G.C. Mathur J.
1. The petitioner is a firm which carries on the business of manufacturing and of selling vegetable non-essential oils at Agra. It owns a factory known as Ganga Dhar Ram Chandra Oil Mills where it manufactures vegetable non-essential oils and on such manufacture pays excise duty under the Central Excises and Salt Act, 1944. In addition to this, the petitioner takes oil seeds belonging to it to certain other oil mills, gets the oil manufactured thereon payment of the necessary manufacturing charges and takes the oil so manufactured and sells the same. These other oil mills are quite independent of the petitioners and of the petitioner oil mills. The vegetable oil manufactured by these other oil mills out, of oilseeds supplied by the petitioner was allowed to be removed by respondents without payment of any excise duty since the total quantity of oils produced by each one of these oil mills was within the exemption limit of 75 tons. Subsequently the respondent No. 3 appears to have taken the view that the vegetable non essential oil manufactured by these other oil mills out of oil seeds supplied by the petitioner was also liable to excise duty in respect of the oil manufactured by the several oil mills out of oilseeds supplied by the petitioner. The petitioner filed appeals before the Collector, but the Collector has refused to hear the appeals unless the amount of excise duty demanded has been deposited. In pursuance of the demand notices and order of detention was passed in respect of the vegetable non-essential oils belonging to the petitioner. Thereupon the petitioner filed this writ petition for quashing the demand notices and for restraining the respondents from recovering the excise duty in pursuance of those demand notices. The main argument of the petitioner is that it is not the manufacture of the vegetable oil manufactured by these other oil mills and is not liable to pay excise duty thereon, A counter affidavit has been filed on behalf of the respondents by the Deputy Superintendent, Central Excise, U.P., Allahabad. It stated therein that the petitioner holds a licence for manufacturing vegetable non-essential oils and is liable to pay excise duty on all such oils manufactured by it. It is asserted that in order to made payment of excise duty the petitioner adopted the method of supplying oilseeds to different mill owners and getting the oilseeds to different mill owners and getting the oilseeds crushed on payment. It is also asserted that the petitioner was really the manufacturer in respect, of this vegetable non-essential oil also.
2. A preliminary objection was raised by Shri Jagdish Swarup on behalf of the respondents, that since there was alternative remedy by way of an appeal, though the appeal could only be heard after the entire excise duty demanded had been deposited, this court should not entertain this writ petition. I cannot agree with this submission in the present case. The case of the petitioner is that he is not liable to pay the excise duty demanded and that the illegal demand and detention of its vegetable oil infringed its fundamental right under Article 19(1)(g) of the Constitution to carry on its trade and business of selling vegetable oil. A petition under Article 226 of the Constitution wherein there is a boon fide complaint of infringement of fundamental right cannot be thrown out on the ground of an alternative remedy being available to the petitioner, In the present case if the contention of the petitioner is right, then undoubtedly his fundamental right under Article 19(1)(g) has been infringed. I accordingly overrule the preliminary objection.
3. A duty of excise is primarily a duty levied on a manufacturer or producer in respect of the commodity manufactured or produced. The Act and the rules provide for the collection of the duty at stages which are considered most convenient. This is a matter of the machinery of the collection but does not affect the nature of the tax. According to decisions, the taxable event is the production or manufacture of goods. The essence of the excise duty is that the right to levy it occurs by virtue of the manufacture or production of goods. It is the fact of manufacture which attracts the duty even though it may be collected later. The duty is payable, in the first instance, by the manufacturer, even though he may not be the owner of the goods produced, and it may then be passed on to the owner and ultimately on to the consumer.
4. The real question that arises for determination in this case is whether the petitioner is the manufacturer in respect of the oil manufactured by other oil mills out of oil seeds supplied by the petitioner. To determine this question it is necessary to consider some of the provisions of the Act and of the rules made thereunder. Section 2(e) define 'factory' to mean any premises, including the precincts thereof, wherein or in any part of which excisable goods other than salt are manufactured, or wherein or in any part of which any manufacturing process connected with the production of these goods is being carried on or is ordinarily carried on. Section 2(f) define the work 'manufacture' in relation to tobacco and salt and then provides as follows : -
'the word 'manufacture' shall be construed accordingly and shall include not only a person who employs hired labor in the production manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account if those are intended for sale.'
