COLLECTOR OF CENTRAL EXCISE Vs. HIRACHAND NARAYANDAS MADHEKAR

JUDGEMENT

(1.) THE present appeal arises out of Judgment and decree dated 14th July 1981 passed by the Jt.Civil Judge S.D Solapur in Special Civil Suit No. 108 of 1977.

(2.) THE respondent/original plaintiff has instituted Special Civil Suit No. 108 of 1977 on 30th May 1977 in the Court of Civil Judge Senior Division, Solapur and challenged the orders passed by the Collector, Central Excise, Pune dated 28th September 1964 wherein the Collector has passed the order for recovery of Rs.4,745.75, Rs.2,000.00, Rs.20,920.00 and Rs.2,000.00 by way of duties and penalties as well as the order passed by the Central Board of Excise and Customs in appeal filed by the plaintiff wherein the appellant Board has confirmed the said order of the Collector, while dismissing the appeal as per order dated 30th June 1975 and sought for injunction against the defendants restraining them from recovering the said amount by way of excise duty and penalty. While filing the suit, it is also highlighted in the plaint that by virtue of the show cause notice issued earlier by the Collector of Central Excise and Customs by adjudicating upon said show cause notice, the Collector has passed the order imposing the excise duty as well as the penalty and earlier the said order of Collector was challenged before the Board of Central Excise and Customs being appeal no. 104 and 105 of 1965 and the said appeals were disposed of by the Board of Central Excise and Customs which was challenged by the plaintiff under the provisions of the said Act before the Central Government by way of revision application and while dealing with the said revision application nos. 920 and 921 of 1966, the Central Government dismissed the same. When the said orders were challenged by way of preferring Writ Petitions before the High Court, in the said Writ Petitions the consent terms were filed and as per the consent terms,.the said writ petitions were disposed of wherein the order of the appellate Court viz. Central Excise Board as well as the order of the Central Govt. in revision were set aside and the Central Board of Excise and Customs was directed to hear the appeals without insisting on prepayment of the amount adjudicated upon by the Collector and said writ petitions were disposed of by recording the Consent terms on 8th October 1969. Even after the remand of the said appeal, the appellate authority viz.Board of Central Excise and Customs has dismissed the appeal and against which the revision applications were presented before the Central Government which were pending when the plaintiff has filed the suit challenging the order of the Collector of Excise and Customs and the order of the appellate authority viz. Board of Central Excise and Custom. The challenge in the suit is mainly on the ground that while issuing the show cause notice on the plaintiff and when the collector of Excise and Customs, Pune has passed the order imposing the duty as well a penalty as per rule 96(q) and 96(s) of the Central Excise Rules 1944 and in the said proceedings, no opportunity was given to the plaintiff and the principles of natural justice were violated by the authorities while passing the order of recovery of duty as well as penalty. The suit is accordingly for declaration to the effect that the orders of the Collector of Central Excise Pune dated 20th September 1964 for recovery of an amount of excise duties and penalty are null and void or ultra vires, inoperative and not binding on the plaintiff and prayed that the defendants be permanently restrained from recovering the duties and penalty imposed by the authority. The plaintiff is a proprietor of oil mill situated at 153 Jodhbhavi Peth, Solapur and he carries on business of manufacturing vegetables non-essential oils commonly known as edible oils under the Central Excise Licence No.4 and he carries on business as per rules. On 30th November 1961 he received two notices from the Superintendent of Central Excise, Solapur indicating that the plaintiff has contravened the provisions of rule 9(1), 52(A), 226(2) and 960 of the Central Excise Rules 1944 and the plaintiff was called upon to explain as to why the penalty should not be imposed. It is also the case of the plaintiff that the said show cause notice was cancelled and fresh show cause notice was issued and served on 24th July 1963 wherein the plaintiff was called upon to explain as to why the penalty should not be imposed upon him in addition to the duty at standard rate of 42 tons 835 lbs and on 22 tons and 554 lbs. of V.N.E.(vegetable non essential oils) alleged to have been produced in excess of the quantities mentioned in the prescribed accounts in the mills licensed premises during the period between December 1959 to May 1960. It was also mentioned in the said notice that the plaintiff has failed to maintain the correct and true accounts of the production of V.N.E. oils in his mill. The Collector of Excise Pune has kept the matter for preliminary hearing on 23rd June 1964 in presence of other oil manufacturers. During the meeting before the Collector, the plaintiff has denied the charges levelled against him as shown in the show cause notices and the hearing was adjourned as the necessary material was not available and Collector has informed that the intimation will be given for the next date later and accordingly, the Collector has not passed any order on 23rd June 1964. It is the case of the plaintiff that no opportunity was given by the Collector Pune though the Collector has adjourned the matter on 23rd June 1964 and as informed by the Collector the next date of hearing will be communicated, no fresh date of hearing was given and behind the back of the plaintiff, the Collector of Central Excise proceeded exparte on the said show cause notice and he has passed the order on 28th September 1964 by imposing the excise duties and penalty. The said order of the Collector Central Excise was challenged before the appellate authority viz. Central Board of Excise and Customs at New Delhi as provided under Section 35 of the Central Excise and Salt Act, 1944 and prayed for setting aside the order of the Collector on the ground that the Collector has without giving any opportunity of further hearing, has exparte passed the said order and prayed that said order is liable to be set aside. The Central Board of Excise and Customs had served the notice for payment of penalty amount and dues which was imposed by the Collector and at that stage, the petitioner has filed two Writ Petitions before the High Court under Article 226 of the Constitution of India and in the said two Writ Petitions, the consent terms were filed and as per the consent terms, it was agreed that the order passed by the secretary of Govt. of India being Order No.920 of 1966 and 921 of 1966 are set aside and as per the Agreement, the Central Board of Excise and Customs could hear the appeals without insisting the pre-payment of the amount as adjudicated upon by the Collector. It is also the case of the plaintiff that thereafter, the Central Board of Excise and Customs, New Delhi had fixed the hearing of the said appeals after four years. The said appeal at first, was fixed on 16th November 1974 at Bombay and on that date, the appeal was adjourned to 30th June 1975 on the request being made by the plaintiff and it is the case of the plaintiff that the Central Board of Excise and customs, has rejected the said appeals without considering the case put forward by the appellant. Even the said two appeals were decided by the appellate authority exparte the appellate authority has not given any opportunity thereby while deciding the said appeals, the appellate authority has violated the principles of natural justice. It is the case of the plaintiff that the plaintiff is not manufacturer of V.N.E. oils in excess of the prescribed quantities yet, he was held liable on the basis of entries in the books of accounts of 3rd party over whom, he had no control and by ignoring the said fact, the appellate authority had disposed of the said appeals exparte. Accordingly, after serving the notice under Section 80 of the C.P.C. on 9th June 1976, the suit was presented in the trial Court on 30th May 1977.

