures. The court acknowledged this delay but noted that the entire scheme is based on a time schedule, with an overall export obligation period of five years. The court permitted the clearance of the goods, subject to the petitioners applying for a modification of the licence conditions regarding the six-month period.
5. Potential prejudice to revenue:
The court considered whether the respondents would suffer any prejudice if the goods were cleared based on the petitioners' interpretation. It concluded that there would be no prejudice, as the petitioners were willing to satisfy all conditions for the imported goods. The court noted that the respondents had the power to assess the correct value of the imported goods and demand the appropriate bank guarantee, ensuring no loss to revenue.
Conclusion:
The court allowed the writ petition, permitting the clearance of the goods on the execution of a bank guarantee for 50% of the duty saved on the imported items alone. The petitioners were also required to execute a legal undertaking for the entire Face Value of the licence and seek an amendment of the licence conditions regarding the six-month period for furnishing the bank guarantee. The court emphasized the need for a liberal interpretation of the EPCG Scheme to promote exports, aligning with the scheme's objective. No order as to costs was made.
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1993 (9) TMI 118
Issues:
1. Wrongful refusal of Customs Authorities to release goods without bank guarantees.
2. Interpretation of import policies and regulations.
3. Validity of demands for bank guarantees under Customs Act.
4. Timeliness of adjudication proceedings and release of goods.
5. Execution of bond and bank guarantee by petitioner.
6. Customs Authorities' obligation to complete assessment proceedings promptly.
Detailed Analysis:
1. The petitioner imported umbrella panels and faced refusal by Customs Authorities to release two consignments without bank guarantees, despite releasing ten consignments earlier. The petitioner contended that goods should have been released unconditionally, citing the earlier policy under which the contract was made and the lack of publication of subsequent policy amendments. The petitioner argued that no adjudication proceedings were initiated within the required timeframe for seizure under the Customs Act.
2. The respondents argued that the policy was amended to restrict the import of umbrella panels, justifying the demand for bank guarantees under Customs Act provisions. They also claimed that the relevant date for importability determination was the date of actual import, not the contract date. The court noted the necessity for Customs Authorities to address these issues in proper proceedings.
3. The court found that the petitioner's arguments were not persuasive. It highlighted a Supreme Court decision indicating that the relevant date for importability assessment was the date of actual import, not the contract date. The court also clarified the amendment to the import policy regarding umbrella panels and consumer goods, emphasizing the need for Customs Authorities to address the issues raised by the petitioner in formal proceedings.
4. Regarding the timeliness of adjudication proceedings and seizure of goods, the court ruled that the mere refusal to release goods did not constitute a seizure. The petitioner's delay in challenging the provisional assessment and acceptance of the bond and bank guarantee were deemed as acquiescence to the terms set by the Customs Authorities.
5. Despite rejecting the petitioner's submissions, the court directed Customs Authorities to complete assessment proceedings promptly within 8 weeks. Failure to do so would result in the cancellation of the bond and return of the bank guarantee to the petitioner. The court emphasized that this order did not limit adjudication proceedings, allowing them to continue beyond the specified time frame.
6. The judgment concluded without imposing any costs on the parties involved, emphasizing compliance with the directives provided. The court's decision aimed to ensure timely completion of assessment proceedings by Customs Authorities while safeguarding the petitioner's rights regarding the bond and bank guarantee.
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1993 (9) TMI 117
The High Court of Judicature at Madras directed the petitioner to deposit Rs. 7,00,000/- as a condition for staying the demand for payment of penalty. The Tribunal had initially asked for Rs. 20,00,000/-, but the High Court modified the amount to Rs. 7,00,000/- considering the petitioner's inability to pay the balance. The appeal was directed to be disposed of one way or the other, and there were no costs ordered.
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1993 (9) TMI 116
Issues Involved:
1. Validity of the show cause notice dated 29-5-1992.
2. Invocation of the extended period of limitation under the proviso to Section 11A(1) of the Central Excises and Salt Act, 1944.
3. Alleged contravention of various Central Excise Rules by the petitioners.
4. Alleged suppression of facts and evasion of excise duty.
5. Jurisdiction of the Collector of Central Excise to issue the show cause notice.
6. Requirement of following Chapter X procedure of the Central Excise Rules, 1944.
7. Admissibility and relevance of evidence and records.
8. Preliminary stage of quashing the show cause notice.
Issue-wise Detailed Analysis:
1. Validity of the Show Cause Notice Dated 29-5-1992:
The petitioners challenged the validity of the show cause notice issued by the Collector of Central Excise, Raipur, alleging that it was based on false premises and fabricated charges. The notice related to the period from 1-4-1987 to 31-3-1992 and included allegations against two units, M/s. Satna Cement Works and M/s. Birla Vikas Cement, both belonging to M/s. Birla Jute and Industries Ltd. The petitioners argued that the notice was baseless as the excise authorities had full knowledge of the operations and storage practices of the petitioners, and the daily production reports had been regularly scrutinized and found correct.
