AGENCY Vs. S K BHATTACHARJEE

JUDGEMENT

(1.) This is an appeal by special leave from the order of the Central Government dated April 15, 1966 dismissing the appellant's revision against the order of the Collector of Central Excise, Poona dated July 20, 1964, confirming on appeal the order of the Assistant Collector, Central Excise, Kolhapur dated December 21, 1959, demanding excise duty amounting to Rs.43,020/-.

(2.) The appellant, Messrs Shree Agency, is a firm registered under the Indian Partnership Act and carries on business as dealers in textile goods, cotton yarn and other allied products at Sangli and Ichalkaranji in the State of Maharashtra. The firm consists of four partners. It does not own any power-loom factory. On May 11, 1957 a demand was made upon the appellant firm by the Superintendent of Central Excise, Jaysingpur (Rural) for a sum of Rs.2,32,614.12 nP. as excise duty payable on the cotton fabrics stated to have been manufactured on behalf of the appellant from in the factories situated at Ichalkaranji, mentioned in the annexure to the notice of demand, at normal rates in respect of the production for the period from July 1, 1956 to April 30, 1957. The appellant represented to the Assistant Collector, Central Excise, Kolhapur against this demand notice. But the same was confirmed by him on September 30, 1957. An appeal was then taken by the appellant to the Collector of Central Excise, Bombay. But the same was not entertained on account of non-compliance with the condition precedent of deposing the duty demanded. Prayer for waiver of this condition precedent was declined by the Collector. The appellant thereupon approached the Central Board of Revenue, which, as a special case, agreed to convert the demand on the basis of compounded levy if the appellant undertook to honour the same. The appellant gave written undertaking as desired and a revised demand for Rs.52,290 was then served upon the appellant by the Deputy Superintendent. Central Excise, Ichalkaranji. This demand was also objected to and the matter went up to the Assistant Collector, Central Excise, Kolhapur, who on December 19, 1959 gave to the appellant some relief. This order was made after hearing the appellant. Pursuant to this order the Deputy Superintendent, Central Excise, made a demand on the appellant for a sum of Rs.43,020 on January 13, 1960. Against the order of the Assistant Collector an appeal was preferred under S.35 of the Central Excises and Salt Act, 1944 (Act No.1 of 1944) (hereinafter called the Act) to the Collector of Central Excise, Poona. But since the appellant had not honoured the demand which was a condition precedent to the hearing of the appeal under the then S.189 of the Sea Customs Act, 1878 as applicable to Central Excise, the Collector rejected the appeal without going into the merits. The appellant thereupon filed a writ petition in the Bombay High Court under Art. 226 of the Constitution but the same was dismissed on July 12, 1961 both on the ground of inordinate delay in approaching the High Court and on the merits. The appellant thereafter filed a revision petition with the Government of India requesting that the appeal preferred against the order of the Assistant Collector be heard by the Collector of Central Excise, Poona on the merits, at the same time offering to pay a part of the demand. After certain correspondence between the appellant and the Government, the latter directed the appellant to deposit a sum of Rs.10,000 and to furnish a security bond for the balance of the duty. On compliance by the appellant with this condition, the Government directed the appeal to be considered on merits after hearing the appellant. The Collector, after hearing the parties at length, accepted the case of the department according to which the appellant used to get its cloth manufactured by 16 weavers and made up its accounts in such a manner that those weavers ultimately did not get anything more than 2 1/2 to 2 3/4 annas per yard of the cloth woven by them. The appellant's contention that it used to sell yarn to the weavers and buy cloth from them was not accepted and it was found by the Collector that the so-called proprietor-weavers had no interest in the production of the cloth and did not even maintain proper accounts of consumption of raw material and production of cloth. In the opinion of the Collector, there was no actual sale of cloth at all by the weavers to the appellant. On this finding the Collector by his order dated July 20, 1964, declined to interfere with the order of the Assistant Collector.

(3.) On further revision the Central Government made the following order on April 15, 1966, affirming the order of the Collector: