1960 (2) TMI 3 - HC - Central Excise

Summary

Issues Involved:
1. Liability to pay excise duty.
2. Definition and identification of the "manufacturer."
3. Exemption entitlement under Appendix V.
4. Legality of the demand for excise duty.

Detailed Analysis:

1. Liability to Pay Excise Duty:
The petitioner, involved in the purchase and sale of groundnuts and groundnut oil, was called upon to pay excise duty amounting to Rs. 10,356.02 nP by the Central Excise authorities for the years 1956-57 and 1957-58. Despite initially consenting to pay the duty in installments, the petitioner later contested the liability, claiming he was not the manufacturer of the excisable goods. The court examined the provisions of the Central Excises and Salt Act, 1944, particularly Section 3 and Rule 7, which mandate that excise duty is payable on excisable goods produced or manufactured in India. The court concluded that the petitioner was liable to pay the excise duty as demanded.

2. Definition and Identification of the "Manufacturer":
The core contention was whether the petitioner could be considered the manufacturer of the oil extracted from his groundnuts. The petitioner argued that the actual manufacturers were the Mirza Oil Mills and Rameswara Oil Mills, where the groundnuts were crushed. However, the court noted that in his application for a license and request for installment payments, the petitioner had admitted to being the manufacturer. The court found that the petitioner had de facto control over the operations of the mills and that no evidence was presented to support the claim that the mills were paid for their services. The court held that the petitioner was indeed the manufacturer under the Act.

3. Exemption Entitlement Under Appendix V:
Appendix V of the Act provides certain exemptions from excise duty. The petitioner claimed that the mills were entitled to exemptions for the quantities of oil produced. However, the court pointed out that the petitioner had himself admitted in his communications that he was the manufacturer and was entitled to the exemptions. The court emphasized that exemptions are available to the manufacturer for the first 125 tons of oil produced in a given year, and since the petitioner was the manufacturer, he could not claim exemptions for each mill separately. The court rejected the petitioner's claim for additional exemptions.

4. Legality of the Demand for Excise Duty:
The petitioner argued that the demand for excise duty was unlawful as the oil had already been sold and was no longer in existence when the demand was made. The court referred to Rule 9, which stipulates that excise duty must be paid before the removal of goods from the manufacturing premises but also allows for the collection of duty even after the removal of goods. The court cited the Federal Court's decision in Province of Madras v. Boddu Paidanna and Sons, which upheld the imposition of excise duty irrespective of the subsequent disposition of the goods. The court concluded that the demand for excise duty was lawful and within the authority of the Central Excise Department.

Conclusion:
The court dismissed the petition, affirming that the petitioner was liable to pay the excise duty as the manufacturer of the groundnut oil. The petitioner's admissions and lack of evidence to the contrary were pivotal in the court's decision. The exemptions claimed were not applicable beyond the specified limits, and the demand for excise duty was found to be lawful.