CENTRAL INDIA SPINNING WEAVING AND MANUFACTURING COMPANY LIMITED NAGPUR Vs. UNION OF INDIA MINISTRY OF FINANCE AND UNION OF INDIA

JUDGEMENT

(1.) By Writ Petition No. 2500 of 1982, the other Writ Petitions Nos. 1837/1983, 2250/1983, 779/1983, 1923/1982 and 2275/1983 also stand disposed of, since the question involved is common in all these petitions. The petitioner in W.P. No. 2500 of 1982 is a Limited Company registered under the Companies Act, 1956 carrying on its business of spinning, weaving and manufacturing of cloth at Nagpur. It is popularly known as Empress Mills, Nagpur. Since about November 1978 the petitioner established at Nagpur a Division known as paper Division where the petitioner manufactures kraft paper. The kraft paper is classified for the purpose of Central Excise duty under Item 17(2) of the Central Excise Tariff. In exercise of the powers under Rule 8 of the Central Excise Rules, the respondent No. 1 by Notification No. 128/1977 dated 18-6-1977 exempted certain categories of papers manufactured in paper mills of the type described in the table to the notification from so much of the duty of excise leviable as specified in the schedule.

(2.) On or about 25th September, 1980 the officers of the Central Excise, Preventive Department, Nagpur in the course of their preventive checks on Nagpur-Kamptee road intercepted a truck No. MRL 4187 which was loaded with kraft paper. The truck was going from Nagpur towards Kamptee. On investigation it was found that the said truck was transporting 37 packages of kraft paper manufactured by the petitioner and the driver was not carrying the relative gate pass evidencing the clearance of the goods on payment of excise duty. As a follow up action the officers of the preventive department visited the premises of the petitioner Paper Mills for verification and checking of the account. At the premises they noticed another truck No. MHB 3702 loaded with 26 packages of kraft paper. This truck was ready to leave the factory premises while the officers were checking the bonded store-room of the petitioner mills; the said truck No. MHB 3702 also left the factory premises. The officers found that the original of the Gate Pass No. 242 covering the consignments of 37 packages found in truck No. MRL 4187 as also the original of Gate Pass No. 243 covering 26 packages which were in truck No. MHB 3702 were in the gate pass book of the petitioner. The officers of the Central Excise Preventive Department thereafter intercepted the truck No. 3702 on Kamptee road.

(3.) In the course of the investigation it was revealed inter alia that although the petitioner was paying excise duty on kraft paper at the concessional rate they were recovering from the customers the duty at the tariff rate. Consequently a show cause notice was issued to the petitioner by the Assistant Collector of Central Excise alleging the contravention of the various provisions of the Central Excise Rules, 1944 and the Central Excise and Salt Act, 1944 and the petitioner was called upon to show cause why duty amounting to Rs. 1,78,862.91 should not be recovered from it under section 11-A of the Central Excise and Salt Act, 1944. The petitioner replied the said show cause notice. As desired by the petitioner personal hearing was granted to it by respondent No. 2 the Collector. The Collector held that the petitioner was guilty of violating the various provisions of the Central Excise Rules. The Collector further directed the Company to pay an amount of Rs. 1,78,862.91 under section 11-A of the Central Excise and Salt Act, 1944 on the excess value during the period from 1-1-1980 to 25-9-1980.