Sabyasachi Mukharji, J. - (1.) Three questions fall for consideration in this case, namely : (1) Whether a pre-end in process article manufactured is exigible to duty under the provisions of the Central Excises and Salt Act, 1944. (2) If so, when such duties have not been paid over the years, whether such duties can be realised by the Government. (3) Where the manufacturer has over the years paid duties on the basis that such duties were payayle on one of the items manufactured by it which has been subsequently held by the authorities to be not dutiable, can the manufacturer enforce refund of the duties paid in an application under Article 226 of the Constitution. None of these questions is unique but all the three require restatement and application of the well-settled principles of law to the facts of this case. It is, therefore, necessary to refer to the facts briefly.
(2.) On 24th March, 1975 the petitioner moved this application under Article 226 of the Constitution and obtained a rule nisi. It was recorded by this court on 7th May, 1975 that without prejudice to the rights and contentions of the petitioner that the rough rolled zinc used for punching zinc calots was not sheets or strips within the meaning of Tariff Item 26B(2) the petitioner volunteered to clear in future rough-rolled zinc used for punching calots upon payment of an amount equivalent to the duty alleged to be leviable on such rough-rolled zinc. It was further ordered that all future clearances of rough-rolled zinc shall be allowed upon payment in monthly return in R.T. Form 12 and such payment as aforesaid would be subject to the result of the main rule and in the event of the petitioner succeeding in the main rule nisi the respondents to the rule would refund such amount so paid as might be held not payable as duty in law. In this application under Article 226 of the Constitution the petitioner challenges (i) the order dated 3rd January, 1975 of the Appellate Assistant Collector in which the order of the Assistant Collector had merged as well as, (ii) the notice of demand dated 26th April, 1976 under Rule 9(2) of the Central Excises and Salt Rules, 1944, and (iii) the show cause notice for the said demand dated 21st November, 1974 as at page 151 of the present petition. The petitioner also claims refund of the sum of Rs. 2,24,16,981.00p. alleged to have been collected illegally on zinc calots for the period from May 1961 to February 1975.
(3.) It would be appropriate to discuss the challenge to the order of the Appellate Collector which is at page 155 of the present petition and which has been set out hereinbefore first. The Appellate Collector has held that zinc calots are not exigible to duty under tariff item 26B(2). That decision, therefore, concluded the question whether zinc calots are exigible to duty or not. The question, whether rough rolled zinc prepared or produced by the petitioner in the process discussed above could be considered to be manufacture of excisable goods mentioned under item 26B of the first Schedule to the Act has to be judged in the light of the definition of manufacture under Section 2(f) of the Act, the provision of Section 3 and the meaning to be given to Sheets and Strips' in item 26B(2) of the First Schedule to the Act. Excise is a tax on the production or manufacture of excisable goods. The taxable event is the manufacture or production of the goods. It is not necessary to attract duty that the goods should be sold. If excisable goods are produced or manufactured that is sufficient to attract duty. Whether the goods are consumed, sold or not used thereafter is wholly irrelevant. The above propositions, in my opinion, are the effect of Section 3 read with section 2(f) of the Act and is concluded by the following decisions, namely :- (1) In re : Central Provinces and Berar,-1939 Federal Court Reports, page 18. (2) The Province of Madras v. Messrs Boddu Paidanna and Sons,-1942 Federal Court Reports, page 90. (3) Governor General in Council v. Province of Madras,-1945 Federal Court Reports, page 179. (4) Chhottabhai Jettabhai Patel and Co. v. Union of India,. (5) R.C. Jall v. Union of India,- (6) In re : Sea Customs Act,-A.I.R. 1963 S.C. 1760. (7) Union of India v. Delhi Cloth and General Mills-. (8) Shinde Brothers v. Deputy Commissioner Raichur and Ors.-. (9) S.B. Sugar Mills v. Union of India- .;