Madras High Court
A.M. Abdul Rahiman Rowther & Co. vs Asstt. C.C.E., Trichirapalli on 19 September, 2001
Equivalent citations: 2002(141)ELT39(MAD)
JUDGMENT P. Thangavel, J.
1. This Writ Appeal has been filed by the writ petitioner as appellant against the order dated 1-11-1995 of the learned single Judge in W.P. No. 2014 of 1985 on the file of this Court.
2. The appellant is a registered firm of partnership carrying on business in manufacture of tobacco at Pudukkottai. The appellant was licensed to maintain a Central Excise Private Bonded Warehouse since 1947 for storage of non-duty paid tobacco, from time to time removal of tobacco from the bonded warehouse were accounted in accordance with Rules of Central Excise. The appellant has also maintained a factory for manufactured tobacco. Pursuant, to the investigation said to have been conducted by the Central Excise Authorities, proceedings were initiated by the Superintendent of Central Excise Mead Quarters Office, Madurai by issue of show cause notice dated 22-7-1980 wherein the appellant was charged for having received unaccounted tobacco in the warehouse of the appellant at Pudukottai within the jurisdiction of the Competent Authority at Madurai and also at Puliampatti within the jurisdiction of the authorities concerned at Coimbatore. The relevant period of receipt of unaccounted tobacco in the warehouse of the appellant on 6 counts was for 11-8-1972 to 25-1-1974. The unmanufactured tobacco said to have been received by the appellant during the said period was shown as 3,20,070 Kgs., but the authority concerned having the jurisdiction at Madurai had restricted the quantum to 2,51,400 Kgs. of unaccounted tobacco received in the warehouse at Pudukottai for the demand of excise duty under Rule 40 of Central Excise Rules, 1944, herein after referred to as "the Rules". While claiming duty as payable at appropriate rate prevailing at the relevant time, the Collector of Central Excise, Madurai had also imposed penalties of Rs. 2,000/- under Rule 40 and Rs. 2,000/- under Rule 32 of the Central Excise and Salt Act, 1944, herein after referred to as "the Act". The appeal filed by the appellant before the Central Board of Excise and Customs, New Delhi was rejected by order dated 23-1-1982 confirming the findings and order of the adjudicating authority. The revision filed by the appellant before the 2nd respondent was transferred to the Customs, Excise and Gold (Control) Appellate Tribunal, South Regional Bench at Madras, as per Section 35P of the Act and the Tribunal passed an order on 14-11-1983 holding that the order of the Collector which was confirmed by the Central Board of Excise and Customs in its order No. 18 of 1982, is maintainable both on law and on facts and accordingly appeal was dismissed. While doing so, liberty was given to the appellant to raise plea regarding the applicability of Rule 9A(5) of the Rules before the Assistant Collector before confirmation of the demand indicating the quantum of duty since the Collector of Central Excise, Madurai has not fixed the rate of duty and the quantum in his order in C. No. V/4/10/79 CX. 3 (Order No. 4/81), dated 30-3-1981. The appellant filed a reference application on 27-1-1984 before the said Tribunal in terms of provision of Section 35G(1) of the Act with reference to the above said order for being referred to this Court on various issues of law. No order was passed after hearing the reference application on 13-6-1984 for about 7 months and in the meanwhile, the 1st respondent had issued a show cause notice dated 9-8-1984 to fix appropriate rate of excise duty as per the order of the above said Tribunal dated 14-11-1983 and demanded such duty of Rs. 7,75,250/- as per Rule 9A(1)(ii) of the Rules from the appellant. The impugned order was passed by the 1st respondent on 5-1-1985 and the same was communicated to this appellant on 14-2-1985. Therefore, the appellant as petitioner has filed the writ petition to quash the order in C. No. V/4/15/23/79 Order No. 1/85, dated 5-1-1985 by issue of certiorari or any other appropriate writ or directions in the nature of writ calling for the records from the 1st respondent.
