Shahnaz Ayurvedics v. Commissioner of Central Excise
2004-01-29
B.S.CHAUHAN, R.C.PANDEY
body2004
DigiLaw.ai
B. S. CHAUHAN, J. ( 1 ) THIS writ petition has been filed for quashing the order dated 14-5-2003 (Annex. 10) passed by the Customs Excise and Gold (Control) Appellate Tribunal, hereinafter called the cegat, by which the Tribunal has dismissed the appeal against the orders dated 7-8-1998 and 24-11-1998 passed by the adjudicating authority. ( 2 ) FACTS and circumstances giving rise to this case are that the petitioner No. 1 claims that it manufactures Ayurvedic medicines since 1986 after obtaining the licence under the Drugs and cosmetics Act, 1940 hereinafter called the Act 1940 and the Rules framed thereunder, hereinafter called the Rules. In September, 1987, the officers of the Central Excise department conducted investigation in the process of manufacturing of the products by the petitioner No. 1 as well as nature thereof. In 1988, dispute arose as to whether the products manufactured by petitioner No. 1 could fall within the category of Ayurvedic medicines or were in fact Cosmetics used for the care and condition of the skin and hair, and were liable to duty under the Central excise Tariff Act, 1985, hereinafter called the act 1985. For that purpose, the provisions of section 11a of the Central Excise Act, 1944, hereinafter called the Act 1944 were invoked and the matter was also examined as to whether the petitioner No. 1 had suppressed/concealed required informations/materials in that regard. After completing the inquiry required under the law, the Revenue accepted the plea of the petitioner No. 1 vide order dated 29-8-1989 passed by the Additional Commissioner, holding that the said products were Ayurvedic medicines and not cosmetics. It was further held that as no material facts were suppressed by the assessee, provisions of Section 11a of the Act 1944 could not be invoked and proceedings initiated vide show cause notice dated 7-3-1988 were dropped. Assessee was allowed clearance of its products under Chapter 30 of the Tariff Act, 1985, as Ayurvedic medicines. Again, the same controversy arose and the proceedings initiated by the show cause notice dated 14-7-1988, were dropped vide order dated 29-1-1992 by the Assistant Commissioner holding that products of the assessee were ayurvedic medicines and could not be classified as Cosmetics.
Assessee was allowed clearance of its products under Chapter 30 of the Tariff Act, 1985, as Ayurvedic medicines. Again, the same controversy arose and the proceedings initiated by the show cause notice dated 14-7-1988, were dropped vide order dated 29-1-1992 by the Assistant Commissioner holding that products of the assessee were ayurvedic medicines and could not be classified as Cosmetics. In 1994, the Classification Lists and Price List along with questionnaire were furnished by the assessee, as required under the provisions of Rules 173b and 173c of the Central Excise Rules, 1944, framed under the Act 1944, hereinafter called the "rules 1944". Same were provisionally approved vide order dated 26-8-1994 by the "assistant Commissioner, Central Excise, MOD-II, New Delhi and finally vide order dated 29-9-1994. The products stood classified under Chapter 30 and not Chapter 33 of the tariff Act 1985, holding the same to be Ayurvedic medicines and not Cosmetics. Similar remained the case regarding the other establishments in NOIDA, wherein the classification was approved under Chapter 30 of the Tariff Act 1985 by the Assistant Commissioner provisionally vide order dated 1-9-1994 and finally vide order dated 2-12-1994. Again, assessee was served with show cause notices dated 28-2-1997 1-4-1997 and 1-7-1997 regarding the same controversy and the authority, after adjudicating the matter, i. e. Commissioner of Central Excise (Adjudication), on 7-8-1998 passed the following order :" (1) As the facts establish that duty was evaded by wilful mis-statement and suppression of facts i upheld invocation of the extended period of limitation in terms of the proviso to Section 11a (1)of the Central Excise Act, 1944 and confirm the demand of duty amounting to Rs. 3,68,04,850/ (Rupees Three crores, sixty-eight lakhs, four thousand, eight hundred and fifty only) on M/s. Shahnaz Ayurvedics, Okhla Industrial Area, New Delhi and duty demands of Rs. 4,80,84,599/ (Rupees Four crores, eighty lakhs, eighty-four thousand, five hundred and ninety-nine only) and rs. 92,39,773/- (Rupees Ninety-two lakhs, thirty-nine thousand, seven hundred and seventy-three only) on M/s. Shahnaz Ayurvedics, Noida. I also hold that interest is recoverable from them under Section 11ab of the Central Excise Act, 1944. (2) I impose penalties equivalent to the duty determined under Section 11a (2), as indicated above, amounting to Rs. 3,68,04,850/- (Rupees Three crores, sixty-eight lakhs, four thousand, eight hundred and fifty only) on M/s. Shahnaz Ayurvedics, Okhla Industrial Area, New Delhi and Rs.
