1965 (11) TMI 17 - HC - Central Excise

Court quashes excise orders, mandates fair appeal rehearing for petitioner

The court quashed the orders of the Superintendent of Central Excise, the Collector of Central Excise, and the Central Government, directing a rehearing ... Statute - Taxing Statute - Removal of goods - Assessment - Revision Issues Involved:1. Whether the manufacture of wireless sets was completed prior to 1st March 1961, thereby exempting them from excise duty.2. Constitutionality of the Central Excise Rules and the delegation of legislative powers.3. Whether the refusal to grant a personal hearing at the revision stage violated principles of natural justice.Issue-Wise Detailed Analysis:1. Completion of Manufacture Prior to 1st March 1961:The petitioner argued that the wireless sets were fully manufactured before 1st March 1961 and thus not subject to excise duty under the new item 33A inserted in the First Schedule to the Central Excises and Salt Act, 1944. However, an inspection on 9th March 1961 revealed that 1186 radio sets were in a dismantled condition, with several components not yet assembled. The Superintendent of Central Excise concluded that the manufacture was not completed prior to 1st March 1961, and excise duty was payable. This decision was upheld by the Collector of Central Excise and the Central Government in revision.2. Constitutionality of the Central Excise Rules and Delegation of Legislative Powers:The petitioner contended that the provision of the machinery for assessment and collection of excise duty was a legislative function that had been unconstitutionally delegated to the Central Government. The court rejected this argument, stating that Article 265 of the Constitution uses the term 'law,' which includes rules made under an Act of the Legislature. The court noted that the Act provided sufficient guidance for rule-making, including the definition of 'manufacture' in Section 2(f) and principles for determining the value of goods in Section 4. The court also highlighted that rules must be laid before Parliament, ensuring legislative oversight.3. Refusal to Grant Personal Hearing at Revision Stage:The petitioner argued that the refusal to grant a personal hearing at the revision stage violated the principle of natural justice, specifically the rule of audi alteram partem. The court agreed, citing Supreme Court precedents that required quasi-judicial authorities to provide a reasonable opportunity for a hearing. The court emphasized that the question of whether the manufacture of a wireless set was complete is a mixed question of law and fact, necessitating a personal hearing.Conclusion:The court quashed the orders of the Superintendent of Central Excise dated 13th March 1961 and 17th March 1961, the appellate order of the Collector of Central Excise dated 30th June 1961, and the order of the Central Government dated 21st December 1961. The Collector of Central Excise was directed to rehear the appeal after giving the petitioner a reasonable opportunity to represent their case. There was no order for costs.