2003 (6) TMI 26 - HC - Central Excise

Demand/Recovery - Duty liability - short-levy of the excise duty - recovery of the dues once - manufacturer or the warehouse keeper or the purchaser - HELD THAT - We have to ascribe meaning to the person, taking into account the broad concept as well. This is case of short-levy of duty. The proceedings can be continued against the manufacturer if he had moved the products paying the duty less than what is liable under the Act. Obviously he has to pay the balance duty as well, if there was a short-levy. This demand has to be met, if it remains unpaid by the legal representatives even after the death of their predecessor-in-interest. This is a case where the short-levy has been noticed during the life of their predecessor. Suppose there had been a case of excess levy from the predecessor-in-interest. If the argument advanced by the learned Counsel for the writ petitioners is accepted, it will lead to a situation that the legal representatives of a manufacturer who had paid more duty, than is necessarily payable under the Act will be disabled to claim excess amount paid by their predecessor. The law will not create such an anomalous position. Therefore the liability as well as entitlement has to be viewed in the same angle with reference to the death of the predecessor-in-interest. There is another moral principle behind it as well. If the manufacturer concerned had become unlawfully enriched, because of non-payment of Excise duty or short-levy of excise duty due to some mistake on the part of the Taxing Officer, that enrichment, after his death falls upon his legal representatives, in this case, the writ petitioners. The law will not permit unlawful enrichment. Such interpretation does not in any way militate against any provision at all. Accordingly, we set aside the judgment and hold that the proceedings as per Ext. P4 shall be proceeded with.

Summary

Issues Involved:
The issues involved in this case are whether proceedings under Section 11A of the Central Excises and Salt Act, 1944 can be continued against the legal representatives of a deceased person and whether the liability for short-levy of excise duty extends to the legal heirs.

Judgment Summary:

Issue 1: Jurisdiction to Proceed Against Legal Representatives
The Collector of Central Excise and Customs appealed against a judgment quashing proceedings against the legal representatives of a deceased person. The appellant argued that Section 11A enables proceedings against any person chargeable with duty, including legal representatives. The Court held that Section 11A allows for such proceedings, even after the death of the person concerned, to recover short-levied duty.

Issue 2: Interpretation of Taxing Statute
The writ petitioners contended that a taxing statute must be construed strictly, and the duty is leviable on the manufacturer. The Court examined relevant provisions and held that proceedings under Section 11A can be initiated against the manufacturer or purchaser, as indicated in the rules. Citing precedents, the Court rejected the argument that proceedings cannot continue against legal representatives.

Issue 3: Application of Precedents
The Court analyzed precedents related to tax statutes, emphasizing the specific language and intent of the Central Excises and Salt Act, 1944. It distinguished cases under other Acts and highlighted that Section 11A empowers proceedings against the person chargeable with duty, allowing for continuation against legal representatives.

Conclusion
The Court concluded that the power under Section 11A can be exercised against legal representatives for short-levy of duty, ensuring that liabilities and entitlements are maintained even after the death of the predecessor. Upholding the appeal, the Court set aside the previous judgment and allowed the proceedings to proceed against the legal representatives.