(2) I impose penalties equivalent to the duty determined under Section 11a (2), as indicated above, amounting to Rs. 3,68,04,850/- (Rupees Three crores, sixty-eight lakhs, four thousand, eight hundred and fifty only) on M/s. Shahnaz Ayurvedics, Okhla Industrial Area, New Delhi and Rs. 4,80,84,599/- (Rupees Four crores, eighty-lakhs, eighty-four thousand five hundred and ninety-nine only) and Rs. 92,39,773/- (Rupees Ninety-two lakhs; thirty-nine thousand, seven hundred and seventy-three only) on M/s. Shahnaz Ayurvedics, Noida under the provisions of section 11ac of the Central Excise Act, 1944. (3) I impose a penalty of Rs. 25 lakhs (Rupees Twenty-five lakhs only) on M/s. Shaherb cosmetics, under Rule 209a of the Central Excise Rules, 1944. (4) I impose a penalty of Rs. 50 lakhs (Rupees Fifty lakhs only) on M/s. Shahnaz Husain under rule 209a of the Central Excise Rules, 1944". ( 3 ) BEING aggrieved, assessee preferred appeals No. E/2787, 2925, 2926, 2927 and 2928 of 1998-NB- (C) before the CEGAT, which have been disposed vide impugned judgment and order dated 14-5-2003 (Annex. 10 ). By the said impugned order, the learned Tribunal set aside the order of interest only so far as the first clause is concerned. The second clause was modified to the extent that it was partly set aside imposing penalty on petitioner No. 2 under Rule 209a of rules 1944 as having dealt with the excisable goods and as the same was not liable to confiscation. No interference was made with Clause (3) of the order. However, the 4th clause of the order imposing the penalty of Rs. 50,00,000/- on assessee under Rule 209a of the Rules 1944 was set aside. By the same impugned order, 8 cross-appeals of the Revenue, on the ground that assessee was liable to pay the excise duty on the price of the products after including the excise duty, sales tax and other taxes, etc. , were dismissed. Hence this petition.
50,00,000/- on assessee under Rule 209a of the Rules 1944 was set aside. By the same impugned order, 8 cross-appeals of the Revenue, on the ground that assessee was liable to pay the excise duty on the price of the products after including the excise duty, sales tax and other taxes, etc. , were dismissed. Hence this petition. ( 4 ) BEFORE proceeding with the merit of the case, it may be pertinent to mention here that Shri b. N. Singh, learned Standing Counsel along with Shri S. K. Misra, Advocate for the Revenue has raised an objection regarding maintainability of the writ petition contending that as the remedy of appeal is provided under the provisions of Section 35l of the Act 1944 either against the order of classification or valuation, before the Honble Apex Court, and as in the instant case, both the issues are involved, this Court has no competence to deal with the case, and it should be dismissed as not maintainable. ( 5 ) ON the contrary, Shri Rakesh Dwivedi, learned Senior Counsel with Mrs. Gitanjali Mohan and shri W. H. Khan, Advocates appearing for the assessee has submitted that the Revenue did not raise the preliminary objection on the first date of hearing, i. e. 10-7-2003 when the matter was heard for admission. Preliminary objection should have been taken at the initial stage. It is being raised after the arguments on behalf of the assessee on merit stood concluded, after hearing on several dates. The statutory appeal before the Honble Supreme Court cannot be a bar for this court to exercise the power of judicial review under Article 226/227 of the Constitution and this case has to be considered entirely from a different angle, as it does not fall within the category of cases where writ is not entertained for the reason that the petitioner has not exhausted the statutory remedies of appeal or revision etc. The power of judicial review being a basic feature of the Constitution, cannot be taken away by the Legislature by providing the remedy of appeal before the Honble Supreme Court. The petition cannot be rejected on this sole ground. ( 6 ) WE have considered the rival submissions made by the learned Counsel for the parties and perused the record.
The power of judicial review being a basic feature of the Constitution, cannot be taken away by the Legislature by providing the remedy of appeal before the Honble Supreme Court. The petition cannot be rejected on this sole ground. ( 6 ) WE have considered the rival submissions made by the learned Counsel for the parties and perused the record. ( 7 ) THE Constitution Benches of the Honble Supreme Court, in K. S. Rashid and Sons v. Income tax Investigation Commission and Ors. , AIR 1954 SC 207 ; Sangram Singh v. Election Tribunal, kotah and Ors. , AIR 1955 S. C. 425; Union of India v. T. R. Varma, AIR 1957 SC 882 ; State of u. P. and Ors. v. Mohammad Nooh, AIR 1958 SC 86 ; and K. S. Venkataraman and Co. (P) Ltd. v. State of Madras, AIR 1966 SC 1089 , held that Article 226 of the Constitution confers on all the high Courts a very wide power in the matter of issuing writs. However, the remedy of writ is an absolutely discretionary remedy and the High Court has always the discretion to refuse to grant any writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere. The Court, in extraordinary circumstances, may exercise the power if it comes to the conclusion that there has been a breach of principles of natural justice or procedure required for decision could not be adopted. ( 8 ) ANOTHER Constitution Bench of the Honble Supreme Court, in State of Madhya Pradesh and anr. v. Bhailal Bhai etc. etc. , AIR 1964 SC 1006 , held that the remedy provided in a writ jurisdiction is not intended to supersede completely the modes of obtaining relief by an action in a civil court or to deny defence legitimately open in such actions. The power to give relief under article 226 of the Constitution is a discretionary power. Similar view has been reiterated in N. T. Veluswami Thevar v. G. Raja Nainar and Ors. , AIR 1959 SC 422 ; Municipal Council, Khurai and Anr. v. Kamal Kumar and Anr. , AIR 1965 SC 1321 ; Siliguri Municipality and Ors. v. Amalendu Das and Ors. , AIR 1984 SC 653 ; S. T. Muthusami v. K. Natarajan and Ors. , AIR 1988 sc 616 ; R. S. R. T. C. and Anr.
