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TMI Blog1965 (11) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed the petitioner that they did not consider it necessary to grant a personal hearing at the revision stage and further intimated that if the petitioner had any further submissions to make they may be sent in writing. Thereafter, on the 21st December, 1961, (Annexure III), the Central Government rejected the revision application. 2.By the Finance Act, 1961, the following new item, item 33A was inserted in the First Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as "the Act"); "Item No., Description of Goods Rate of duty 33A Wireless Receiving Sets all sorts including Transistor Sets and Radiograms, with or without loud-speaker, 20 percent ad valorem." Though the Finance Act came into effect only from the 1st April, 1961, in respect of several items, nevertheless by virtue of the declaration under the Provisional Collection of Taxes Act, 1931, made in the Bill itself, the aforesaid insertion of Item 33A in Schedule I of the Act came into effect from the midnight of the 28th February - 1st March, 1961. Hence excise duty at the rate mentioned above would be payable in respect of wireless sets whose manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set forth in the First Schedule. We may leave out of consideration goods which are produced, because in the present case we are concerned only with goods which are manufactured, with a view to remove any ambiguity that may arise as to the precise stage when the manufacture of certain class of goods may be said to have been completed, the definition Clause (f) of Section 2 was specially inserted in the Act in the following terms, namely, "manufacture" includes any process incidental or ancillary to the completion of a manufactured product. From this definition it may be fairly inferred that the stage of completion of a manufactured produce is not reached until all the processes incidental or ancillary have also been completed. The rate of excise duty was mostly on the ad valorem basis and hence Section 4 laid down the principles to be followed in calculating the value of an article. Clause (a) of that section stated that the wholesale cash price for which an article of the like kind and quality is sold or is capable of being sold at the time of the removal of the article chargeable with duty shall be the value of the article. If such wholesale market does not exist for such article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... became a small one of forty sections only. But the legislature took care to retain some sort of control over the rule-making power conferred on the Central Government by Section 38 of the Act which is as follows : "38. All rules made and notifications issued under this Act shall be made and issued by publication in the Official Gazette. All such rules and notifications shall thereupon have effect as if enacted in this Act ; Provided that every such rule shall be laid as soon as may be after it is made before Parliament while it is in session, for a total period of thirty days which may be comprised in one session or in two or more sessions, and if the expiry of that period, Parliament makes any modification in the rule or directs that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be." 4.Turning to the relevant rules, I may refer to Rule 9 which prohibits the removal of any excisable goods from the place at which it is manufactured until the excise duty leviable thereon has been paid in the manner provided in the rules. Provision, was however, made for storing in an approved warehouse the good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 says that every appeal or application for revision shall be accompanied by a copy of the decision or order by which the party is aggrieved. 5.The main contentions of Mr. Lal Narain Sinha on behalf of the petitioner may now be summed up : (1) The provision of the machinery for assessment and collection of excise duty was essentially a legislative function, and the Legislature has abdicated this function by leaving it entirely to the rule-making power of the Central Government, without giving any guidance in the Act, he used the word "assessment" in its comprehensive sense, as including the whole procedure for imposing liability upon the tax-payer as pointed out by the Privy Counsel in Commissioner of Income-tax, Bombay v. Khemchand Ramdas -[(1938) 65 Ind. App. 236 at P. 247 (A.I.R. 1938 P.C. 175 at p. 179)]. (2) The rules have been so framed as to practically deny the assessees a reasonable opportunity of being heard whenever there is a dispute about the amount of duty payable and hence the rules impose an unnecessary and unreasonable restriction on freedom of trade and thus offend Article 19(1)(g) of the Constitution and are not saved by Clause (6) of that Article. (3) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cised arbitrarily or capriciously. Moreover, by conferring extensive power to summon witnesses to give evidence and to produce documents, Section 14 of the Act, officers perform quasi-judicial functions. 8.Apart from thus giving some guidance as aforesaid, the legislature took special care in the proviso to Section 38 of the Act to require that all the rules shall be laid before Parliament in session and that the Parliament may make any modification in the rules. Thus it cannot be said that the Parliament completely abdicated its functions as far as collection of excise duties is concerned. 9.I may in this connection refer to the observations of their Lordships of the Supreme Court in the well known Kerala Education Bill Court, in the well known Kerala Education Bill case, 1959 SCJ 321 at p. 344; (A.I.R. 1958 S.C. 956 at p. 976) where the rule-making power conferred by Clause 36 of the Bill was challenged. Their Lordships referred to Clause 37 which required the rules to be placed before the legislature, and observed that this requirement made it clear that the rules owe their efficacy to the tacit assent of the Legislative Assembly itself. Their Lordships further observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ming number of cases the process of assessment becomes somewhat mechanical, based on arithmetical calculation. This seems to be the reason why Rule 52 says that at least twelve hours before the date of intended removal of goods the assessee may apply for officer may thereupon assess the amount of duty on the goods. It was urged that within such a short period of twelve hours it will not be possible for any assessee to adduce all available evidence in support of his contention, and that consequently, there is unreasonable restriction on trade. This argument overlooks the significance of the words 'at least' occurring in Rule 52. There seems no bar in the rule to the assessee applying several days before the actual day on which he intends to remove the goods. It is true that Rule 9 permits the storing of goods in a warehouse or other approved places without payment of duty, but this is a provision for the benefit of the assessee and the rules do not say that the assessment should be made only a day or two before the date of intended removal of goods. If the assessee feels that disputed questions regarding assessment arise, there is no bar to his submitting the application in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 242 of Maxwell on Interpretation of Statues Law, 6th edition. There is sufficient authority to show that notwithstanding the use of the permissive expressions, such as "as he thinks fit", may at his discretion etc., a power conferred by a statutory rule may be imperative if its conferred on public servants for performance of public duties. Even if it is assumed that the exercise of these powers is discretionary, there is no reason to presume that they will be exercised arbitrarily or capriciously with a view to impose undue restraint on movement of manufactured goods. Even if the lower Excise Authorities exercise the discretionary power unreasonably, there is the appellate authority acting under Section 35, or the revisional authority acting under Section 36, to correct the wrong exercise of discretion. It will be noticed that the appellate and revisional power is conferred not only against any decision of the lower authority, but also against any order, which will include not only final orders but even interlocutory orders. In my opinion, therefore, the argument that the relevant statutory rules impose unreasonable restrictions on the freedom of trade, or they, in substance, den ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Rule 59 of the said rules and the power conferred on that Government under Section 36 of the Act. I have already held that even the assessing officer has to act quasi-judicially, and it necessarily follows that the appellate authority exercising powers under Section 35 and the Central Government exercising powers of revision under Section 36 must also act quasi-judicial and give the petitioner a reasonable opportunity of being heard. The necessity of hearing in this case arises mainly because the question as to when the manufacture of a wireless set is complete is a mixed question of law and fact, depending on the construction of the expression "manufacture" as given in Section 2(f) of the Act and on what is known to the consumers and the commercial community as "wireless set" (see in this connection paragraph 13 at p. 794 of A.I.R. 1963 Supreme Court 791). The petitioner must be given a reasonable opportunity to prove by affidavits or otherwise (as was done in the aforesaid Supreme Court case) its contention that the disputed 1186 radio sets, or some of them, at any rate, were completely manufactured prior to 1st March, 1961, and that, as such, free from payment of duty. A me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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