(3.) CONSIDERING the pleadings, the trial Court has framed the various issues for determination. No oral evidence was led on behalf of the defendant. However, the plaintiff's evidence was recorded vide Exhibit-57. In the evidence of the plaintiff, it is borne out that he runs an oil mill since 1956 and the government is recovering the excise duties from 1st March 1956. The plaintiff is also having his licence to run the said oil mill. The plaintiff is maintaining all accounts as prescribed as per the Central Excise Act and Rules and he has maintained the R.G.1 Account and R.G.19 and Storage and Register Book. The plaintiff also used to fill up A.R.1 form after obtaining from the Excise Inspector and he used to obtain oil from the tank in presence of the Inspector. In the year 1961, he received notices from the Excise Department and that notices were replaced by another notices which are, Exhibits-31 and 33. In view of the show cause notice issued by the authority, he appeared before the Collector Central Excise at Pune alongwith other manufacturers at the preliminary inquiry. He has produced the documents before the Collector in the said proceedings. The Collector, has thereafter adjourned the matter and informed that intimation will be given later on. In his evidence, he has stated that the Collector has not given any opportunity for leading the evidence. He has asked for certain note books for cross-examination. The Collector in personal hearing at the preliminary inquiry stage, has informed that those documents are not available and thereafter without giving any opportunity, the Collector has proceeded exparte and has passed the order on 28th September 1964. In connection with the another show cause notice, the same fate was there and another order was also passed on the same date and he received the order and demand letter on 31st October 1964. The said order of the Collector was challenged by way of appeals as provided under the Act before the appellate authority viz. Board of Central Excise and Customs, the appellate authority has dismissed the appeals. The said order of the appellate authority was challenged before the Central Govt. in revision and Central Govt. has also dismissed the said revision application. After the dismissal of the revision applications by the Central Govt, the plaintiff has filed two Writ Petitions before the High Court and in the said two Writ Petitions the consent terms were filed wherein it was agreed that the order of the appellate authority and the order of Central Govt. in revision, be set aside and the matters were remanded back to the appellate authority without insisting upon the prepayment of the duties. Thereafter, in view of the order passed by the appellate authority, the Tahsildar has issued the notices of auction on 15th May 1971. Thereafter again another notice dated 4th November 1975 was received. After the order passed by the High Court when the matter was remanded back to the appellate authority and when the appellate authority has dismissed the appeals, the plaintiff has challenged the said order before the Central Govt. by filing revision application and the said revision application was pending at the time of filing of the suit. It is also borne out from the evidence of the plaintiff that during the pendency of the suit, said revision application filed by the plaintiff was dismissed. In the cross-examination, witness has admitted that he used to sell the oil at Bombay through M/s.Vora Bhaichand Hemchand who is the Commission Agent. He has admitted that he used to write letters to him at the time of sending the consignment. It is further admitted by this witness in his cross-examination that they have not given anything in writing in favour of the Excise Collector when the proceedings were initiated. The witness has further admitted that he used to maintain the private account separately. On considering the evidence of the plaintiff and without considering the merits of the order passed by the authorities, the learned trial Judge has decreed the suit and held that the order passed by the Collector of Central Excise for recovery of Rs.4,475.75 ps., penalty of Rs.2,000.00 and Rs.20920.00 and penalty of Rs.2,000.00 are illegal and null and void and defendants were ordered to be restrained permanently from recovering the said amount.