, AIR 1959 SC 422 ; Municipal Council, Khurai and Anr. v. Kamal Kumar and Anr. , AIR 1965 SC 1321 ; Siliguri Municipality and Ors. v. Amalendu Das and Ors. , AIR 1984 SC 653 ; S. T. Muthusami v. K. Natarajan and Ors. , AIR 1988 sc 616 ; R. S. R. T. C. and Anr. v. Krishna Kant and Ors. , AIR 1995 SC 1715 ; Kerala State electricity Board and Anr. v. Kurien E. Kalathil and Ors. , AIR 2000 SC 2573 ; A. Venkatasubbiah Naidu v. S. Chellappan and Ors. , (2000) 7 SCC 695 ; and L. L. Sudhakar Reddy and Ors. v. State of Andhra Pradesh and Ors. , (2001) 6 SCC 634 ; Shri Sant Sadguru Janardan swami (Moingiri Maharaj) Sahakari Dugdha Utpadak Sanstha and Anr. v. State of Maharashtra and Ors. , (2001) 8 SCC 509 ; Pratap Singh and Anr. v. State of Haryana, (2002) 7 SCC 484 ; and g. K. N. Driveshafts (India) Ltd. v. Income Tax Officer and Ors. , (2003) 1 SCC 72 . ( 9 ) IN Harbans Lal Sahnia v. Indian Oil Corporation Ltd. , (2003) 2 SCC 107 , the Honble Supreme court held that the rule of exclusion of writ jurisdiction by availability of alternative remedy is a rule of discretion and not one of compulsion and the Court must consider the pros and cons of the case and then may interfere if it comes to the conclusion that the petitioner seeks enforcement of any of the fundamental rights; where there is failure of principle of natural justice or where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. ( 10 ) IN G. Veerappa Pillai v. Roman and Raman Ltd. , AIR 1952 SC 192 ; Assistant Collector of central Excise v. Dunlop India Ltd. , AIR 1985 SC 330 ; Ramendra Kishore Biswas v. State of tripura, AIR 1999 SC 294 ; Shivgonda Anna Patil and Ors. v. State of Maharashtra and Ors. , air 1999 SC 22 81 ; C. A. Abraham v. I. T. O. Kottayam and Ors. , AIR 1961 SC 609 ; Titaghur paper Mills Co. Ltd. v. State of Orissa and Anr.
v. State of Maharashtra and Ors. , air 1999 SC 22 81 ; C. A. Abraham v. I. T. O. Kottayam and Ors. , AIR 1961 SC 609 ; Titaghur paper Mills Co. Ltd. v. State of Orissa and Anr. , AIR 1983 SC 603 ; H. B. Gandhi v. Gopinath and sons, 1992 (Suppl.) 2 SCC 312; Whirlpool Corporation v. Registrar of Trade Marks and Ors. , air 1999 SC 22 ; Tin Plate Co. of India Ltd. v. State of Bihar and Ors. , AIR 1999 SC 74 ; Sheela devi v. Jaspal Singh, (1999) 1 SCC 209; and Punjab National Bank v. O. C. Krishnan and Ors. , (2001) 6 SCC 569 , the Honble Apex court held that where hierarchy of appeals is provided by the statute, party must exhaust the statutory remedies before resorting to writ jurisdiction. ( 11 ) THUS, the law can be summarized that rule of exclusion of the writ jurisdiction is not a law. Discretion should be exercised by the writ Court considering the facts and circumstances involved in each case. But where there has been violation of the principle of natural justice or failure of any rule of fundament procedural or Tribunal places erroneous interpretation on the statutory provision, or exceeds its jurisdiction, writ petition can be entertained, even if the statute provides for appeal/revision. ( 12 ) A Constitution Bench of the Honble Supreme Court in L. Chandra Kumar v. Union of India, 1997 (92) E. L. T. 318 (S. C.) = 1997 SC 1125, held that all decisions of the Tribunals whether created under Article 323a or 323b of the Constitution, are subject to the High Court writ jurisdiction under Article 226/227 of the Constitution and the remedy provided in the parent institute by way of special leave to Appeal under Article 136 of the Constitution is no bar. After considering a large number of its earlier judgments including Kesavananda Bharati sripadagalvaru v. State of Kerala, AIR 1973 SC 1461 ; and Minerva Mills Ltd. v. Union of India and Ors. , AIR 1980 SC 1789 , the Apex Court came to the conclusion that theory of alternative institutional mechanism established in S. P. Sampat Kumar v. Union of India, (1985) 4 SCC 458 , was not in accordance with the proposition of law laid down in Keshwanand Bhartis case (supra ).
