Sinha, C.J. - (1.) The facts in this case are briefly as follows. The respondent company carries on the business of manufacturing cigarettes and tobacco at Agarpara in 24 Parganas and as such, they have to pay excise duty on the value of the cigarettes manufactured by it. In this case, we are not concerned with anything else. The levy of excise duty is controlled by me Central Excises and Salt Act (Act I of 1944) (hereinafter referred to as the "said Act") and the Central Excise Rules (hereinafter referred to as the "said Rules"). Section 3 of the said Act provides that there shall be levied and collected in such manner as may be prescribed, duties of excise on all excisable goods other than salt, which are produced and manufactured in (India), and a duty on salt manufactured in, and imported by land into any part of India as, and at the rates, set forth in the First Schedule. It is not necessary to go into further details at present. It is sufficient to state that cigarettes manufactured in India have to pay excise duty. During the relevant period, namely the years 1955 to 1957, excise duty was to be levied on a slab system upon value of the goods manufactured. It was, therefore, a battle of wits between the manufacturer and the Central Excise Authorities. The former wanted to keep within the lower slabs whereas it was to the interest of the latter to calculate the excise duty under the higher ilabs. For the calculation of the duty payable, the value of the goods was all-important, as the calculation of the excise duty depended upon the price, that is to say the value of the cigarettes manufactured. Section 4 of the said Act provides how the value was to be determined for purposes of duty. Section 37 of the said Act confers power upon the Central Government to make rules, inter alia providing for the assessment and collection of excise duty, particularly the authorities by whom functions under the said Act were to be discharged, the issue of notices requiring payment, the manner in which the duty shall be payable and the recovery of duty not paid. Such Rules have been promulgated, and the said Rules will govern the determination of this case, as we are concerned with the realization of duty on excisable goods. Under the said Rules, [2(v)] "duty" means the duty payable under Section 3 of the said Act. Rule 7 provides that every person who produces or manufactures any excisable goods shall pay the duty leviable on such goods, at such time and place and to such person as may be designated in, or under the authority of, the said Rules. Rule 9 is important and the relevant part thereof is set out below: "9. Time and manner of payment of duty.--(1) No excisable goods shall be removed from any place where they are produced, cured or manufactured or any premises appurtenant thereto, which may be specified by the Collector in this behalf, whether for consumption, export, or manufacture of any other commodity in or outside such place, until the excise duty leviable thereon has been paid at such place and in such manner as is prescribed in these Rules or as the Collector may require, and except on presentation of an application in the proper form and on obtaining the permission of the proper officer on the form: ... ... ... ... ... ... Provided further that the Collector may, if he thinks fit instead of requiring payment of duty in respect of each separate consignment of goods removed from the place or premises specified in this behalf, or from a store-room or warehouse duly approved, appointed or licensed by him keep with any person dealing in such goods an account-current of the duties payable thereon and such account shall be settled at intervals not exceeding one month, and the the account-holder shall periodically make deposit therein sufficient in the opinion of the Collector to cover the duty due on the goods intended to be removed from the place of production curing, manufacture or storage." The proviso set out above is referred to hereinafter as the "second Proviso" of Rule 9.
(2.) We now come to Rule 52 which lays down the procedure for clearing goods on payment of duty. That Rule is as follows: "52. Clearance on payment of duty. When the manufacturer desires to remove goods on payment of duty, either from the place or premises specified under Rule 9 or from a storeroom or other place of storage approved by the Collector under Rule 47, he shall make application in triplicate (unless otherwise by rule or order required) to the proper office in the proper form and shall deliver it to the officer at least twelve hours (or such other period as may be elsewhere prescribed or as the Collector may in any particular case require or allow) before it is intended to remove the goods. The officer shall, thereupon, assess the amount of duty due on the goods and on production of evidence that this sum has been paid into the Treasury, or paid to the account of the Collector in the Reserve Bank of India or the State Bank of India, or has been despatched to the Treasury by money order shall allow the goods to be cleared." The application referred to in said Rule is made in the prescribed form, being Form A. R. 1 (Central Excise Series No. 57) set out at pp. 442 to 448 of the Central Excise Manual, 8th Edition. In the present case, it is this form which was used in all the transactions. It is, therefore, evident that the normal procedure is that the goods are removed upon payment of the duty assessed. The Rules provide for such assessment as well as for a "provisional assessment." At the relevant time, provisional assessment of duty was governed by Rule 10-B, the relevant terms whereof were as follows :-- "10-B. Provisional Assessment of Duty :-- (1) Notwithstanding anything contained in these rules- (a) Where the owner of any excisable goods makes and subscribes a declaration before the proper officer to the effect that he is unable for want of lull Information to state precisely the real value or description or such goods in the proper Form; or (b) Where the owner of any goods has furnished full information in regard to the real value or description of the goods but the proper Officer requires further proof in respect thereof; or (c) where the proper Officer deems it expedient to subject any excisable goods to any chemical or other test, the proper Officer may direct that the duty leviable on such goods may, pending the production of such information or proof or pending the completion of any such test, be assessed provisionally. (2) When the owner of any goods in respect of which the duty has been assessed provisionally under Sub-rule (1) has paid such duty, the proper Officer may make an order allowing the goods to be cleared for home consumption or for exportation, as the case may be and such order shall be sufficient authority for the removal of the goods by the owner : Provided that before making any such order the proper officer shall require the owner to furnish a bond in the proper form binding the owner to pay the differential duty when the final assessment is made.
(3.) When the duty leviable on such goods is assessed finally in accordance with the provisions of these rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed falls short of, or is in excess of, the duly finally assessed, the owner of the goods shall pay the deficiency or be entitled to refund, as the case may be." 3. We now come to the provision for the recovery of duties which have been short-levied. Rules 10 and 10-A are the relevant Rules, which I set out below. It will appear later on that it is Rule 10 which is applicable to the facts of this case. "10. Recovery of duties or charges short-levied or erroneously refunded :--When duties or charges have been short-levied through inadvertence, error, collusion or misconstruction on the part of an officer, or through misstatement as to me quantity, description or value of such goods on the part of the owner, or when any such duty or charge, after having been levied, has been owing to any such cause, erroneously refunded, the person chargeable with the duty or charge, so short-levied, or to whom such refund has been erroneously made, shall pay the deficiency or pay the amount paid to him in excess, as the case may be, on written demand by the proper officer being made within three months from the date on which the duty or charge was paid or adjusted in the owners account-current, if any, or from the date of making the refund. 10-A. Residuary powers for recovery of sums due to Government:--Where these Rules do not make any specific provision for the collection of any duty, or of any deficiency in duty if the duty has for any reason been short-levied, or of any other sum of any kind payable to the Central Government under the Act or these Rules, such duty, deficiency in duty or sum shall, on a written demand made by the proper officer, be paid to such person and at such time and place, as the proper officer may specify.";