3. After considering the submission made by the appellant as petitioner as well as the respondent departments, the learned single Judge has come to the conclusion that the order of the Customs, Excise and Gold (Control) Appellate Tribunal at Madras which is not under challenge is binding on the appellant and therefore, the remedies available under Article 226 of Constitution of India will not be available to the appellant to set aside the impugned order passed by the first respondent. Accordingly, the writ petition filed by the appellant as petitioner was dismissed. Aggrieved at the said order dated 1-11-1995 and made in W.P. No. 2014 of 1985, the writ petitioner as appellant has come forward with this appeal.
4. We have heard the arguments on both sides and perused the records produced before us.
5. The learned Senior Counsel Mr. G. Rajagopalan, on behalf of the appellant contended that the order of the learned single Judge dismissing the writ petition on the ground that the order passed by the learned Tribunal referred to above has become final for want of challenging the same, is not correct, that the 1st respondent cannot order for payment of excise duty as mentioned in the order dated 5-1-1985 under Rule 9A(1)(ii) of the Rules, but can pass an order only under Rule 9A(5) of the Rules under which no excise duty can be levied on unmanufactured tobacco with effect from 1-3-1979 in view of the withdrawal of excise duty on such product and that, in any event, the claim made under the impugned order for excise duty is barred under Section 11A of the Act. Accordingly the learned Senior Counsel sought for setting aside the order of learned single Judge.
6. Per contra, the learned counsel appearing for the respondents would contend that the 1st respondent was justified in levying excise duty for illegal receipt of tobacco in the warehouse of the appellant which was an offence at that time and for which excise duty can also be levied at that time, under Rule 9A(1)(ii) of the Rules apart from levying penalty as contemplated under Rule 40 of the Rule, that Rule 9A(5) of the Rules will have no application to the commission of the offence of illegal receipt of tobacco in the warehouse of the appellant at earlier point of time to 1-3-1979 when duty on unmanufactured tobacco was withdrawn and that the appellant who had given up to question the correctness of the demand of excise duty and penalty imposed by the Collector of Central Excise, Madurai or the period of limitation of the demand as referred to above in the reply of the appellant before the first respondent by restricting his contention with regard to the applicability of Rule 9A(5) of the Rules cannot be heard to raise contension with regard to the period of limitation, etc., at this stage. The learned counsel appearing for the respondents further would contend that the writ petition filed by the appellant as writ petitioner cannot be maintained since the appellant, as aggrieved of the order of the Tribunal referred to above, can only request the said Tribunal to refer the questions of law involved in this matter to this Court as provided under Section 35G(3) of the Act. The learned counsel for the respondents further contended that the writ petition cannot be maintained questioning the correctness of the impugned order without challenging the order passed by the Collector of Central Excise, Madurai in C. No. V/4/10/79 CX. 3, (Order No. 4/81) dated 30-3-1981 to which the impugned order is only a continuation. On these grounds, the learned counsel appearing for the respondents contended to sustain the order of the learned single Judge.
7. The fact remains that the Central Excise Authorities-on receipt of complaint against the appellant investigated the complaint and found receipt of unaccounted tobacco in the warehouse of the appellant at Pudukottai within the jurisdiction of the Central Excise Authorities at Madurai and also at Puliampatti within the jurisdiction of the Central Excise Authorities at Coimbatore and therefore issued show cause notice on 22-7-1980 with regard to levy of excise duty and penalties under the relevant provisions of the Act and Rules. Even though in the said show cause notice dated 22-7-1980 the receipt of unaccounted tobacco in the warehouse of the appellant was fixed at 3,20,070 Kgs. of unmanufactured tobacco, subsequently the authorities concerned had restricted the quantum to 2,51,400 Kgs. of unmanufactured tobacco which relates the illegal receipt at the warehouse in Pudukottai.