, AIR 1980 SC 1789 , the Apex Court came to the conclusion that theory of alternative institutional mechanism established in S. P. Sampat Kumar v. Union of India, (1985) 4 SCC 458 , was not in accordance with the proposition of law laid down in Keshwanand Bhartis case (supra ). The Court held as under :" we, therefore, hold that the power of judicial review over legislative action vested in the High courts under Article 226 and in this Court Under Article 32 of the Constitution is an integral and essential feature of the Constitution, constituting part of its basic structure. Ordinarily, therefore, the power of High Courts and the Supreme Court to test the Constitutional validity of the legislations can never be ousted or excluded. We also hold that the power vested in the High courts to exercise judicial superintendence over the decisions of all the Courts and Tribunals within their respective jurisdiction, is also a part of the basic structure of the Constitution. This is because of a situation where the High Courts are divested of all other judicial functions apart from that a constitutional interpretation, is equally to be avoided. . . . . . . . On the other hand, to hold that all such decisions will be subject to the decision of the High Court under Article 226/227 of the Constitution before a Division Bench of the High Court within whose territorial jurisdiction, the Tribunal concerned falls, will serve two purposes. While saving the power of judicial review of legislative action vested in the High Courts under Article 226/227 of the Constitution, it will ensure that frivolous claims are filtered out through the process of adjudication in the Tribunal. The High Court will also have the benefit of a reasoned decision on merits which will be of the use to it in finally deciding the matter. . . . . . . . . . . . We hold that all decisions of Tribunals, whether created pursuant to Article 323a or 323b, will be subject to High Courts writ jurisdiction under article 226/227 of the Constitution before a Division Bench of the High Court within whose territorial jurisdiction, the particular Tribunal falls. " ( 13 ) SIMILAR view has been reiterated in R. K. Jain v. Union of India and Ors.
" ( 13 ) SIMILAR view has been reiterated in R. K. Jain v. Union of India and Ors. , 1993 (65) E. L. T. 305 (S. C.) = AIR 1993 SC 1769 . ( 14 ) IN Than Singh Nathmal v. The Superintendent of Taxes, AIR 1964 SC 1419 , the Constitution bench of the Honble Supreme Court held that the jurisdiction of the High Court under Article 226 of the Constitution is couched in wide terms and the exercise thereof is not subject to any restrictions except the territorial restrictions, which are expressly provided under the constitution. But the exercise of the jurisdiction is discretionary; it is not exercised merely because it is lawful to do so. The very amplitude of the jurisdiction demands that it will ordinarily be exercised subject to certain self-imposed limitations. ( 15 ) SIMILAR view has been reiterated in State of Karnataka v. Vishwabharathi House Building cooperative Society and Ors. , (2003) 2 SCC 412 by the Hnble Supreme Court observing that a court may entertain a petition notwithstanding concurrent jurisdiction of the other forum/court for the reason that "the power of judicial review of the High Court, which is a basic feature of the constitution, has not been nor could be taken away". ( 16 ) IN State of Orissa and Ors. v. Gokulnanda Jena, (2003) 6 SCC 465 , the Honble Apex Court held that the power of the High Court to entertain writ petition is an original power and that power of judicial review is subject to rules of exclusion such as alternative remedy or exhaustion of remedy. ( 17 ) IN T. K. Rangarajan v. Government of Tamil Nadu and Ors. , 2003 AIR SCW 3807, the honble Supreme Court held that ordinarily the writ Court should not entertain any matter where statutory remedies have not been exhausted but is empowered to exercise extraordinary jurisdiction to meet unprecedented extraordinary situation, having no parallel and the Court held that where the State Government has dismissed two lakhs employees for going on strike, the situation was very very exceptional. There was no justifiable reason for the High Court not to entertain the petitions on the ground of alternative remedy provided under the Statute.
There was no justifiable reason for the High Court not to entertain the petitions on the ground of alternative remedy provided under the Statute. ( 18 ) PRELIMINARY objection in this regard was accepted by the Karnataka High Court in Premier irrigation Equipment Ltd. v. Union of India, 1998 (100) E. L. T. 29; Bombay High Court in colour-Chem Ltd. v. Union of India - 1998 (98) E. L. T. 303; and Delhi High Court in Shalimar rubber Industries v. Union of India and Ors. , (1998) 103 E. L. T. 217 and Perfect Electric concern Pvt. Ltd. v. Assistant Collector/cce, 2000 (118) E. L. T. 578. ( 19 ) HOWEVER, the Division Bench of the Madhya Pradesh High Court in Neo Sack Ltd. v. CEGAT, New Delhi, 1999 (114) E. L. T. 826 (M. P.), entertained the petition and rejected the same objection observing as under : "coming to respondents plea of alternative statutory remedy, it deserves to be rejected on the very threshold. It is well settled that rule of exhaustion of available statutory remedy is only a rule of policy. It neither bars nor prohibits jurisdiction of the Court and the entertaining or otherwise of a petition falls squarely within the discretion of the Court. It is also well recognized that where the Tribunal or a Court acts outside its jurisdiction or in excess of it or under a law which is ultra vires or places an erroneous interpretation on a statute or conducts proceedings in a manner contrary to rules of natural justice and accepted rules of procedure, the plea of alternative statutory remedy becomes irrelevant. . . . Moreover the remedy of appeal provided in section 35l is restrictive in nature and character and thus could not be treated as efficacious to oust the exercise of the writ jurisdiction. " ( 20 ) APPEAL under Section 35l of the Act 1944 is required to be considered in a different way than any other statutory appeal. In other cases, if a party is relegated to appellate/revisional forum, the party after exhausting the said statutory remedy, may again approach the writ Court challenging the order of the said forum. Such a course is not permissible in case of appeal under section 35l of the Act 1944.
