RAVI ENGINEERING WORKS Vs. UNION OF INDIA

JUDGEMENT

(1.) THE plaintiff-appellant is in this Court in Regular Second Appeal against the concurrent decisions of the Courts below. Although on pleadings of the parties eight issues were framed, however, the controversy in appeal centres around only one issue i. e. issue No. 4, which is as under :-Whether the demand in question is illegal etc. as alleged in the plaint ?

(2.) M/s Ravi Engineering Works, Amritsar and its proprietor partner Kailash Chand Meheshwari filed the suit inter alia alleging they had purchased 2578. 749 metric tonnes of steel fails for the purposes of re-rolling in their own mills in the year 1964-65 from M/s Hindustan Steel Ltd. , Bhalai. They obtained a licence from the Central Department for manufacture of iron and steel products in their factory. The Inspector of Central Excise issued a notice of demand on March 2, 1966 demanding differential duty at a rate of Rs. 50/- per metric tonne. It was alleged that no separate duty was payable on the rails as under Item No. 26 AA (i) of the Tarrif, duty had already been paid on the purchase of rails. The said item pertained to semifinished steel including blooms, billets, slabs, sheet bars, tin bars etc. on which duty at Rs. 75/- per metric tonne plus excise duty leviable on steel ingots was payable. According to the plaintiffs the rails were manufactured from blooms and billets by M/s Hindustan Steel Ltd. The Inspector of Central Excise Department had been attending the plaintiffs factory and it was never pointed out that any extra duty was payable on the rails or the products manufactured therefrom in the factory of the plaintiffs. Thus, the plaintiffs did not charge any duty from their own customers to whom the manafactured goods were supplied. Rule 10 of the Central Excite Rules, 1944, applied to the case in hand and demand could not be raised for short levy after three months. Thus, in the suit while challanging the demand they prayed for permanent injunction restraining Union of India from recovering the amount of Rs. 1,28,937 45 paise under the impugned notice.

(3.) THE suit was contested and it was clarified that the demand was not on the basis of differential duty After purchase of the rails, the plaintiffs were required to manufacture goods which were exempt from further excise duty A notice was issued to the plaintiffs to give complete data of the articles manufactured from those rails. The plaintiffs having failed to reply to the said notice, it was taken that the plaintiffs manufactured exciseable goods and. thus, were liable to pay at the rate of Rs. 50/- per metric tonne at the production stage. It was not Rule 10 which was applicable but it was Rule 10-A of the Rules which was applicable and the period of limitation of three months as provided under Rule 10 was not attracted.