Ravindra & Company Versus Union of India>1991(04)LCX0009

1991(04)LCX0009

IN THE HIGH COURT OF JUDICATURE AT ALLAHABAD

B.P. Jeevan Reddy, CJ. and S.R. Singh, J.

RAVINDRA & CO.

Versus

UNION OF INDIA

Civil Misc. Writ Petition No. 6 of 1991, decided on 4-4-1991

[Order per: B.P. Jeevan Reddy, CJ.].- This writ petition is filed for issuance of a writ of certiorari quashing the communication dated 6-12-1990 from the Asstt. Collector, Central Excise (Annexure-15) as well as the communication dated 10-12-1990 issued by the Superintendent, Central Excise (Annexure-17).

2. The petitioner is a partnership firm. According to it, it is engaged in the sale and purchase of Tobacco under three brand names, namely “Assam Bengal Scented Khaini”, “Hari Chhap Tobacco”, and “Bandar Dholak Chhap Tobacco”. In this writ petition, we are concerned with the latter two. The dispute is whether the Tobacco sold by the petitioner under the above brand names is a manufactured tobacco or is it unmanufactured tobacco? The petitioner says that under trade notice No.136/1987, it was notified by the Central Excise Collector, Kanpur that -

“un-manufactured tobacco merely broken by beating and then sieved and packed in retail packets with or without brand names for consumption as chewing tobacco which may be commonly known in the market as Zarda would be appropriately classified under Heading No. 24.01 of the Schedule to the Central Excise and Tariff Act, 1985 as un-manufactured tobacco.”

In pursuance of this trade notice, the petitioner says that Asstt. Collector intimated to him through his letter dated 9-10-1990 that the tobacco sold by the petitioner under the aforesaid two brand names is un-manufactured in nature and is classifiable under sub-heading 2401. The petitioner says that accordingly, he was clearing the said goods without paying duty thereon. They also stopped taking out licences from the Excise Rules. While so, the petitioner says, on 12-6-1990, his goods which were being transported in a truck, were detained on the apprehension that the tobacco being transported is manufactured tobacco and that it had been cleared without paying duty. It also appears that samples of it were sent for analysis to Chemical Examiner. Pending those proceedings, the petitioner requested for release of the said goods. They were released on executing the appropriate bonds. A letter written by the Asstt. Collector, Central Excise Farukhabad addressed to the Superintendent, Central Excise Range Kayanganj, is also brought to our notice whereunder the Asstt. Collector advised the Superintendent to the following effect:

“The petitioner has executed a ‘B-13’ (General Surety) bond vide Bond No. nil dated 17-10-1990 for the valuation of Rs. 10 lacs for the provisional assessment of his product namely, ‘Hari Chhap and Bandar - Dholak Chhap’ chewing tobacco under Chapter sub-heading No.2404.41 of the Central Excise Tariff Act, 1985 and that therefore, the Superintendent should allow the clearance provisionally till further orders.” (This order appear to be dated 23-10-1990 as per the date put in the signature of the Asstt. Collector)."

It is then stated by the petitioner that without giving any further notice to him, the impugned order dated 6-12-1990 was communicated to him. It should be appropriate to set out the said order in its entirety.

“Discreet enquiries were made to ascertain as id whether your products ‘Hari Chhap Tobacco’ and ‘Bandar Dholak Chhap Tobacco’ are un-manufactured Branded Chewing tobacco or manufactured Branded Chewing tobacco and it is found that your products ‘Hari Chhap Tobacco’ and Bandar Dholak Chhap Tobacco’ were manufactured Branded Chewing Tobacco and fall under Chapter sub-heading No. 2404.41 of the Central Excise Tariff Act, 1985.”

A reading of this order shows that it is based upon discreet enquiries made to ascertain whether the products of the petitioner represent ‘un-manufactured tobacco’ or ‘manufactured tobacco’ and that it has been decided that it is manufactured tobacco falling under Chapter sub-heading 2404.41 of the Central Excise Tariff Act, 1985. Accordingly, the earlier order dated 4-10-1990 classifying the petitioner’s goods aforesaid as ‘un-manufactured tobacco’ was withdrawn. Thereafter, the Superintendent passed the order dated 10-12-1990 wherein, he referred to the order of the Asstt. Collector dated 6-12-1990 and on that basis informed the petitioner that “in future all clearances of the said brand will be allowed after payment of Central Excise duty at appropriate rate after observing all the procedures required under the Central Excise Rules, 1944. You are also requested to please deposit duty for the clearance taken on provisional assessment with effect from 9-10-1990 to 5-12-1990 in cash which comes to Rs. 2,94,738.00 (Basic Rs. 2,13,063.74, Addl. Rs. 71,020.93 Plus Special Rs. 10,663.33) within 10 days of the receipt of this letter.”

3. The petitioner’s case is that the order dated 6-12-1990, has been passed in violation of the principles of natural justice. It is submitted that the issue of classification cannot be decided finally on the basis of discreet enquiries. Such an issue must be decided after notice to or in the presence of the petitioner, as the case may be. It is also submitted that the report of the Chemical Examiner, if any, has also not been communicated to the petitioner. It is submitted that the petitioner had no opportunity of showing cause against the said classification.

4. On the other hand, it is submitted by Sri A.K. Gupta, learned Addl. Standing Counsel for the Central Government that the impugned order is an appealable order and there is no reason why the petitioner should not be relegated to the said remedy. It is also submitted that the order is based upon the report of the Chemical Examiner to which no tenable objection can be raised.

5. In the ordinary course, we would have relegated the petitioner to the remedy of appeal but we find that the impugned order (order dated 6-12-1990) has been passed in violation of the principles of natural justice as contended by the petitioner. The issue of classification is an important one. Upon the said determination, does the levy or non-levy of duty depend. It must be remembered that previously, the very same goods were treated as “un-manufactured tobacco” and not liable to duty. No doubt, as a result of seizure, the goods were provisionally treated as manufactured tobacco and the petitioner was being allowed to clear the goods on executing the appropriate bond but the final decision of the said question ought to have been arrived at after giving an opportunity of hearing to the petitioner. Since, this has not been done, the impugned order dated 6-12-1990 is liable to be and is quashed. As a result, the consequential proceedings issued by the Superintendent, Central Excise on 10-12-1990 also fall to ground.

6. In the result, the writ petition is allowed in the above terms. There shall be no order as to the costs.

7. It shall be open to the Asstt. Collector to decide the issue of classification after giving an opportunity of hearing to the petitioner as expeditiously as possible. Pending such determination, the petitioner shall be permitted to clear the goods on executing the bond as contemplated in the Asstt. Collector’s letter dated 23-10-1990 addressed to the Superintendent, referred to supra.

Equivalent 1992 (61) ELT 12 (All.)