8. A perusal of Rule 40 of the Rules would reveal that a wholesale purchaser who receives or in his custody or possession of unmanufactured products from any curer otherwise than under a valid permit granted by an officer showing that the proper duty has been paid or under any other valid transport document recognised by the Central Government in lieu thereof which shall show that the proper duty has been paid is deemed to have been contravened the Rules and shall in respect of every such offence be liable to pay the duty leviable on such products and to pay a penalty which may be extended to Rs. 2,000/- apart from the products being liable to. be confiscated.
9. A perusal of Rule 9A(1)(ii) of the Rules would reveal that the rate of duty and tariff valuation, if any, applicable to any excisable goods shall be the rate and valuation in force in the case of goods removed from a factory or a warehouse, subject to Sub-rules (2), (3) and (3A), on the date of the actual removal of such goods from such factory or warehouse. Sub-rule (2) deals with rate of payment of excise duty for the goods previously removed and not re-warehoused after payment of duty on such goods. Sub-rule (3) deals with rate of levy of excise duty and the tariff valuation on excisable goods removed from warehouse for export in bond, but fails to export such goods, etc. Sub-rule (3A) deals with levying of duty on any material or component parts in respect of which credit of duty had been allowed under Rule 56A. Therefore, Clauses (2), (3) and (3A) will have no application in this matter while considering Rule 9A(1)(ii) of the Rules for levy of excise duty for contravention of the Rules or the Act. It is based on such Rules referred to above, the Collector of Central Excise, Madurai in his order in C. No. V/4/10/79 CX. 3, (Order No. 4/81), dated 30-3-1981 has ordered that the appellant is liable to pay excise duty at appropriate rate under Rule 40 of the Rules for illicitly receiving in its warehouse at Pudukottai 2,51,400 Kgs. of tobacco since the material on the file of the department established contravention of Rules 32 and 40 of the Rules by the appellant. In addition to that as contemplated under Rule 40 of the Rules, the Collector of Central Excise, Madurai had also imposed penalties of Rs. 2,000/- each under Rule 40 and under Rule 32 of the Rules totalling to Rs. 4.000/-. Since the appellant had not disputed the commission of the offence of illegal receipt of tabacco in the warehouse at Pudukottai and since the appellant had questioned the applicability of Rule 9A(1)(ii) of the Rule instead of Rule 9A(5) of the Rules, it is evident that the appellant had admitted the commission of offence of illegal receipt of tobacco in the warehouse at Pudukottai. It is because of that the appellant had not chosen to question the correctness of the order of Collector of Central Excise, Madurai in C. No. V/4/10/79 CX. 3, (Order No. 4/81) dated 30-3-1981, but has chosen too question the correctness of the impugned order of the first respondent, which deals with the levy of excise duty under Rule 9A(1)(ii) of the Rules, which is only a continuation of the earlier order passed by the Collector of Central Excise, Madurai, in this writ petition.
10. There can be no dispute that excise duty can be levied for illegal receipt of tobacco weighing 2/51,400 Kgs. in the warehouse of the appellant at Pudukottai which is within the Jurisdiction of the Collector of Central Excise, Madurai under Rule 40 of the Rules. The rate of duty to be levied for the proceedings initiated under Rule 40 of the Rules has to be worked out only under Rule 9A(1)(ii) of the Rules prevailing at the time of commission of the offence of illegal receipt of tobacco in the warehouse of the appellant. Admittedly, levy of duty on unmanufactured tobacco was withdrawn by the authorities concerned only with effect from 1-3-1979. The Collector of Central Excise, Madurai had initiated action for the commission of offence of illegal receipt of tobacco in the warehouse of the appellant for the period prior to 1-3-1979 by issue of notice dated 22-7-1980. At the time of commission of the above said offence by the appellant, duty can be levied, since levy of duty on unmanufactured tobacco was withdrawn only with effect from 1-3-1979 and not with retrospective effect. In view of the said position, Rule 9A(5) of the Rules cannot come to the rescue of appellant to avoid payment of excise duty for contravention made much earlier to 1-3-1979. Therefore, the contention raised by the learned Senior Counsel for the appellant that Rule 9A(5) of the Rule alone will be applicable and not Rule 9A(1)(ii) of the Rules and therefore, the appellant is not liable to pay any duty as per the impugned order in the writ petition cannot be sustained.
