HINDUSTHAN GENERAL ELECTRICAL CORPORATION LTD Vs. SUPERINTENDENT OF CENTRAL EXCISE

JUDGEMENT

(1.) This is an application under Article 226 of the Constitution to quash the orders of the Superintendent of Central Excise, Ranchi, (Annexures I and II), dated the 13th March, 1961, and 17th March, 1961, directing the petitioner to pay the full excise duty on 1186 radio sets before removing them from the factory. The petitioner appealed against the said orders of the Superintendent of Excise to the Collector of Central Excise, Patna, who by his order dated the 30th June, (Annexure II-A) 1961, rejected the appeal. The (petitioner then moved the Central Government in revision and specially requested the Government by its letter dated the 22nd August, 1961, to give it an opportunity of being heard before disposing of the revision petition (Annexure V). The Central Government, however, by their letter dated the 27th September, 1961 (Annexure VI) informed the petitioner that they did not consider it necessary to grant a personal hearing at the revision stage and further intimated that if the petitioner had any further submissions to make they may be sent in writing. Thereafter, on the 21st December, 1961 (Annexure III), the Central Government rejected the revision application.

(2.) By the Finance Act, 1961, the following new item, item 33A, was inserted in the First Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as "the Act")'.

(3.) Several constitutional questions, including the vires of the Central Excise Rules (hereinafter referred to as "the rules") made under the Act, have been raised by Mr. Lal Narain Sinha on behalf of the petitioner. To appreciate these points it is necessary to refer to the relevant provisions of the Act and the rules made thereunder. The Act was made in 1944 for the purpose of consolidating and amending the law relating to central duties of excise on goods manufactured or produced in India. Section 3, which is the charging section, says that the duty shall be levied and collected in such manner as may be prescribed in the rules, in respect of exercisable goods which are produced or manufactured in India, at the rates set forth in the First Schedule. We may leave out of consideration goods which are produced, because in the present case we are concerned only with goods which are manufactured, with a view to remove any ambiguity that may arise as to the precise stage when the manufacture of certain class of goods may be said to have been completed, the definition Clause (f) of Section 2 was specially inserted in the Act in the following terms, namely, "manufacture" includes any process incidental or ancillary to the completion of a manufactured product". From this definition it may be fairly inferred that the stage of completion of a manufactured produce is not reached until all the processes incidental or ancillary have also been completed. The rate of excise duty was mostly on the aJ valorem basis and hence Section 4 laid down the principles to be followed in calculating the value of an article. Clause (a) of that section stated that the wholesale cash price for which an article of the like kind and quality is sold or is capable of being sold at the time of the removal of the article chargeable with duty shall be the value of the article. If such wholesale market does not exist for such article at such price at the place of manufacture, the wholesale price existing at the nearest place where such market exists shall be the. relevant factor. Clause (b) of that section provided for a special contingency which may arise if such wholesale price is not ascertainable at all. In such circumstances the price at which an article of the like kind and quality is sold or is capable of being sold by the manufacturer at the time of removal of the article chargeable with duty, was deemed to be the value of the article. Unlike other taxing statutes, such as, the Sea Customs Act, the Income-tax Act, the Sales Tax Act, etc., the Act did not contain detailed provisions for the assessment of the excisable goods to duty and their collection. This power was conferred on the Central Government by the rule-making power in Section 37 (2) (i), which is as follows: