GANGA DHAR RAM CHANDRA Vs. COLLECTOR CENTRAL EXCISE

JUDGEMENT

(1.) The petitioner is a firm which carries on the business of manufacturing and of selling vegetable non-essential oils at Agra. It owns a factory known as Ganga Dhar Ram Chandra Oil Mills where it manufactures vegetable non-essential oils and on such manufacture pays excise duty under the Central Excises and Salt Act, 1944. In addition to this, the petitioner takes oil seeds belonging to it to certain other oil mills, gets the oil manufactured thereon payment of the necessary manufacturing charges and takes the oil so manufactured and sells the same. These other oil mills are quite independent of the petitioners and of the petitioner oil mills. The vegetable oil manufactured by these other oil mills out, of oilseeds supplied by the petitioner was allowed to be removed by respondents without payment of any excise duty since the total quantity of oils produced by each one of these oil mills was within the exemption limit of 75 tons. Subsequently the respondent No. 3 appears to have taken the view that the vegetable non essential oil manufactured by these other oil mills out of oil seeds supplied by the petitioner was also liable to excise duty in respect of the oil manufactured by the several oil mills out of oilseeds supplied by the petitioner. The petitioner filed appeals before the Collector, but the Collector has refused to hear the appeals unless the amount of excise duty demanded has been deposited. In pursuance of the demand notices and order of detention was passed in respect of the vegetable non-essential oils belonging to the petitioner. Thereupon the petitioner filed this writ petition for quashing the demand notices and for restraining the respondents from recovering the excise duty in pursuance of those demand notices. The main argument of the petitioner is that it is not the manufacture of the vegetable oil manufactured by these other oil mills and is not liable to pay excise duty thereon, A counter affidavit has been filed on behalf of the respondents by the Deputy Superintendent, Central Excise, U.P., Allahabad. It stated therein that the petitioner holds a licence for manufacturing vegetable non-essential oils and is liable to pay excise duty on all such oils manufactured by it. It is asserted that in order to made payment of excise duty the petitioner adopted the method of supplying oilseeds to different mill owners and getting the oilseeds to different mill owners and getting the oilseeds crushed on payment. It is also asserted that the petitioner was really the manufacturer in respect, of this vegetable non-essential oil also.

(2.) A preliminary objection was raised by Shri Jagdish Swarup on behalf of the respondents, that since there was alternative remedy by way of an appeal, though the appeal could only be heard after the entire excise duty demanded had been deposited, this court should not entertain this writ petition. I cannot agree with this submission in the present case. The case of the petitioner is that he is not liable to pay the excise duty demanded and that the illegal demand and detention of its vegetable oil infringed its fundamental right under Article 19(1) (g) of the Constitution to carry on its trade and business of selling vegetable oil. A petition under Article 226 of the Constitution wherein there is a boon fide complaint of infringement of fundamental right cannot be thrown out on the ground of an alternative remedy being available to the petitioner, In the present case if the contention of the petitioner is right, then undoubtedly his fundamental right under Article 19(1) (g) has been infringed. I accordingly overrule the preliminary objection.

(3.) A duty of excise is primarily a duty levied on a manufacturer or producer in respect of the commodity manufactured or produced. The Act and the rules provide for the collection of the duty at stages which are considered most convenient. This is a matter of the machinery of the collection but does not affect the nature of the tax. According to decisions, the taxable event is the production or manufacture of goods. The essence of the excise duty is that the right to levy it occurs by virtue of the manufacture or production of goods. It is the fact of manufacture which attracts the duty even though it may be collected later. The duty is payable, in the first instance, by the manufacturer, even though he may not be the owner of the goods produced, and it may then be passed on to the owner and ultimately on to the consumer.