In other cases, if a party is relegated to appellate/revisional forum, the party after exhausting the said statutory remedy, may again approach the writ Court challenging the order of the said forum. Such a course is not permissible in case of appeal under section 35l of the Act 1944. ( 21 ) THE power of judicial review is basic feature of the Constitution and even the Parliament cannot take it away by amending the Constitution. Thus, it becomes difficult to assume that such a jurisdiction can be ousted merely by amending the statute without having any express provision for ouster of the said remedy, even while providing the statutory remedy of appeal directly before the Honble Apex Court. Accepting the contention of the Revenue that under no circumstances writ can be entertained in view of the provisions of Section 35l of the Act 1944, the provisions of Section 35l have to be read re-writing the same adding the words "and no writ under Article 226 of the Constitution would be entertained. " Adding or subtracting of any word or rewriting of the provisions could itself amount to an amendment to the Act, which is not permissible. [vide Union of India v. Mohindra Supply Company, AIR 1962 SC 256 ; Madanlal fakir Chandra Dudhediya v. Shri Changdeo Sugar Mills Ltd. , AIR 1962 SC 1543 ; Mangi Lal v. Sugamchand Rathi, AIR 1965 SC 101 ; Union of India v. Sankal Chand Himmat Lal Seth, AIR 1977 SC 328; Commissioner of Sales Tax, U. P. v. Auriya Chambers of Commerce, Allahabad, 1986 (25) E. L. T. 867 (S. C.) = AIR 1986 SC 1556 ; P. K. Unni v. Nirmala Industries, AIR 1990 sc 933 ; and Union of India v. Deokinandan Agarwal, AIR 1992 SC 96 ]. ( 22 ) BE that as it may, the Honble Apex Court in Union of India v. Ahmedabad Electricity Co. Ltd. and Ors. , 2003 (158) E. L. T. 3 (S. C.) = JT (2003) 8 SC 153, while dealing with the same provisions, has categorically held that the writ jurisdiction is not barred in all the circumstances. Thus, we are of the view that the writ petition can be entertained against the impugned judgment and order.
Ltd. and Ors. , 2003 (158) E. L. T. 3 (S. C.) = JT (2003) 8 SC 153, while dealing with the same provisions, has categorically held that the writ jurisdiction is not barred in all the circumstances. Thus, we are of the view that the writ petition can be entertained against the impugned judgment and order. The petition was entertained at the initial stage after hearing the learned Counsel for the Revenue, and interim relief had been granted after having deliberations at length and the counsel for Revenue did not even raise the plea in this regard at that time. It is being raised at a belated stage, the same is not worth acceptance and accordingly rejected. ( 23 ) SHRI Rakesh Dwivedi, learned Senior Counsel appearing for the petitioners has submitted that as there has been no intention of the petitioner to evade duty and the assessee had always been furnishing full information regarding classification, valuation also disclosing the relation with petitioner No. 2, there was no occasion for the adjudicating authority to pass the impugned orders. More so, in such an eventuality, the proviso of Section 11a of the Act 1944 could not be attracted. The adjudicating authority as well as the Tribunal failed to appreciate the material on record particularly the Price List, Questionnaires, Invoices, Returns and Literatures submitted by the assessee had not been taken into account at all. Petitioner No. 2 had been the bulk purchaser of the products and less than 2 per cent of the products had been sold in the open market including Hotels and Airlines and the said small quantity could not be the decisive factor for the purpose of classification. Packing material and labels affixed on that had clearly shown that they were Ayurvedic medicaments. They were having effect of curing and not only caring of the human body. None of the authorities below ever tried to find out by chemical analysis as what was the contents of the products and which constituent of the product had been having the dominant character. The reports of experts submitted by the petitioner were brushed aside without giving any reason, giving a hostile treatment to the petitioner while in cases of other assessees, reports of experts had been given due consideration/weightage.
The reports of experts submitted by the petitioner were brushed aside without giving any reason, giving a hostile treatment to the petitioner while in cases of other assessees, reports of experts had been given due consideration/weightage. Findings of fact recorded by the Tribunal as well as by the adjudicating authority are perverse, being based on no evidence rather contrary to the evidence on record. Petitioner had always been disclosing all the information, which had been accepted by the Revenue throughout and orders impugned could not be passed merely because of the change of the opinion. Therefore, the Revenue erred grossly applying the proviso of Section 11a of the Act 1944. The case of the petitioners was squarely covered by the Chapter 30 and not 33 of the Tariff Act, 1985. Hence, the orders are liable to be set aside. ( 24 ) SHRI B. N. Singh, learned Counsel appearing for the Revenue has vehemently opposed the averments made on behalf of the assessee contending that while dealing with the case under fiscal statutes, the Court has to apply the rule of literal interpretation, as equity, personal hardship to the assessee are not the grounds to be taken into consideration at all. Assessment for each year is an independent act and assessee cannot ask the Revenue not to make the assessment in accordance with law, if earlier orders had been passed in favour of the assessee wrongfully. The findings of fact recorded by the statutory authorities that the assessee had evaded the tax, is enough to attract the proviso to Section 11a of the Act 1944. More so, the entire case of the petitioner is not covered by the said proviso and a short period is covered by the main clause. The Court should not interfere with the well reasoned orders passed by the statutory authorities which have categorically held that case of the petitioners falls under Chapter 33 and not 30 of the act 1985. The case does not present any special feature warranting judicial review of the findings of fact recorded by the statutory authorities. Petition is liable to be dismissed. ( 25 ) WE have considered the rival submissions made by the learned Counsel for the parties and perused the record. ( 26 ) IT is settled legal proposition that while interpreting a fiscal statute, the Court should apply the rule of literal interpretation.
