NAGRAT PAINTS Vs. UNION OF INDIA (UOI)

JUDGEMENT

(1.) THE petitioner is private limited company carrying on the business of manufacture and sale of paints and varnishes at Kanpur. The paints and varnishes manufactured by the petitioner company are liable to excise duty under Central Excises and Salt Act, 1944 (hereinafter referred to as the Act), under Item No. 14 of the Central Excise Schedule. In the manufacture of these articles the petitioner uses processed vegetable non -essential linseed oil (hereinafter referred to as V.N.E, Oil). This oil is also liable to Central Excise Duty under Item No. 12 of the Centra? Excise Schedule. The oil is first converted into Aikyd Resin (Synthetic Resin) which, in its turn, is utilised for manufacturing paints and varnishes. This Alkyd Resin is also an excisable article. Under Rule 56A of the Central Excise Rules if duty paid material or component parts are brought in for the manufacture of finished excisable goods, a pro forma credit is granted to the extent the duty has already been paid on such material or component parts and it is adjusted against the excise duty leviable on the finished product. Obviously this Rule has been inserted to avoid double taxation, once on the component parts and again on the finished products. In order to avail of this concession, an application has to be made to the Collector, Central Excise, The petitioner company made such an Application in respect of the duty paid V.N.E. Oil to the Collector, Central Excise, Kanpur, who by this order dated 25 -3 -63 granted the exemption, which was communicated to the petitioner in the following words : -

(2.) ON receiving these two notices of demand the petitioner made two representations to the Assistant Collector, Central Excise, Kanpur, those Representations were forwarded to the Superintendent, Central Excise, S.R.P. IV. Kanpur. for adjudication. That authority without giving any notice to the petitioner or affording any opportunity to explain its case, rejected the representations by the following order dated 18th June, 1970 :

(3.) TWO contentions have been raised on behalf of the petitioner, (1) that the levy of the impugned excise duty is wholly unauthorised under the law and (2) that the demand of excise duty is time -barred. The authority which raised the demands did not pass any order. It merely issued two notices of demand. On the representations of the petitioner the Superintendent, Central Excise, Kanpur, passed an order which has already been extracted above. This order also does not indicate the provision under which the same has been passed. But in the Counter -Affi -davit the order is sought to be justified under Rule 56H(3)(a) read with Rule 10A and Rule 56A(3) as it stood at the material time read': -