1978 (9) TMI 62 - HC - Central Excise

Court upholds excise duty levy, rejects challenge on jurisdiction. Follow appellate procedures.

The court upheld the central excise duty levy on the plaintiff, dismissing the argument of illegal assessment. It determined that the civil court lacked ... Ouster of civil court jurisdiction by statutory finality of administrative orders - Finality of orders in appeal under the Central Excise scheme - Correctness of assessment to be challenged only by statutory appeals/revision - Exception where constitutionality is challenged or no statutory machinery for refund - Maintainability of a civil suit seeking declaration against excise assessmentOuster of civil court jurisdiction by statutory finality of administrative orders - Finality of orders in appeal under the Central Excise scheme - Correctness of assessment to be challenged only by statutory appeals/revision - Civil court jurisdiction is excluded where the suit challenges the correctness of an excise assessment which is made subject to finality under the statutory appellate scheme. - HELD THAT: - The court held that Section 35(2) of the Act, which declares that every order passed in appeal shall, subject to revision, be final, excludes the jurisdiction of the civil courts to entertain a suit that in substance questions the validity or correctness of an assessment. The judgment applies the principle that however wrong an assessment may appear, challenges to the rightness of such an assessment fall within the statutory remedies of appeal and revision; they do not constitute a cause of action maintainable in a civil suit. Reliance was placed on the exposition in Dhulabhai v. State of Madhya Pradesh which explains that where a statute gives finality to orders of specialised tribunals, civil jurisdiction is ousted unless the statutory scheme fails to provide adequate remedies or the tribunal has not observed fundamental judicial procedure. On the facts, the plaintiff's case amounted to disputing the assessment and therefore fell squarely within the exclusive statutory remedies, barring civil adjudication. [Paras 7, 8]The suit was not maintainable in a civil court because it essentially challenged the correctness of an excise assessment reviewable by the statutory appellate/revisionary fora.Exception where constitutionality is challenged or no statutory machinery for refund - Maintainability of a civil suit seeking declaration against excise assessment - The contention that the case involved taxation of a non-excisable commodity (invoking Provincial Government of Madras v. Dasappa) and thereby rendered a civil suit maintainable was rejected. - HELD THAT: - The court considered the appellant's submission that the levy concerned a non-excisable commodity and that Dasappa supported civil relief in such cases. It held that the present suit did not raise lack of jurisdiction or a challenge to the constitutionality of the taxing provision, but only alleged improper assessment. Accordingly, the Dasappa line of authority did not assist the appellant. The reasoning follows the Dhulabhai principles distinguishing cases where civil remedies are permissible (for example, where constitutionality is in issue or statutory machinery for refund is absent) from routine challenges to correctness of assessments which must be pursued under the Act's appeal/revision mechanism. [Paras 6, 7, 8]The exception premised on taxation of a non-excisable commodity was held inapplicable; the suit remained barred as it merely disputed assessment.Final Conclusion: Second appeal dismissed; civil suit held not maintainable as it impermissibly challenges the correctness of an excise assessment subject to the statutory appellate/revision remedies; no order as to costs. Issues:1. Incorrect levy of central excise duty on the plaintiff.2. Jurisdiction of the civil court to try the suit challenging the assessment order.Analysis:Issue 1: Incorrect levy of central excise duty on the plaintiffThe plaintiff, a tobacco merchant, challenged the central excise authority's decision to levy duty on him for dealing in unmanufactured and manufactured tobacco. The central excise authorities alleged that the plaintiff had manufactured pani tobacco from non-duty paid tobacco, leading to the duty levy. The plaintiff contended that the conclusion was arbitrary, lacked evidence, and denied proper opportunity to peruse records. The trial court and the appellate court upheld the assessment order, ruling in favor of the central excise authorities. The plaintiff's argument of illegal and erroneous assessment was dismissed, leading to the second appeal.Issue 2: Jurisdiction of the civil court to try the suitThe central excise department raised an objection regarding the maintainability of the suit in the civil court, citing the finality of the assessment order under Section 35(2) of the Central Excises and Salt Act, 1944. The plaintiff argued that the levy was without jurisdiction as a non-excisable commodity was wrongly taxed. Reference was made to the case law to support the argument that the civil suit challenging the assessment was maintainable. However, the court held that the jurisdiction of the civil court was excluded in cases related to the correctness or validity of the assessment. The court emphasized that the civil court's jurisdiction should not be readily inferred, especially in matters concerning taxing statutes. The court relied on precedents to establish that challenging the assessment order falls under the jurisdiction of appellate or revision authorities as provided by the Act. Consequently, the court dismissed the second appeal, holding that the suit was not maintainable in a civil court due to the exclusion of jurisdiction.In conclusion, the judgment upheld the central excise duty levy on the plaintiff and determined that the civil court lacked jurisdiction to entertain the suit challenging the assessment order. The court emphasized the finality of assessment orders under the Act and the need to follow the prescribed appellate and revision procedures for challenging such orders.