Petition is liable to be dismissed. ( 25 ) WE have considered the rival submissions made by the learned Counsel for the parties and perused the record. ( 26 ) IT is settled legal proposition that while interpreting a fiscal statute, the Court should apply the rule of literal interpretation. In Mathuram Agarwal v. State of Madhya Pradesh and Ors. , AIR 2000 SC 109 , the Honble Apex Court observed that equally, impermissible is an interpretation which does not follow from the plain and unambiguous language of the Statute. ( 27 ) IN Saraswati Sugar Mills v. Haryana State Board and Ors. , AIR 1992 SC 224 , the Honble supreme Court held that there can be no room for any intentment, nor is there equity about a tax. Nothing is to be read in and nothing can be implied. While interpreting the taxing statute, one has to look fairly at the language used therein. The fiscal statute must, therefore, be strictly construed in order to find out the extent of liability fastened on a particular industry and while doing so, the fiscal statute must be read according to its natural construction of words. While deciding the said case, the Apex Court placed reliance upon large number of its earlier judgments, particularly, in Gursahai Saigal v. C. I. T. , AIR 1963 SC 1062 ; Controller of Estate duty v. Kantilal Trikamlal, AIR 1976 SC 1935 , A. V. Farnandez v. State of Kerala, AIR 1957 SC 657 ; C. I. T. v. Mr. P. Firm Muar, AIR 1965 SC 1216 , and Ahmedabad Urban Development authority v. Sharda Kumar Jayanti Kumar Parawalla, AIR 1992 SC 2038 . ( 28 ) IN Martand Dairy and Farm v. Union of India and Ors. , AIR 1975 SC 1492 , the Honble Apex court observed that :" law is not always logic and taxation considerations may stem from administrative experience and other factors of life and not artistic visualization or neat logic and so "the literal, though pedestrian, interpretation must prevail. " ( 29 ) SAME view was subsequently reiterated in Member Secretary, A. P. S. B. for Prevention and control of Water Pollution v. A. P. Rayons Ltd. , AIR 1989 SC 611 . It is also well settled that a very wide latitude is available to the legislature in fiscal matters but fiscal enactments require strict interpretation.
" ( 29 ) SAME view was subsequently reiterated in Member Secretary, A. P. S. B. for Prevention and control of Water Pollution v. A. P. Rayons Ltd. , AIR 1989 SC 611 . It is also well settled that a very wide latitude is available to the legislature in fiscal matters but fiscal enactments require strict interpretation. ( 30 ) THE Court is bound to give a literal interpretation if there is no ambiguity in the provision. In patel Chhunibhai Dajibha v. Narayainrao K. Jambekar and Anr. , AIR 1965 SC 1457 , the Apex court observed that an interpretation of the provision without giving full effect to the language used, would be unsupport-able and hence not permissible. In Martin Burn Ltd. v. The corporation of Calcutta, AIR 1966 SC 529 , the Apex Court observed as under :" that a result flowing from a statutory provision is never an evil. A Court has no power to ignore that provision to relieve what it considers a distress resulting from its operation. A statute must, of course, be given effect to whether the Court likes the result or not. " ( 31 ) SIMILAR view has been taken by the Honble Supreme Court in Races Ahmad v. State of U. P. and Ors. , AIR 2000 SC 583 ; Mool Chand v. Kedar, AIR 2000 SC 745 ; and Kadiyala Rama Rao v. Gutala Kahna Rao, (2000) 3 SCC 87 . ( 32 ) IN V. V. S. Sugars v. Government of Andhra Pradesh, AIR 1999 SC 2124 , the Honble supreme Court observed that while interpreting the tax statute, the literal and strict construction is to be applied. The Court has to read a fiscal statute as it reads, with no addition and no subtraction on the ground of legislative intendment and reading it otherwise would defeat the legislative intent. Similar view has been reiterated in Shyam Kishori Devi v. Patna Municipal corporation, AIR 1966 SC 1678 ; Gulam Yasin Khan v. Sahebrao Yashwantrao Walaskar and anr. , AIR 1966 SC 1339 ; Orissa State Warehousing Corporation v. Commissioner of Income tax, AIR 1999 SC 1388 ; Arulnadar v. Authorised Officer, Land Reforms, (1998) 7 SCC 157 ; and Jagdish Chandra Pathak v. State of Orissa, (1998) 4 SCC 456 . ( 33 ) IN Karamchari Union, Agra v. Union of India of Ors.
