TaxTMI 
TaxTMI 
1979 (10) TMI 94
X X X X Extracts X X X X
X X X X Extracts X X X X
....hey require benzene to be used as one of the ingredients in the manufacture of rubber. The benzene is obtained as a by-product in the iron steel plants and it is also available from the Indian Oil Corporation. The Excise duty under the Central Excise Act is levied on the benzene produced by the manufacturers. The benzene is a highly volatile and inflammable substance. It has, therefore, to be transported in strong vats or wagons and the handling has to be done very carefully so as to avoid losses by evaporation, spillage or otherwise. The benzene being a light liquid has to be pumped from the manufacturer's factory into the railway wagons under pressure. Again on reaching the petitioners' end it has to be pumped out to the petitioners' stor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....el for the petitioner that the Excise duty is chargeable on the manufacture and not on sale. It follows that the duty, that is payable is, on the quantity manufactured and not the quantity actually received. 6. The duty is payable at the rates set forth and in the First Schedule of the aforesaid Act, known as tariff duty. However, under Rule 8 of Chapter III of the Central Excise Rules the Central Government is authorised to grant exemption in respect of the whole or part of the duty leviable, in respect of such goods, as it may notify in the official gazette from time to time. The concessional duty is termed as remitted duty. We are informed that the Excise duty leviable on the benzene manufactured is Rupees one thousand per kilo litre.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the quantity of benzene lost. These notices had been filed by the petitioner as Annexures 2A to 2N to the petition. Thereafter orders were passed by the Deputy Collector condoning five per cent loss during transit and ordered the duty to be paid on the remaining quantity at usual rates. The orders of the Deputy Collector, Central Excise, Allahabad are filed as Annexures 3A to 3K to the writ petition. The petitioners filed appeal against the aforesaid order and the Collector, Central Excise partly allowed the appeal by allowing exemption at the flat rate of 7.5 per cent. The copies of the orders of the Collector, Central Excise, Allahabad are filed with the writ petition as Annexures 4A to 9N. Thereafter the petitioners filed revisions befor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ble but it could be collected from the consignee. The nature of Excise duty was considered in connection with the same in paragraph 7 their Lordships of the Supreme Court relied upon a case reported in A.I.R. 1939 Federal Court 1 = 1978 ELT (J 269). In Re. Central Provinces and Berar Sale of Motor Spirit and Lubricants Taxation Act, 1938. They also relied upon another case of Federal Court reported in A.I.R. 1942 Federal Court 33 = 1978 ELT (J 272), Province of Madras v. Boddu Paidanna and Sons which considered the scope of Excise duty. Another case related for Excise duty relied upon by their Lordship of the Supreme Court was Governor General in Council v. Province of Madras reported in A.I.R. 1945 P.C. 98 = 1978 ELT (J 280). Summing up th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... decision is capricious or no reasonable man could have reached that decision. From the orders of the Deputy Collector it is clear that he applied his mind to the question of losses and then come to a finding, and not arbitrarily. He also granted personal hearing to the petitioners and considered even the cases relied upon by the petitioners. He gave following finding regarding the actual loss : "(d). the loss was not real but virtually due to the defective flow meter which was giving wrong readings. At his suggestion, the factory installed a meter tank authentically caliberated by the weights and measures department in place of the flow meter and the losses have come down sharply after the switch over to the measuring tank." 12. The ....