2. Invocation of the Extended Period of Limitation:
The petitioners contended that the extended period of limitation under the proviso to Section 11A(1) of the Central Excises and Salt Act, 1944, could not be invoked as there was no fraud, collusion, willful misstatement, or suppression of facts. They argued that the excise authorities had accepted their daily production reports and annual stock taking reports, which had been duly checked and verified. The respondents, however, argued that there was deliberate evasion of excise duty by suppression of material facts, justifying the invocation of the extended period of limitation.
3. Alleged Contravention of Various Central Excise Rules:
The show cause notice alleged that the petitioners had contravened several Central Excise Rules, including Rules 9(1), 52A, 53, 54, 173F, 173G(4) & (5), 174, and Rule 226. The allegations included the removal of cement clinker without payment of duty, failure to issue gate passes, and non-accounting of the receipt and removal of cement clinker and cement in the daily stock register. The petitioners denied these allegations, asserting that all operations were conducted with the knowledge and approval of the excise authorities.
4. Alleged Suppression of Facts and Evasion of Excise Duty:
The respondents alleged that the petitioners had willfully suppressed facts and evaded excise duty by not accounting for the quantities of cement clinker and cement removed from one factory to another. The petitioners argued that the shifting of clinker between the units was done due to space constraints and with the knowledge of the excise authorities. They maintained that there was no suppression of facts or evasion of duty.
5. Jurisdiction of the Collector of Central Excise to Issue the Show Cause Notice:
The petitioners questioned the jurisdiction of the Collector of Central Excise to issue the show cause notice, arguing that the excise authorities had no basis to invoke the extended period of limitation. The court, however, held that the Collector of Central Excise had the authority to issue the notice if there was an intention to evade payment of duty as stated in the proviso to Section 11A.
6. Requirement of Following Chapter X Procedure of the Central Excise Rules, 1944:
The respondents argued that the petitioners had not followed the procedure set out in Chapter X of the Central Excise Rules, 1944, for the transportation of clinker between the units, which was a requirement for claiming exemption from payment of excise duty. The petitioners contended that such procedures were not applicable for the period when the units had a common L-4 license and that the shifting of clinker was for captive consumption within the same premises.
7. Admissibility and Relevance of Evidence and Records:
The court noted that the excise authorities had issued the show cause notice based on the records of the company, including statements from company officers and private records not produced before the excise authorities. The court held that the excise authorities were justified in making investigations and inquiries based on these records to determine whether there was deliberate evasion of excise duty.
8. Preliminary Stage of Quashing the Show Cause Notice:
The court emphasized that it was not advisable or necessary to determine questions of fact at this preliminary stage. The court's role was to ensure that there was material on record justifying the initiation of proceedings and that the proceedings were not merely to harass the petitioners. The court concluded that the petitioners should submit their reply to the show cause notice, and the matter should be adjudicated by the Collector of Central Excise.
Conclusion:
The petition was dismissed with costs, and the petitioners were directed to submit their reply to the show cause notice to the respondent. The court found that there was sufficient material on record to justify the issuance of the show cause notice and the initiation of proceedings by the excise authorities.
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1993 (9) TMI 115
The High Court set aside the CEGAT's order and directed the appeal to be heard without the deposit condition of Rs. 10 lacs, with a deadline of two months for disposal. Compliance report due on 22-7-1993.
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1993 (9) TMI 114
Issues:
1. Allegation of clearing dutiable goods in the guise of non-dutiable goods.
2. Determination of duty liability based on quantity of goods produced.
3. Prima facie case and assessment based on probabilities.
4. Financial position of the petitioners' Company and waiver of pre-deposit.
5. Impact of deposit amount on the opportunity to have the appeal heard on merits.
Detailed Analysis:
1. The case involved the petitioners being charged for clearing dutiable goods like eye-brow pencils as non-dutiable items. The first respondent issued a Show Cause Notice based on certain inspections, leading to a demand for duty, redemption fine, and penalties. The Tribunal directed the petitioners to deposit a significant sum for hearing the appeals, failing which the appeal would be dismissed. The writ petition sought to quash this order, leading to the matter being taken up for final disposal by consent of parties.
2. The determination of duty liability was a key issue, with discrepancies in the quantity of "Eye-brow" pencils produced and cleared from the factory. The Tribunal considered the arguments on merits, noting the complexity of the case involving multiple facts and points of law. The Tribunal was not convinced of a strong prima facie case in favor of the petitioners, leading to a detailed analysis of the quantity of goods produced and the duty liability calculated by the first respondent.