, AIR 1966 SC 1339 ; Orissa State Warehousing Corporation v. Commissioner of Income tax, AIR 1999 SC 1388 ; Arulnadar v. Authorised Officer, Land Reforms, (1998) 7 SCC 157 ; and Jagdish Chandra Pathak v. State of Orissa, (1998) 4 SCC 456 . ( 33 ) IN Karamchari Union, Agra v. Union of India of Ors. , AIR 2000 SC 1226 ; the Honble supreme Court has held that while interpreting the fiscal statute, general and plain meaning of the words have to be given by the Court. Equity and hardship to an individual assessee are out of place in interpretation of tax statutes. Similar view has been reiterated in Commissioner of income Tax, Bhopal v. Hindustan Elector Graphites Ltd. , Indore, AIR 2000 SC 1481 ; and travancore Rubber and Tea Co. Ltd. v. Commissioner of Income Tax, Trivendrum, AIR 2000 SC 1980 . ( 34 ) IN Molar Mal v. Kay Iron Works (P) Ltd. , AIR 2000 SC 1261 , the Honble Supreme Court held that unless the statute, read as a whole, indicates a different meaning or provides for inconsistency, the Court has to interpret the language of the provisions literally and merely because a law causes hardship, it cannot be read otherwise. ( 35 ) THUS, it is evident that while deciding a case under fiscal statute, the Court cannot import the principles of equity nor it can take into account the question of hardship to the assessee merely for the reason that assessee could not have transferred the liability of duty to consumers and it was not possible for him to recover the same at that stage. ( 36 ) IN the instant case, relevant issue is regarding application of the proviso to Section 11a of the Act 1944. The proviso is read as a restriction to the generality of the main provision and it may also be termed as an exception to the main part of the statute but it has to be read in the context of the main proviso and not as an independent one. The proviso must be read with relation to the principal matter to which it stands as a proviso. It should not be treated as an independent enacting clause instead of being dependent on the main enactment. [vide sukhwinder Pal Bipan Kumar and Ors. v. State of Punjab and Ors.
The proviso must be read with relation to the principal matter to which it stands as a proviso. It should not be treated as an independent enacting clause instead of being dependent on the main enactment. [vide sukhwinder Pal Bipan Kumar and Ors. v. State of Punjab and Ors. , AIR 1982 SC 65 ; Indian Oil corporation Ltd. v. Chief Inspector of Factories and Ors. , 1999 (113) E. L. T. 761 (S. C.) = (1998)5 SCC 738 ; Mallawwa and Ors. v. Oriental Insurance Company Ltd. and Ors. , AIR 1999 SC 589 ; Balchandra Anantrao Rakvi and Ors. v. Ramchandra Tukaram (Dead) by LRs. and Anr. , (2001) 8 SCC 616 ]. ( 37 ) IN CIT v. Indo Mercantile Bank Ltd. , AIR 1959 SC 713 , the Honble Supreme Court held as under :" the proper function of a proviso is that it qualifies the generality of the main enactment by providing an exception and taking out as it were, from the main enactment, a portion which, but for the proviso would fall within the main enactment. Ordinarily, it is foreign to the proper function of a proviso to read it as providing something by way of an addendum or dealing with a subject which is foreign to the main enactment. The territory of a proviso, therefore, is to carve out an exception to the main enactment and exclude something which otherwise would have been within the section. It has to operate in the same field and if the language of the main enactment is clear, it cannot be used for the purpose of interpreting the main enactment or to exclude by implication what the enactment clearly says unless the words of the proviso are such that that is its necessary effect. " ( 38 ) WHILE deciding the said case, the Supreme Court placed reliance upon a decision of the privy Council in Madras and Southern Maharatta Rly. Co. v. Bezwada Municipality, AIR 1944 pc 71, wherein it had been observed that "proper function of a proviso is to accept and deal with a case which was otherwise fall within the general language of the main enactment, and its effect is confined to that case. " ( 39 ) IN Babulal Nagar v. Shree Synthetics Ltd. and Ors.
Co. v. Bezwada Municipality, AIR 1944 pc 71, wherein it had been observed that "proper function of a proviso is to accept and deal with a case which was otherwise fall within the general language of the main enactment, and its effect is confined to that case. " ( 39 ) IN Babulal Nagar v. Shree Synthetics Ltd. and Ors. , AIR 1984 SC 1164 , Honble Supreme court observed as under :" proviso does cut down the ambit of the main provision but it cannot be interpreted to denude the main provision of any efficacy and reduce it to a better provision. Both must be so interpreted as to permit interference which if not undertaken, there would be miscarriage of justice. " ( 40 ) IN Commissioner of Sales Tax, Orissa and Anr. v. Halari Stores, (1997) 7 SCC 715 , the honble Supreme Court dealt with a case under the Sales Tax Act, wherein the suo motu power of revision has been conferred upon the statutory authority by the proviso but not to file a revision by the assessee, as for him there was a provision of appeal. Explaining the discrepancy, the Court held that normally a proviso is "enacted to carve out something special out of the general enactment or to qualify what is in the enactment. " ( 41 ) IN Satnam Singh v. Punjab and Haryana High Court and Ors. , AIR 1997 SC 983 , the Honble supreme Court explaining the scope of proviso, held as under :" a proviso has to be strictly construed inasmuch as it carves out an exception to the general rule. The general rule enacted in the main part is not only to be unduly restricted by expanding the contents of the proviso which is intended to carve out the exception from the general rule. " ( 42 ) IN J. K. Industries Ltd. v. Chief Inspector of Factories and Boilers, (1996) 6 SCC 665 , while expanding the scope of proviso the Court held as under :" a proviso to a provision in a statute has several functions and while interpreting a provision of the statute, the court is required to carefully scrutinize and find out the real object of the proviso appended to that provision.
