Susanta Chatterji. J. - (1.) The present Rule was issued at the instance of the writ petitioner Anglo-India Jute Mills Co. Ltd., praying, inter alia, for issuance of a Writ of Mandamus commanding the respondents to withdraw, cancel and/or rescind the notice to show cause dated 16-3-1982 and all proceedings relating thereto and not to levy and/or demand any Central Excise duty from the petitioner on the making of polythene films by the manufacturers out of granules supplied by the petitioner and for other consequential reliefs by way of retaining the respondents from giving any effect to and/or taking step whatsoever pursuant thereto and/or in furtherance of the said notice to show cause and the proceeding relating thereto and/or from levying and/or demanding any duty from the petitioner.
(2.) It is stated that the petitioner company carries on business of manufacturing and dealing in jute products. It is further stated that one of the items of jute manufactures manufactured by the petitioner at its factory is "laminated jute bags". During the process of manufacture of the said laminated jute bags some bitumen is picked up by the cloth and thereafter the cloth is passed through another roller under pressure and polythene films is pasted on the bituminous side of the cloth. The laminated cloth is then cut to sizes as per- the buyer's specifications and sewn into bags. According to the petitioner company various manufacturers who used to manufacture and/or are manufacturing polythene films out of, inter alia, the granules supplied by the petitioner are small manufacturers and the petitioner has been given to understand by them that they are entitled to the various exemptions granted under the various provisions of law to small-scale units. In or about March 1982 the petitioner was allegedly surprised to receive a purported notice to show cause as if the petitioner had manufactured and cleared a quantity of 436776.300 kgs. of polythene films falling under Item No. 15A of the First Schedule to the Central Excises and Salt Act, 1944 without payment of Central Excise duty leviable thereon and without observance of Central Excise formalities and without obtaining any Central Excise Licence. It was further alleged that the petitioner supplied raw materials to the various parties and got the finished polythene films manufactured out of such materials on payment of job charges and thus petitioner engaged itself in the manufacture of the said goods within the meaning of Section 2(f) of the said Act. By the said notice the respondent No. 1, the Collector of Central Excise, Calcutta, required the petitioner to show cause as to why Central Excise duty should not be demanded from and paid by the petitioner under Rule 9(2) of the said Rules read with Section 11A of the said Act and as to why the penalty should not be imposed upon the petitioner under Rule 173Q of the said Rules. The petitioner, however, replied to the show, cause notice, stating inter alia, that the polythene films were manufactured by the manufacturers and that the petitioner company was not and could not be regarded as the manufacturers thereof. It was further stated that the responsibility of procuring the materials required for making the films other than granules was entirely of the manufacturers and the petitioner was not in any way concerned with the same. There was no control or supervision of any nature whatsoever by the petitioner company on the manufacturing activities of the other manufacturers. The aforesaid manufacturers carried on the manufacturing activities on their own machinery and with their own employees and that the employees of the manufacturers were not connected with the petitioner in any way and they worked under the control and supevision of the said manufacturers. Elaborating in details the petitioner company asserted that in any event the petitioner company cannot be regarded as the manufacturers in respect of the said manufacturing activities; while Section 2(f)of the Central Excises and Salt Act provides that the word "manufacturer" shall include not only a person who employs hired labour in the production or manufacture of excisable goods but also any person who engages in their production or manufacture on his own account. Under the provisions of Section 2(f) of the said Act, the petitioner does not come within the mischief of that section. Stating all these facts in details the petitioner has moved this Court and obtained a Rule on 14-5-1982 on the ground that assuming though not admitting that any Central Excise duty was payable on the making of polythene films out of duty paid granules by the manufacturers, the petitioner cannot be regarded as the manufacturer in respect of the said manufacturing activities of the manufacturers as per definition given in Section 2(f) of the said Act and the respondent No. 1 and the Central Excise authorities while issuing notices upon some of the manufacturers requiring them to show cause as to why Central Excise duty should not be paid by them on the making of polythene films by them out of granules supplied by their customers including the petitioner cannot proceed against the petitioner also on the same footing by treating the petitioner company as a manufacturer. The allegation of the petitioner is that the notice dated 16-3-1982 has been issued by the respondent No. 1 after the expiry of the period of limitation and the same is wholly illegal, invalid and without jurisdiction. Under Section 11A of the said Act, such notice is required to be issued within a period of six months from the relevant date. The expression "relevant date" has been defined in the said Section 11A to mean, inter alia, in the case of excisable goods on which duty has not been levied or paid or on which duty has been short levied or has not been paid in full, the date on which the duty was required to be paid under the said Act or the said Rules. It is placed on record that the provisions of Section 11A(1) of the said Act does not and cannot have any application in the instant case. All necessary and relevant facts were fully disclosed to and/or were known to the Central Excise Authorities, and in spite of being aware of such facts proceedings have been initiated with mala fide motive and the acts done and/or caused to have been done by the respondents are unwarranted and uncalled for. The procedure laid down in Rule 56A was not and could not be followed in view of the accepted position that no Central Excise duty was payable on the making of the said films by the manufacturers out of the duty paid granules. It has, however, been placed on record that the polythene films were covered by the Notification No. 71/71-C.E. and under the provisions of the said notification as it stood prior to its amendments on June 19,1980 the manufacturers of the said polythene films were fully entitled to claim and get set-off of the duty already paid on the granules used for making the said films. Since the respondents are going to give effect and/or taking steps pursuant to and/or the furtherance of the notice to show cause dated 16-3-1982 and to initiate proceeding relating thereto, the petitioner company has been compelled to move the Writ Court seeking reliefs as already indicated above.
(3.) The writ petition is contested by the respondents Central Excise Authorities, by filing an affidavit-in-opposition. It is disclosed therein that the petitioner company supplies raw materials to other parties and get finished goods i.e. rigid polythene films, falling under Central Excise Tariff Item 15(2) manufactured out of the said raw materials on behalf of them. It further disclosed that on payment of job charges only to other parties thereby they engaged themselves in the manufacture of the said goods within the meaning of Section 2(f) of the said Act. It is emphasised that as per Section 2(f) of the Central Excises and Salt Act, 1944 the word "manufacturer" shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in the production or manufacture on his own account. The other allegations made by the petitioner have been controverted by placing on record that provisions of Section 11A(1) is applicable in the instant case and at no relevant time the petitioner company had disclosed the fact of manufacturing the polythene films and it was further submitted that the amount of duty payable by the petitioner company is a huge amount and the acts done and/or caused to have done by the respondents are justified in accordance with law.;