3. The concept of a prima facie case was discussed, emphasizing the need for evidence supporting the charge, especially in cases of large-scale irregularities. The assessment based on probabilities was deemed necessary in cases of committed irregularities, even if not mathematically precise. The argument challenging the assessment's correctness was not fully accepted in light of the circumstances.
4. The financial position of the petitioners' Company was considered, acknowledging their profit-making status but highlighting liquidity challenges. The Tribunal applied a previous judgment and directed a partial payment as a condition for waiving the pre-deposit. The court assessed whether undue hardship would result from depositing the entire amount, balancing the interests of the petitioner and the revenue.
5. The impact of the deposit amount on the opportunity to have the appeal heard on merits was a significant concern. It was noted that a substantial deposit could practically deny the opportunity for a fair hearing. Balancing the practical challenges faced by the petitioners, the court modified the deposit amount to Rs. 30,00,000 in two installments, ensuring a balance between the interests of both parties. The writ petition was disposed of on merits, considering all circumstances comprehensively.
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1993 (9) TMI 113
Issues:
1. Whether waxing of plain/printed base paper can be considered a manufacturing process for the purpose of Excise Duty under Tariff Item No. 17(2) of the Central Excises and Salt Act, 1944.
Analysis:
The judgment by the High Court of Judicature at Madras involved two separate actions against common respondents, with the same point of consideration. The petitioners were M/s. Paper Products Ltd. (PPL) and M/s. Flexo Pack (FP). PPL, a limited company, and FP, a partnership firm, were both involved in processing and supplying wax papers to customers, attracting excise duty under Tariff Item No. 17(2) of the Act. They filed refund claims for the excise duty paid on printed and imprinted wax paper, which were rejected by the Assistant Collector of Central Excise and the Appellate Collector of Central Excise, leading to the writ petitions seeking quashing of the orders and refund of the excise duty.
The main issue for consideration was whether waxing of plain/printed base paper, subjected to excise duty under Tariff Item No. 17(2), could be deemed a manufacturing process, making the wax paper a distinct product liable to excise duty again under the same tariff. The court referred to previous Supreme Court decisions in Laminated Packings (P) Ltd. v. Collector of Central Excise and Union of India v. Babubhai Nylchand Mehta, where it was held that certain processes resulted in the creation of new goods liable to excise duty under the same tariff.
The court applied the principles established in the cited Supreme Court cases to the current situation and concluded that waxing of plain/printed base paper indeed constituted a manufacturing process, creating a new product (wax paper) subject to excise duty under Tariff Item 17(2). Therefore, the court dismissed both writ petitions, ruling that the petitioners were liable to pay excise duty on the wax paper. The Rule Nisi issued was discharged, and no costs were awarded in the circumstances.
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1993 (9) TMI 112
The petitioners challenged notices issued without specifying the purpose of the enquiry. The court directed the respondents to determine if the goods are excisable before assessing duty evasion. The petition was disposed of with no costs.
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1993 (9) TMI 111
Issues:
1. Whether the order passed by the 1st respondent under Section 129E of the Customs Act, 1962, should be stayed or not.
Analysis:
The High Court of Judicature at Madras considered the issue of whether the order passed by the 1st respondent, directing the petitioners to pre-deposit certain amounts towards penalty, should be stayed. The petitioners had appealed against the penalty imposed by the 2nd respondent under Section 112(a) of the Customs Act, 1962, and had filed applications for waiver of the pre-deposit. The court noted that under the Proviso to Section 129(E) of the Customs Act, the Collector (Appeals) or the Appellate Tribunal could dispense with the deposit of duty demand or penalty if it would cause undue hardship to the appellant, subject to certain conditions to safeguard the Revenue's interest.
The court observed that the 1st respondent had directed the petitioners to provide financial statements and details of amounts realized from the goods in question, but the petitioners failed to do so. The court also considered the petitioners' prima facie case and found that the goods were liable for confiscation, and the redemption fines/penalties were not excessive. The court concluded that the 1st respondent's order was reasoned and speaking, and it was not appropriate for the court to interfere with the discretionary interlocutory order under Article 226 of the Constitution based on the materials presented.
Furthermore, the court addressed the argument made by the learned Addl. Central Govt. Standing Counsel regarding further investigation revealing under-valuation and fabrication of documents, strengthening the case in favor of the Revenue. The court also highlighted that the petitioners had obtained orders for release of goods before adjudication proceedings, and penalties were imposed post-adjudication. The court affirmed that the 1st respondent had properly exercised its jurisdiction under Section 129E of the Customs Act, and no interference was warranted.
Additionally, the court discussed precedents cited by the petitioners, emphasizing that they did not support their case. The court differentiated the facts of various judgments and concluded that the orders impugned were not perverse, arbitrary, or mala fide. It noted that the 1st respondent had considered all aspects and that the petitioners failed to provide necessary financial information. The court dismissed the Writ Miscellaneous Petitions, extending the time for pre-deposit by two months from the judgment date.
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