PURSHOTTAM GULAB BUDH Vs. GOVERNMENT OF INDIA

JUDGEMENT

(1.) The First petitioner is a partnership firm of which petitioners Nos. 1 to 6 are the partners. Petitioner No. 4 used to manufacture during his leisure hours fans of transistor shape, consisting of a plastic cabinet and a motor run by a battery cell. The Petitioner describes the fans as baby fans or toy fans. The Senior Superintendent of Central Excise served a notice on the first petitioner asking the firm to pay a sum of Rs. 25 in lieu of prosecution as they had contravened the provisions of rule 210-A of the Central Excise Rules of 1944 in as much as the firm manufactured 200 transistorised electric fans during S.Y. 2019 to 2023 without securing a Central Excise licence for the manufacture of the same. On July 11, 1967 the petitioner received a letter from the Inspector of Central Excise, Jamnagar making a demand of excise duty in respect of 200 fans at the rate of Rs. 5/- plus Re. 1/- as special excise per fan. The Superintendent, Central Excise, Jamnagar served a demand notice on the first petitioner on September 15, 1967, asking the said petitioner to show cause why the penalty should not be imposed on the firm for contravening rule 9(2) read with rule 7 of the Central Excise Rules, 1944 . Why one fan seized from the said firm should not be confiscated under rule 9(2) of the said rules and why duty on 200 fans should not be recovered from the firm under the provisions of the said rule. The petitioner firm gave an explanation by its letter dated September 22, 1967 denying that they had manufactured 200 transistorised electric fans and the said fans could not be classified as electric funs under tariff item 33 by any stretch of imagination as they were curiosity articles for children's play. By an order dated October 28, 1967, the Superintendent, Central Excise, Jamnagar, ordered a penalty of Rs. 100 under rule 9(2) of the Central Excise Rules, 1944 and also ordered confiscation of one fan under the said rule. Against this order an appeal was filed to the Deputy Collector, Central Excise, Ahmedabad but the same was dismissed. The petitioners filed revision application before the Government and the same was also dismissed. The petitioners have filed this petition challenging the said orders passed by the Central Excise Authorities on the ground that the tariff item 33 has not been properly interpreted and the decisions of the authorities that the fans which the petitioners had manufactured were covered by the said item.

(2.) The relevant part of Item 33 is as follows :- <FRM>JUDGEMENT_9_LAWS(GJH)4_1971_1.html</FRM>

(3.) The word "fan" is also understood in the same sense in common parlance. One of the articles which is to be taxed in the present case is shown to us. When it was worked, it did display air but the displacement was so negligible that it cannot be said that it circulated air. It is a article of curiosity for children. It is not capable of being used as a fan. It is not the appearance of the article that matters, but the test is whether the article can be used as a fan. The article is not capable of being used as a fan. The decision of the Central Excise Authorities that the articles fall within the Tariff Item No. 33 is patently erroneous. By erroneously construing the said item, the Central Excise Authorities recovered the excise duty, penalty from the petitioner and had confiscated one fan. For the aforesaid reasons these orders cannot be sustained and, therefore, the said orders passed by the Central Excise Authorities, to the effect, that the petitioners are liable to pay excise duty and penalty in respect of the articles in question are quashed. The order confiscating one toy fan is also quashed. As no duty or penalty is payable in respect of the articles in question, the duty or penalty, if paid, is ordered to be refunded and it is directed that the confiscated toy fan be returned to the petitioners. The rule issued on the petition is accordingly made absolute. The respondents to pay costs of the petitioners.