KIRLOSKAR BROTHERS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) By this petition under Article 226 of the Constitution of India, the petitioners have challenged the orders dated 3rd February, 1979 and 16th November, 1979 respectively passed by the Collector of Central Excise and Customs, Pune and the Member of the Board of Central Excise and Customs, New Delhi in. terms of which 17 air-conditioners under seizure under Rule 173Q(1) of the Central Excise Rules, 1944 (for short the Rules) were confiscated, with an option to redeem the same on payment of fine of Rs. 13,000.00 . The petitioners were also required to pay excise duty of Rs. 1,95,682.00 under Rule 9(2) of the Rules. In addition penalty amounting Rs. 10,000.00 was imposed under Rule 173Q(1).

(2.) The facts are in a narrow compass. The main business of the petitioners is manufacture of compressors for which purpose they have a factory at Karad in Satara District in the State of Maharashtra. The compressors are items installed in air-conditioners, water coolers, refrigerators and allied appliances and are assessable to excise duty Item 29A (3) of the Tariff to the Central Excise and Salt Act, 1944 (for short 'Act'). The petitioners admittedly have licence under the Act and the Rules for the manufacture of the compressors and pay excise duty on their manufacture. During the period prior to 1973, the petitioners were manufacturing compressors of three different capacities namely, of 1.00 ton, 1.25 tons and 1.34 tons, which were capable of being installed, inter alia, in the air-conditioners and these compressors were sold by the petitioners to different parties ail over India.

(3.) During the period between 1973 and 1976, the petitioners manufactured 23 compressors of a larger capacity suitable for being installed in 1.5 tons air-conditioners. During this period the petitioners acquired 23 fully furnished 'Coldin' air-conditioners cabinets complete in all respect namely, with grills, thermostats and other controls and knobs, from a concern in Ahrnedabad known as "Refrigeration Agencies". The compressors were fitted in the air-conditioner cabinets. Out of the 23 air-conditioners so manufactured/assembled, the petitioners delivered 15 air-conditioners to their various branches in different parts of the country, two were supplied to their branch office at Pune, five were kept in their Research and Development department in the - factory itself and the remaining one was sold at cost to a concern known as Delstar (Private) Limited at Oglewadi. It is common ground that the petitioners did not have any licence to manufacture the air-conditioners and had removed 18 air-conditioners out of the factory premises without declaring them as such, though excise duty was paid on the compressors used in the air-conditioners on the basis of gate-passes made out as compressors.