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B.K. Gupta Khandsari Sugar Mills Vs. Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectExcise;Civil
CourtAllahabad High Court
Decided On
Case NumberCivil Misc. Writ Petition No. 175 of 1980
Judge
Reported in1983(13)ELT889(All)
ActsCentral Excise Rules, 1944 - Rules 92B, 92B(2), 92B(4), 92C, 92E and 93E
AppellantB.K. Gupta Khandsari Sugar Mills
RespondentUnion of India (Uoi) and ors.
DispositionPetition allowed
Excerpt:
- interpretation of statutes definition clause: [markandey katju & h.l. dattu, jj] meaning given to an expression in one statute cannot be applied to another statute. - rule 92c is very clear 5 it provides that failure to comply with the conditions mentioned under rule 92b(4) will render the permission null and void. 7. in the situation, we allow the writ petition and quash the orders of the collector as well as the appellate and revisional orders in so far as duty has been demanded from the petitioner on the unauthorised centrifugal......we, however, send the matter back to the collector. it will be open to the collector to take fresh proceedings in accordance with law against the petitioner in respect of production of khandsari sugar by unauthorised means. in the circumstances of the case, the parties shall bear their own costs.
Judgment:

B.N. Sapru, J.

1. The petitioner runs a Khandsari Sugar Factory in village Guniyapur, district Bijnor. He made an application as provided under Rule 92E of the Central Excise Rules (hereinafter referred to as the Rules) to avail of the special procedure. The application was allowed. On 6th July, 1976 the Preventive Officers of the Central Excise Division, Moradabad inspected petitioner's factory premises and found that one extra centrifugal of size 22.8X45.6 cm. is addition to one declared centrifugal of size 22.8 x 45.5 cm which was duly entered in L4 licence and was found sealed with cealing slip No. 4761, was also installed in the said factory and was working without declaration and without deposit of compounded levy as required by Rules 92B and 92C of the Rules. Freshly manufactured Khandsari sugar was found lying by the side of the unauthorised centrifugal. Statements of some men working in the factory were recorded. The entire Khandsari sugar so recovered was weighed and it was found to be 36.43 quintals and was seized for the contravention of the Rules. Since a prima facie case appeared to have been made out against the petitioner for contravention of Rules 92B and 92C, a notice was issued to the petitioner to show cause as to why the seized Khandsari sugar should not be confiscated and why penalty should not be imposed under Rule 92E of the Act.

2. In the Proceedings...consequent upon the show cause notice, the petitioner admitted that one centrifugal which was found working was unauthorised ; but he submitted that 'it was on a trial run and it commenced running only from 4th July, 1976. The Collector passed an order dated 16th May, 1978. He found that the petitioner had been running one centrifugal without any declaration thereof for special procedure and without pre-payment of central excise duty. The contravention of Rule 92C of the Rules was proved. He further found the seized khandsari-sugar weighing 36.43 quintals was liable to confiscation under Rule 93E. The Collector accordingly confiscated the seized Khandsari sugar, but he gave the petitioner an option of redemption on payment of redemption fine of Rs. l.000/-. The Collector further found that the petitioner had made an application for special procedure for the period from 1st November, 1975 to 3lst October, 1976, and in view of the provisions of Rule 92B(2) the petitioner was liable to pay duty from the date from which the unit commenced operations during the season to the date on which the unit closed at the end of the season. He accordingly directed the petitioner to pay the duty in respect of the sealed centrifugal for the period from 22nd March, 1976 onwards upto 7th July, 1976 and in respect of the additional centrifugal from the date of commencing of manufacturing operations during the season till 7th July, 1976 at the appropriate rate. He also imposed a penalty of Rs. 2,000/- upon the petitioner in terms of Rule 92E of the Rules. Aggrieved, the petitioner preferred an appeal.

3. The appellate authority found that Collector correctly demanded the duty. So far as the unauthorised centrifugal was concerned, the appellate authority found it to have been put into unauthorised use without payment of duty. It also found that the petitioners was liable to pay duty. The appellate authority held that so far as the unauthorised centrifugal was concerned, its use was rightly presumed for the entire period. With these findings the appeal was rejected. The petitioner then went up in revision.

4. In revision the demand for duty in respect of Sealed centrifugal was set aside. As regards the unauthorised centrifugal, the Government of India found that the Collector had correctly demanded the duty in respect of unlicensed centrifugal from the date of commencement of the operations of the reason, that is, 22nd March, 1976 upto 7th September, 1976. It further found that the duty demanded in terms of provisions of Rule 92B(2) was sustainable in law and that the penalty so imposed on the petitioner was also not excessive. The revision was dismissed except as far as the demand of duty in respect of the licensed centrifugal was concerned. Aggrieved, the petitioner has filed the present writ petition.

5. Learned counsel for the petitioner contends that in respect of the unauthorised centrifugal which was found to be working, he had not applied for special procedure, and, therefore, duty could not be charged on the basis of the provisions which would be applicable to Khandsari sugar produced under the special procedure. He further argues that when the petitioner was found to have committed a breach of the Rules on 6th July, 1976 in as much as he was found running an unauthorised centrifugal in his factory premises, the permission granted under Rule 92A of the rules becomes void under Rule 92C. His contention, therefore, is that the duty has been assessed under wrong provisions of law. Rule 92C is very clear 5 it provides that failure to comply with the conditions mentioned under Rule 92B(4) will render the permission null and void.

6. As regards the argument of learned counsel for the petitioner that neither the Collector nor any of the higher authorities have factually determined the date from which the petitioner installed the additional centrifugal and the actual amount of Khandsari sugar produced and removed from the premises. He contends that unless the actual amount of production of Khandsari sugar as also the amount of removal thereof from the premises by the assessee is determined, no duty can be demanded. As the quantum of Khandsari sugar cannot be quantified, the authorities have assumed that the petitioner started the additional centrifugal from the commencement of the season. There is no warrant for this assumption. It is for the authorities to determine on facts as to what was the date on which the petitioner commenced production and what was his unauthorised production of Khandsari sugar. The amount of duty will now, of course, have to be worked out on the standard rate, and the concessions available under the special procedure will not be available to the petitioner. Learned counsel for the petitioner has not challenged the confiscation of Khandsari sugar and levy of penalty for unauthorised production.

7. In the situation, we allow the writ petition and quash the orders of the Collector as well as the appellate and revisional orders in so far as duty has been demanded from the petitioner on the unauthorised centrifugal. We, however, send the matter back to the Collector. It will be open to the Collector to take fresh proceedings in accordance with law against the petitioner in respect of production of Khandsari sugar by unauthorised means. In the circumstances of the case, the parties shall bear their own costs.


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