11. A perusal of the impugned order would disclose that the appellant had sent letters dated 10-9-1984 and 27-11-1984 and had also submitted written submission on 17-12-1984 through Thiru P. Kuppuswamy, the representative of the appellant for the show cause notice issued by the 1st respondent and in that replies, the appellant had not questioned the correctness of the demand made, imposing of penalties by the Collector of Central Excise, Madurai or the period of limitation of the demand made by the 1st respondent, but has raised a plea that Rule 9A(5) alone will be applicable and not Rule 9A(1)(ii) of the Rules. The 1st respondent, has, therefore stated that he was refrained from considering the above said points except Rule 9A(1)(ii) and Rule 9A(5) of the Rules. The said observation made in the impugned order has not been questioned as incorrect in the affidavit sworn to for filing the writ petition by the appellant as writ petitioner. In view of the said fact the contention raised by the learned counsel for the respondents that the appellant is deemed to have waived the right to limitation before the authorities concerned cannot be held to be unsustainable one. After considering the submission made with regard to the levy of excise duty for contravention of the provisions of the Rules with regard to 2,51,400 Kgs. of tobacco by the appellant, the Central Board of Excise and Customs, New Delhi sustained the order of the Collector of Central Excise, Madurai. Likewise the Customs, Excise and Gold (Control) Appellate Tribunal at Madras, after considering the revision application filed before the 2nd respondent and transferred to the above said Tribunal under Section 35P of the Act has held that the order of the Collector which has been confirmed by the Central Board of Excise and Customs in his Order No. 18/82 is maintainable both in law and on facts and accordingly dismissed the application for revision filed by the appellant.
12. A perusal of Section 11A of the Act would reveal that when any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, a Central Excise Officer may, within 6 months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short levied or short paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice. The proviso to the above said Section would also reveal that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded by reason of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect, as if, for the words "six months", the words "five years" were substituted. In this case it is a specific case of the respondents that the appellant had committed an offence of illegal receipt of tobacco and the same was found out on investigation made by the department having jurisdiction and immediately thereafter show cause notice was issued as to why excise duty should not be levied on the quantity of tobacco which was not accounted as per the Rules. It is not in dispute that the appellant has to file his monthly statement with regard to the in coming and outgoing of the product from the warehouse of the appellant. A proper and correct register of accounts has also to be maintained by the appellant. As already pointed out the appellant had not questioned the contravention of illegal receipt of tobacco in the warehouse of the appellant but vehemently opposed the levy of duty under Rule 40 and Rule 9A(1)(ii) of the Rules instead of ordering that no duty is leviable with effect from 1-3-1979 as per Rule 9A(5) of the Rules. The proceeding against the appellant had been initiated by issue of show cause notice on 22-7-1980 immediately after the detection on investigation about illegal receipt of tobacco in the warehouse of the appellant. Therefore, it cannot be said that the proceedings initiated against the appellant by the respondents are not within the period of 5 years from the date of detection, since the proviso to Section 11A of the Act alone will be applicable in this case. If the facts of commission of such offence or contravention of Rules by the appellant and the date of detection of such offence committed by the appellant are disputed, the matter cannot be decided in a writ petition under Article 226 of the Constitution of India, but has to approach the competent Court to decide the issue in dispute. Therefore the appellant may have to approach the competent Court, if the above said facts are disputed and cannot seek any relief in this writ petition. In our view of this matter, the contention raised by the learned Senior Counsel for the appellant that the proceeding initiated by the respondents against the appellant is barred by time in view of Section 11A of the Act cannot also be sustained.