Two things have to be noticed in this definition. The first is that a person who manufactures excisable goods through hired labour is the manufacturer of those goods. The second is that a person who manufactures excisable goods on his own account is also a manufacturer if the goods are intended for sale. The petitioner does not fall in any of these categories. It does not, so far as the oil in dispute is concerned, manufacture it with hired labour. Further it does not itself manufacture this oil. Therefore, the positive provisions in the definition of the word 'manufacturer' do not assist the respondents. But the definition is an inclusive one and it has yet to be seen whether the petitioner is a manufacturer for the purposes of the Act on account of the other provisions of the Act or the rules. Section 6 provides that no person shall engage in the production or manufacture of excisable goods without previously obtaining a licence. Admittedly, the petitioner has not obtained nor was it required to obtain, any licence for the manufacture of vegetable non-essential oils by these other mills. The licence for running these other oil mills must have been obtained by the owners thereof. This section indicates that it is the licence-holder who is the manufacturer and not any other person who brings his raw material for being subjected to the manufacturing process in these mills. The provisions of Rules 43 and 44 also indicate the same thing. Rule 43 requires every manufacturer, who intends to manufacture excisable goods for the first time, to give notice in writing to the Collector and further requires every such manufacturer to give notice in writing to the Collector of his intention to stop or resume the production of such goods. Clearly this petitioner was not required to give these notices in respect of the oil mills where the oil in dispute was manufactured, but it was the owners of those oil mills who were required to give the notices. Rule 44 empowers the Collector to require a manufacturer to make a prior declaration of the factory premises and equipment. The petitioner could not have been required to make any such declaration in respect of these other oil mills. All these provisions lead to the conclusion that it is the owner or occupier of the factory or oil mill where the vegetable non-essential oil is manufactured who is the manufacturer of such oil and a person who merely brings his oilseeds for being manufactured into oil upon payment of crushing charges is not the manufacturer of the oil for the purposes of the Act. Apart from the provisions of the Act it appears that the manufacturer would be the person who actually manufactures the goods. In the present case, it would be the oil mills which crushed the oilseeds and manufactured oil out of them. The contention of the respondents is that the petitioner is the manufacturer as it manufactures the oil through the hired labour of the oil mill within the definition given in section 2(f) of the Act. This contention is clearly unsound. The petitioner does not hire any labour. It merely pays crushing charges to the oil mills and the labour is employed by the oil mills themselves. This position is made clear by the Central Excise Standing Order No. 26/56 made by the Collector, Central Excise, and filed as Annexure I to the affidavit accompanying the writ petition. Paragraphs 1 and 2 of this Standing Order read as follows : -
'It has been represented to me that certawe oil millers do milling of oilseeds belonging to others on payment of a fee, the oil extracted being delivered to the owner of oilseeds in much the same way as the flour mill-grinds any owner's corn for him.'
5. All vegetable oils produced in a factory, whether out of seeds belonging to the owner of the factory or to others, is excisable vegetable oil. All such production of vegetable oils must be accounted for in the accounts of production and deliveries of the oil millers and be subjected to the usual checks besides payment of duty leviable after the exempted quantities of 10 tons in March and first 125 tons on and after 1st April have been exhausted.
6. This makes it clear that vegetable oil manufactured by the owner of a factory even out of oilseeds supplied by some one other than the owner of the factory is oil manufactured by the factory and the factory is liable to pay excise duty thereon. If it is the owner of the factory which manufactures the oil who is to be treated as the manufacturer of the oil, it follows that the person who supplies the oilseeds cannot be the manufacturer. This strengthens the conclusion to which I have already arrived that the petitioner is not the manufacturer in respect of the vegetable nonessential oils manufactured by the other oil mills out of oilseeds supplied by it.
7. The petitioner not being the manufacturer was not liable to be assessed to excise duty on the oil in dispute and accordingly the demand notices and the order of detention of the oil were illegal. In the result I allow the writ petition, quash the demand notices and the order of detention and direct the respondents not to recover the excise duty from the petitioner in pursuance of the said . demand notices. The petitioner will be entitled to its costs from the respondents.