1987 (6) TMI 51 - HC - Central Excise

Court Upholds Orders on Excise Duty Violations, Recalculation of Duty, Penalty Validity

The court upheld the orders passed by the Collector of Central Excise and Customs and the Member of the Board of Central Excise and Customs, finding that ... Writ jurisdiction - Proforma credit - Penalty and fine Issues Involved:1. Whether the petitioners contravened the relevant provisions of the Central Excise and Salt Act, 1944 and the Central Excise Rules, 1944 by manufacturing air-conditioners without a valid license and removing them without paying excise duty.2. Whether the excise duty payable by the petitioners should be recalculated taking into account the duty already paid on compressors.3. Whether the imposition of penalty and fine was valid without establishing mens rea.Summary:Issue 1: Contravention of ProvisionsThe petitioners challenged the orders dated 3rd February 1979 and 16th November 1979 passed by the Collector of Central Excise and Customs, Pune, and the Member of the Board of Central Excise and Customs, New Delhi, respectively. The orders confiscated 17 air-conditioners under seizure u/r 173Q(1) of the Central Excise Rules, 1944, with an option to redeem on payment of a fine of Rs. 13,000/-, imposed a penalty of Rs. 10,000/-, and required payment of excise duty of Rs. 1,95,682/- u/r 9(2). The petitioners, who manufacture compressors, assembled 23 air-conditioners using purchased cabinets and removed 18 without declaring them or paying excise duty. The court examined whether the petitioners engaged in manufacturing air-conditioners without a valid license and removed them without paying excise duty as per Item No. 29A(2) in the Central Excise Tariff. The court found that the Central Excise authorities had considered all relevant facts and concluded that the petitioners had indeed contravened the provisions. The court held that the findings of fact by the Central Excise authorities were not perverse and did not warrant interference under writ jurisdiction.Issue 2: Recalculation of Excise DutyThe excise duty payable was determined at Rs. 1,95,682/-. The petitioners had paid excise duty on the compressors fitted in the air-conditioners. The court directed the Central Excise authorities to determine the exact amount of excise duty payable by the petitioners, taking into account the duty already paid on the compressors. The court found that the petitioners were not required to follow a particular procedure to take credit for the excise duty paid on the compressors since the duty on the end product was determined by the authorities.Issue 3: Imposition of Penalty and FineThe petitioners argued that there was no intention to evade excise duty and that the imposition of penalty and fine was invalid without establishing mens rea. The court noted that the question of intent to evade duty is a question of fact and that sub-clauses (a), (b), and (c) of Rule 173Q(1) do not require intent to evade payment of duty, unlike clause (d). The court declined to interfere with the finding of fact by the Central Excise authorities regarding the imposition of penalty and fine.Conclusion:The court partly made the rule absolute by directing the Central Excise authorities to determine the exact amount of excise duty payable by the petitioners, considering the duty already paid on the compressors. There was no order as to costs.