13. The learned counsel for the respondents brought to the notice of this Court the decision reported in Sharma Trolly Manufacturers v. Customs, Central Excise and Gold (Control) Appellate Tribunal, 1987 (30) E.L.T. 317 (Allahabad) wherein the Honourable Apex Court was pleaded to hold as follows :-
"An order was passed by the Collector, Central Excise, Kanpur against the petitioner on 19th February, 1979. It preferred an appeal before the Central Board of Excise and Customs, New Delhi on 18th April, 1979. The appeal was dismissed on 31st December, 1979. Thereafter, the petitioner filed the revision under Section 36 of the Customs and Excise Act. After the revision had been filed by the petitioner, the Central Excise Act was amended. By this amendment, Section 35G was inserted under which the Tribunal could send a reference to the High Court if it was satisfied that the case involved question of law. Before the Tribunal, the petitioner raised a number of grounds which are enumerated in paragraph 10 of the writ petition. The application was rejected on 4th April, 1986. Thereafter, instead of filing an application under Sub-section (3) of Section 35G of the Central Excise and Salt Act, the petitioner filed the present writ petition and obtained a stay order. The petitioner's counsel was informed on the last occasion that the writ petition was not maintainable. The time was sought for converting the writ petition into application for reference, but this has not been done, since a specific remedy for filing an application for reference is provided in the Central Excise Act, this writ petition is not maintainable and is liable to be rejected on that ground."
In this case, the appellant filed an application under Section 35G of the Act requesting the above said Tribunal to refer certain questions of law to this Court and the Tribunal, after considering the submission made on both sides, framed the questions for reference in its order dated 23-12-1985. One of the questions referred to Apex Court as per the said order was interpretation of Section 40(2) of the Act as it stood before its amendment on 19-5-1973 on which there were conflicting views of High Courts and Tribunals. In order to file the reference application to the Apex Court, Registry of the Tribunal by its letter dated 17-4-1986 called upon the reference applicant to furnish copies of certain documents in quadruplicate. After issue of reminder on 18-6-1986 by the Registry of the Tribunal, the appellant herein had informed the Tribunal in writing that the appellant had filed writ petitions on the file of the High Court of Madras in W.P. Nos. 2014 of 1985 and 7704 of 1986 and obtained stay on 7-6-1986 in W.P No. 2014 of 1985, against the impugned order. The appellant had also informed the Tribunal that the matter had become subjudice and the reference application had become infructuous and that therefore, copies of the documents called for by the Registry has not been filed. In a letter dated 12-11-1986 the said fact of filing two writ petitions was again informed to the Tribunal. Since the appellant had expressed its desire not to pursue the matter of reference stating the same has become infructuous, the Tribunal had recalled its order for reference dated 23-12-1985 and dismissed the reference application as withdrawn. It is evident from the order of the Tribunal in Reference Application No. 7/1984, dated 22-10-1987. The above said facts would disclose that the appellant, instead of referring the matter under reference either to High Court or to the Apex Court regarding question of law that had arisen in view of the order passed by the Tribunal, had chosen to file and continue the writ petitions inclusive of the writ petition against the order of which this writ appeal has been filed by withdrawing the reference application already filed and orders passed by the Tribunal. If the principles laid down by the Apex Court in the case cited above are applied to the facts and circumstances of this appeal, we are of opinion that the writ petition filed by the appellant as petitioner cannot also be maintained as rightly contended by the learned counsel appearing for the respondents. That apart as already pointed out the appellant had questioned the impugned order dated 5-1-1985 which is a continuation of the order of the Collector of Central Excise, Madurai dated 30-3-1981 wherein the said Authority had decided that the appellant is liable to pay excise duty at appropriate rate under Rule 40 of the Rules for illicitly receiving 2,51,400 Kgs. of tobacco in its warehouse at Pudukottai. The said order remains unchallenged. For all these reasons, we are unable to interfere with the order of dismissal passed by the learned single Judge though not on the reasons given by the learned single Judge in his order for dismissal of the writ petition.
14. Accordingly, the Writ Appeal is dismissed, but in the circumstances of the case, without costs. In view of the disposal of the main Writ Appeal, the petition in C.M.P. No. 8558 of 1996 is closed.