Decided on May 28,1976

Gopiram Banka Appellant


A.K. Sen, J. - (1.)This appeal under Clause 15 of the Letters Patent raises a short question as to whether a demand in respect of excise duty which escaped assessment in the facts and circumstances of the case would be recoverable under Rule 10 or Rule 10A of the Central Excise Rules, 1944, (hereinafter referred to as the said Rules) framed under the Central Excises and Salt Act, 1944 (hereinafter referred to as the said Act). While, according to the Appellant, such a demand would come within the scope of Rule 10 of the said Rules, according to the Respondents, it comes within Rule 10A thereof. The learned Judge in the trial Court having upheld the claim of the Respondents in this respect and having dismissed the writ petition preferred by the Appellant disputing such a claim of the Respondents, the Appellant has come with this appeal.
(2.)Material facts are not in dispute and may be shortly set out. The Appellant is the proprietor of a firm Rajkumar Dyeing and Printing Works and carries on the business of processing cotton fabrics in his factory at No. 11 Strand Road, Dakshineswar, under a licence issued by the Excise authorities under the said Act. Between December 1962 and August 1963, on different occasions the Appellant removed cotton fabrics processed in his aforesaid factory obtaining on each occasion the necessary permission from the Inspector of Central Excise. Such permission was sought for on applications filed in the statutory form, A.R.I., on which the Appellant claimed exemption from payment of excise duty admissible under the notification dated April 24, 1962, read with the notification dated June 13, 1962, issued by the Central Government under Rule 8 of the said Rules (hereinafter referred to as the said notifications). Under the notifications an exemption in the matter of payment of excise duty in the manner specified therein was admissible on the maximum of 20,000 sq.metres of cotton fabrics per month processed in the factory and that such exemption was available only to an independent processor which had been defined by the explanation to the notification dated June 13, 1962, to mean
A manufacturer who is engaged exclusively in the processing of cloth with the aid of power and who has no proprietory interest in any factory engaged in the spinning yarn or weaving of clothes.

On each occasion necessary exemption was granted to the Appellant by the Inspector of Central Excise in issuing the permission for removal of the cotton fabrics so processed on the basis of his claim that he was an independent processor and in this manner between December 1962 and August 1963, the Appellant could remove 1,08,227 -83 sq.metres of cotton fabrics processed by him without payment of necessary excise duty.

(3.)The Appellant, however, was also the proprietor of a firm known as Rajasthan Weaving Factory situate at No. 2 Brojodayal Saha Road, Cossipore, where he had been carrying on the business of weaving cotton fabrics since February 1962. Therefore, he was not an independent processor and, as such, was not eligible for the exemption under the said notifications. The authorities, however, in allowing him the exemption did so being misled by the misstatement made in the application for permission for removal of the cotton fabrics processed in his processing factory as the appropriate officer was not aware that the Appellant was also carrying on the business of weaving cotton fabrics. The said position, however, was later found out in August 1963 when on August 31, 1963, a demand for payment of excise duty to the tune of Rs. 5,411 -39 P. was issued under Rule 10A of the said Rules. The said demand was issued on the following terms:
Take notice on behalf of the Central Government, I hereby demand payment by you of the sum of Rs. 5,411 -39 P. towards Central Excise Duties, on processed Cotton Fabrics within 10 days hereof.

Particulars of Demand.

It has come to light that the proprietor of M/s. Raj Kumar Dyeing and Ptg. Works, Shri Gopiram Banka had also the proprietory interest in a Powerloom unit styled as M/s Rajasthan Weaving Factory, Licence No. 23 -CF -62. The firm M/s. Raj Kumar Dyg. and Ptg. Works failed to intimate the same to the Central Excise authority and enjoyed monthly exemption of 20,000 sq.mtrs. of processed Cotton Fabrics as per Notification No. 44/62 dated 24.4.62 read with Notification No. 123/62 dated 13.6.62 claiming them as an independent processor as defined in Govt. of India's Notification Nos. 111/62 dt. 13.6.62 and 112/62 dt. 13.6.62 which he was not.

Therefore, he is to pay the C.E. duty on 1,08,227 -83 sq.mtrs. of processed cotton @ 5 nP. per sq. meter for which exceptions was enjoyed by him upto 7.8.1963.

Yours faithfully,Sd/illegible 31.8.63Inspector, Central Excise,Processing Unit No. 2(II).M.O.R. - -I.C.F.


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