VRAJLAL MANILAL Vs. UNION OF INDIA

JUDGEMENT

(1.) Messrs. Vrajlal Manilal and Co., carry on the business of manufacture of bidis at Saugor (Madhya Pradesh). The firm in the course of its business stores tobacco, which is an excisable commodity under Central Excises and Salt Act of 1944 (Act No. 1 of 1944). On a particular consignment the authorities under the Act have assessed excise duty and have called upon the firm to pay this amount The firm has filed this petition under Article 226 of the Constitution challenging the validity of this demand.

(2.) The facts relating to this case are these. This company imports large quantities of tobacco from the State or Bombay, keeps the same in its bonded warehouse and after processing the same takes it to the factory for manufacture of bidis. The consignment in question entered the firm's bonded warehouse on 28-4-1953, and it then weighed 92483.09 lbs. After processing when it was taken out of the warehouse, it showed a reduction in weight by 1362.99 lbs. This loss in weight comes to 1.47 per cent. The excise authorities charged duty on the actual weight of the goods (91120.1 lbs) as obtainable at the time of the tobacco leaving the warehouse, at annas fourteen per pound. There is no dispute about this charge. As regards the loss in weight, the excise authorities exempted 1 per cent of it from duty, but by order dated 8/9th September, 1933, levied excise duty on .47 per cent of it. This duty comes to Rs. 383/4/-. The company challenged its liability to pay this duty by appeal and then revision under the Act, but without any success. Hence this writ petition.

(3.) In substance petitioners' case is that the duty under the said Act is leviable when after processing the tobacco is taken out of the warehouse to the factory for manufacture of bidis and, therefore, its weight at that stage is the only one which should be taken into consideration for the purposes of computing excise duty. On the other hand, respondent's, case is that the duty is leviable as soon as the tobacco has been cured and as that was done in the present case before the consignment readied company's bonded warehouse, the duty is payable on the weight found at the time of its entering in the warehouse. Further the respondent's case is that the exemption of duty granted regarding 1 per cent of loss in weight by the time the tobacco was taken out from the warehouse is ex gratia and could not be claimed by the company as a matter of right under the Act. The only question, therefore, that requires determination in this case is as to the point of time when the duty is leviable under the Act and the rules framed the rounder. For this purpose, it is necessary to consider various provisions of the Act and the rules.