It is not a proper rule of interpretation of a proviso that the enacting part or the main part of the section be construed first without reference to the proviso and if the same is found to be ambiguous only then recourse may be had to examine the proviso as has been canvassed before us. On the other hand an accepted rule of interpretation is that a section and the proviso thereto must be construed as a whole, each portion throwing light, if need be, on the rest. A proviso is normally used to remove special cases from the general enactment and provide for them specially. A proviso qualifies the generality of the main enactment by providing an exception and taking out from the main provision, a portion, which, but for the proviso would be a part of the main provision. A proviso must, therefore, be considered in relation to the principal matter to which it stands as a proviso. A proviso should not be read as if providing something by way of addition to the main provision which is foreign to the main provision itself. Indeed, in some cases, a proviso, may be an exception to the main provision though it cannot be consistent with what is expressed in the main provision and if it is so, it would be ultra vires of the main provision and struck down. As a general rule in construing an enactment containing a proviso, it is proper to construe the provisions together without making either of them redundant or otiose. Even where the enacting part is clear, it is desirable to make an effort to give meaning to the proviso with a view to justify its necessity. " ( 43 ) THUS, it is evident from the above, that a proviso to statutory provisions provides for an exception and, therefore, authorities dealing with the matter are required to give strict interpretation to the same. ( 44 ) SO far as the application of the proviso to Section 11a of the Act 1944 is concerned, it has also been considered by the Honble Apex Court, High Courts and Tribunals time and again. The proviso provides for resorting to certain proceedings even after expiry of limitation period under certain circumstances.
( 44 ) SO far as the application of the proviso to Section 11a of the Act 1944 is concerned, it has also been considered by the Honble Apex Court, High Courts and Tribunals time and again. The proviso provides for resorting to certain proceedings even after expiry of limitation period under certain circumstances. ( 45 ) IN Collector of Central Excise v. Chemphar Drugs and Liniments, 1989 (40) E. L. T. 276 (S. C.)= AIR 1989 SC 832 , the Honble Supreme Court held as under :" in order to make the demand for duty sustainable beyond a period of six months and up to a period of 5 years in view of the proviso to Sub-section 11a of the Act, it has to be established that the duty of excise has not been levied or paid or short-levied or short-paid, or erroneously refunded by reasons of either fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, before the period of six months. Whether in a particular set of facts and circumstances there was any fraud or collusion or wilful misstatement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case. " ( 46 ) SIMILARLY in Padmini Products v. Collector of Central Excise, 1989 (43) E. L. T. 195 (S. C.) = air 1989 SC 2278 , the Honble Supreme Court held that "mere failure or negligence on the part of the producer or manufacturer either not to take out a licence in case where there was scope for doubt as to whether licence was required to be taken out or where there was scope for doubt whether goods were dutiable or not, would not attract Section 11a of the Act.
" ( 47 ) IN Cosmic Dye Chemical v. Collector of Central Excise, Bombay, 1995 (75) E. L. T. 721 (S. C.) = (1995) 6 SCC 117 , Honble Apex Court held that where the assessee acted under a bona fide impression based on the judgments of the High Court, he cannot be held guilty of suppression of facts etc. and provision of Section 11a of the Act 1944 were not attracted. ( 48 ) IN Tamil Nadu Housing Board v. Collector of Central Excise, Madras, 1994 (74) E. L. T. 9 (S. C.) = (1995) Suppl. (1) SCC 50, the Honble Apex Court held as under :" a bare reading of the proviso indicates that it is in nature of an exception to the principal clause. Therefore, its exercise is hedged on one hand with existence of such situations as have been visualized by the proviso by using such strong expression as fraud, collusion etc. and on the other hand it should have been, with intention to evade payment of duty. Both must concur to enable the Excise Officer to proceed under this proviso and invoke the exceptional power. Since the proviso extends the period of limitation from six months to five years, it has to be construed strictly. The initial burden is on the Department to prove that the situations visualized by the proviso existed. But once the Department is able to bring on record material to show that the appellant was guilty of any of those situations which are visualized by the Section, the burden shifts and then applicability of the proviso has to be construed liberally. When the law requires an intention to evade payment of duty then it is not mere failure to pay duty. It must be something more. That is, the assessee must be aware that the duty was leviable and it must deliberately avoid paying it. The word evade in the context means defeating, the provision of law of paying duty. It is made more stringent by use of the word intent.
It must be something more. That is, the assessee must be aware that the duty was leviable and it must deliberately avoid paying it. The word evade in the context means defeating, the provision of law of paying duty. It is made more stringent by use of the word intent. In other words the assessee must deliberately avoid payment of duty which is payable in accordance with law," ( 49 ) IN Prabhu Steel Industries Ltd. v. Collector of Central Excise, Nagpur, [1997 (95) E. L. T. 164 (S. C.) = (1998) 1 SCC 303 ], the Honble Apex Court held that if the goods had been cleared in accordance with the approved classification list and all material facts were in the knowledge of the revenue authorities, mere change in opinion as to correct the classification/description of inputs is not sufficient to invoke the extended period of limitation, particularly when there was no concealment of facts. ( 50 ) IN Lubri-Chem Industries Ltd. v. Collector of Central Excise, Bombay, -1994 (73) E. L. T. 257 (S. C.) = AIR 1994 SC 2604 , the Honble Supreme Court examined the same issue and placing reliance upon Chemphar Drug (supra) held that for invoking the proviso to Section 11 A, it has to be established that there had been an intention to evade duty and there had been something more positive than mere inaction or failure on the part of the assessee or conscious or deliberate withholding of information when the assessee knew otherwise, was required before he could be saddled with any liability beyond the period of general limitation, and unless the assessee is found to be guilty of any fraud or collusion or misstatement by suppression of fact with intent to evade payment of excise duty, the extended period of limitation cannot be applied. . .