Court rules against respondents in differential duty dispute, orders return of Bank Guarantee

KISHAN LAL DALMIA Versus COLLECTOR OF CENTRAL EXCISE AND OTHERS

KISHAN LAL DALMIA Versus COLLECTOR OF CENTRAL EXCISE AND OTHERS - 1986 (26) E.L.T. 76 (Cal.) Issues:
Challenge of demand of duty, certificate proceedings, and distress warrant under Central Excises & Salt Act, 1944.

Analysis:
1. The petitioner challenged the demand of duty, certificate proceedings, and distress warrant issued by Central Excise Authorities under the Central Excises & Salt Act, 1944. The petitioner purchased cold rolled strips, re-rolled them in his factory, and sold them to customers. The Superintendent of Central Excise raised a demand, alleging duty non-payment on the purchased strips. The petitioner contended that re-rolling is not manufacturing but processing, submitting monthly production returns as per rules.

2. The assessing officer charged a differential duty, claiming the petitioner failed to prove duty payment on purchased strips as per a specific notification. The petitioner argued that manufacturers of the purchased strips paid duty, enabling their sale in the market. The burden of proof was placed on the petitioner to show duty payment on inputs, which he couldn't provide. The assessing officer misdirected by demanding differential duty without verifying duty payment by the original manufacturers.

3. The Court noted that excisable goods cannot be removed without duty payment, presuming goods sold in the market are duty paid unless proven otherwise. Rerolling cold rolled strips does not constitute manufacturing under the Act. Referring to a Government order, it was established that rerolling doesn't create a new product. The petitioner's contention of no double taxation on the same article was supported by a Supreme Court judgment.

4. The Court held that the respondents were unjustified in demanding differential duty from the petitioner for processing cold rolled strips. The Rule was made absolute, appropriate writs were to be issued, and no costs were awarded. A Bank Guarantee furnished was to be discharged and returned to the petitioner by the Registrar Appellate Side.