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Central Distillary and Chemical Works Vs. Inspector of Central Excise M.O.R. and anr. - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtAllahabad High Court
Decided On
Case NumberSpecial Appeal No. 219/68
Judge
Reported in1978(2)ELT194(All)
ActsCentral Excise Act, 1944; Uttar pradesh Alcohol Act, 1940
AppellantCentral Distillary and Chemical Works
Respondentinspector of Central Excise M.O.R. and anr.
DispositionAppeal allowed
Excerpt:
- - in our judgment the appellate authority has failed in its duty. the appellant shall be entitled to its costs both in the appeal as well as in the petition......judge held that the alcohol manufactured by the petitioner was covered by the definition of 'motor spirit' under item 6 (ii) of the first schedule to the central excises and salt act, 1944. the contention put forward on behalf of the petitioner appellant in support of the appeal by its learned counsel was that the learned single judge fell in error in applying the definition of 'motor spirit' to the product manufactured by the petitioner on erroneous or misappreciation of the facts. his further contention was that in decision of the appeal the appellate authority did not apply its mind in arriving at a finding, as was its duty, before rejecting the appeal and the appellate order, a copy of which is annexed as annexure 'g' to the petition, did not show any application of mind by the.....
Judgment:

K.B. Asthana, J.

1. This is a petitioner's appeal against an order passed by a learned Single Judge dismissing, its writ petition for quashing of a demand for payment of excise duty and the appellate order confirming the said demand by the Central Excise Authorities. The learned Single Judge held that the alcohol manufactured by the petitioner was covered by the definition of 'motor spirit' under Item 6 (ii) of the First Schedule to the Central Excises and Salt Act, 1944. The contention put forward on behalf of the petitioner appellant in support of the appeal by its learned counsel was that the learned Single Judge fell in error in applying the definition of 'motor spirit' to the product manufactured by the petitioner on erroneous or misappreciation of the facts. His further contention was that in decision of the appeal the Appellate Authority did not apply its mind in arriving at a finding, as was its duty, before rejecting the appeal and the appellate order, a copy of which is annexed as Annexure 'G' to the petition, did not show any application of mind by the appellate authority.

2. We think that this appeal has some force. Learned Single Judge seems to have produced on the basis that ethyl alcohol was admittedly manufactured by the petitioner and that ethyl alcohol by itself or even mixed with some denaturants could always be used for running an internal combustion engine hence it would be excisable under Item 6 (ii) as power alcohol. To us it appears that as the definition stands, all kinds of ethyl alcohol will not be power alcohol that is to say, motor spirit within Item 6 unless it was also established that it was suitable, for operating or running internal combustion engines. The governing factor of the difinition is that the product of the manufacturing process undertaken by the petitioner would be suitable for running. Internal combustion Engines. It is only then that it could be covered by the definition of 'motor spirit'. At this stage we do not intend to express any final opinion on a further argument raised by the learned counsel for the petitioner appellant that the word 'motor spirit' at Item 6 of the Schedule should be understood and given a meaning in the popular sense as what passed in the common market as motor spirit is intended to be excisable under the Central Excises Act. Learned counsel referred to the legislative scheme under the Constitution and the local Excise Acts made by the State of Uttar Pradesh in trying to make a distinction between the so-called power alcohol as was defined and understood in the U.P. Alcohol Act, 1940 and power alcohol as defined in the heading 'motor spirit' in the said Schedule of the Central Excises and Salt Act. It was not considered necessary by us to examine the force behind this argument as we propose to give a limited relief for the present to the petitioner after setting aside the judgment and order of the learned Single Judge.

3. Having per used the appellate order, a copy of which is Anncxare 'G' to the petition, we find ourselves in agreement with the submission of the learned counsel of the petitioner appellant, inspite of the efforts of Shri B. N. Sapru appearing for the Union of India to the contrary, that, the appellate order on the fact of it does not show that the case of the appellant before the appellate authority was considered on merits and the mind was applied by the appellate authority to the real controversy. The appellate authority seems to have rejected the appeal on mere general observation. It observe :

'Further so long as the criterion of suitability for use as fuel in internal combustion engines is fulfilled, absolute alcohol denatured with 1% kerosene or any of the other special denaturants prescribed by Government is excisable as 'Power Alcohol' and is liable for duty.' The quotation extracted above from the appellate order to our mind is nothing but the paraphrase of the difinition of 'motor spirit'. What the Appellate Authority under a duty is to find was that the alcohol manufactured bv the petitioner was excisable as motor spirit. A copy of the grounds of appeal, Annexure 'F' to the petition, should indicate that the petitioner raised in them not only questions of law but questions of fact also. Its case was that no doubt it manufactures alcohol but it was not motor spirit which it manufactured or produced but was what is known in common parlance in commercial and industrial world as industrial alcohol. Thus the appellant before the Appellate Authority raised a question of fact. The Appellate Authority has not recorded any finding on the crucial question that arose in the appeal has it. In our judgment the Appellate Authority has failed in its duty. The order passed by it rejecting the petitioner's appeal before it cannot be sustained. It cannot be doubted that the Appellate Authority was performing if not a judicial function a quasi-judicial function and it ought to have applied its mind to all the relevant and material controversies raised before it before deciding the appeal. The ground for dismissing the appeal, as observed above, amounts to merely a general opinion and not to an examination and consideration on merit the case of the petitioner appellant. We think that the learned Single Judge was in error in not quashing the appellate order, the petitioner having made out a case for its quashing.

4. The result is that this appeal succeeds. The judgment and order of the learned Single Judge is set aside the impugned appellate order dated 22nd December, 1966, Annexure 'G' to the petition, is quashed. A further direction is issued that the Appellate Authority will re-consider the appeal of the petitioner and decide it in accordance with law and in the light of observations made above. The appellant shall be entitled to its costs both in the appeal as well as in the petition.


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