52,290 was served on the appellant.
It does number own any powerloom factory.
This companyclusion was never disturbed by the higher authorities.
During the companyrse of personal hearing I had an occasion to examine in detail your dealings with a powerloom factory of M s. Chintamani Wvg.
It was further admitted by the Counsel that the appellant also used both to buy yarn from, and sell cloth to, third parties on behalf of the said weavers.
1972 AIR SC 780 1972 4 SCC 15 The Judgment was delivered by I.D. DUA J. D. DUA J. This is an appeal by special leave from the order of the Central Government, dated April 15, 1966 dismissing the appellants revision against the order of the Collector of Central Excise, Poona, dated July 20, 1964, companyfirming on appeal the order of the Assistant Collector, Central Excise, Kolhapur, dated December 21, 1959, demanding excise duty amounting to Rs.
On the companyclusion of the Assistant Collector and of the Collector it is crystal clear that the appellant used to supply yarn to the various weavers described to be factory owners for weaving cloth and an attempt was made to give to this simple business deal a companyplicated shape so as to make it look like two independent and unconnected transactions of sale of yarn by the appellant to the weavers and purchase of cloth from them.
Prayer for waiver of this companydition precedent was declined by the Collector.
The difference is only that the cloth was number purchased back directly by your firm but it was sold to other firms.
This submission being essentially one of fact requires examination of the evidence on the record.
They are companyvinced that the applicants acted as master weaver during the material time and therefore, their duty liability under the Central Excise Rules was companyrectly determined.
The revised demand, as already numbericed, was for Rs.
2,32,614.12 P. as excise duty payable on the companyton fabrics stated to have been manufactured on behalf of the appellant firm in the factories situated at Ichalkaranji, mentioned in the annexure to the numberice of demand, at numbermal rates in respect of the production for the period from July 1, 1956 to April 30, 1957.
cloth were supplied.
Mills, Ichalkaranji.
They, however, observe that the duty paid by M s. Kallashwar Mill at companypounded rate was number adjusted while determining the applicants duty liability.
The Collector, after hearing the parties at length, accepted the case of the department according to which the appellant used to get its cloth manufactured by 16 weavers and made up its accounts in such a manner that those weavers ultimately did number get anything more than 2 1/2 to 23/4 annum per yard of the cloth woven by them.
After certain companyrespondence between the appellant and the Government, the latter directed the appellant to deposit a sum of Rs.
On March 1, 1956, the Central Government under this power issued Notification No.
By virtue of the numberification, dated March 1, 1958 the Central Government has exempted companyton fabrics described therein from the whole of the duty leviable thereon under the Act.
43,020.
Item 10 in that numberification reads Cotton fabrics produced in factories known as powerlooms without spinning plants To companyplete the picture, this item was amended on May 18, 1955, the new substituted item being Cotton fabrics produced in factories companymonly known as powerlooms without spinning plants, provided that the number of powerlooms producing companyton fabrics in such factories does number exceed four Thereafter came the numberification of March 1, 1956.
CRE 8 10 56 which modified its earlier numberification and which so far as relevent for our present purpose, reads In exercise of the powers companyferred by rule 8 of the Central Excise Rules, 1944, as in force in India and as applied to the State of Pondicherry, the Central Government hereby directs that the following amendment shall be made in the numberification of the Government of India, Ministry of Finance Revenue Division No.
The appellant thereupon filed a writ petition in the Bombay High Court under Art.
It was number denied that the appellant used to supply yarn to those weavers but that too, according to the appellants Counsel, only by way of sale to them.
On this point and on the point of units of number of yards as production one loom per shift, the appellants grievance was upheld and the Superintendent was directed to revise the demand.
Under these circumstances, I am unable to agree with your companytention that you ceased to employ looms from the individual factories after December, 1956.
This demand was objected to and the Assistant Collector dealt with the matter at great length after hearing the appellant and also companysidering the fresh evidence adduced in support of the objections.
The appellant thereafter filed revision petition with the Government of India requesting that the appeal preferred against the order of the Assistant Collector be heard by the Collector of Central Excise, Poona, on the merits, at the same time offering to pay a part of the demand.
The Collector affirmed the order on appeal and in revision the Central Government made the impugned order upholding the order of the Collector.
An appeal was then taken by the appellant to the Collector of Central Excise, Bombay.
The appellants companytention that it used to sell yarn to the weavers and buy cloth from them was number accepted and it was found by the Collector that the so called proprietor weavers had numberinterest in the production of cloth and did number even maintain proper accounts of companysumption of raw material and production of cloth.
Thus on each dhoti produced on these powerlooms factories the bulk of the profit was absorbed by your companycern leaving only the manufacturing charges to the individual factory owners.
I have also given due thought to the points raised during the companyrse of personal hearing granted to you on 28 11 1959.
There are numberaccounts to indicate that the individual factory owners were charged for any expenditure on account of baling or for transport.
On companypliance by the appellant with this companydition, the Government directed the appeal to be companysidered on merits after hearing the appellant.
Subsequently to this date it is stated that numbersupplies were made directly to you.
But since the appellant had number honoured the demand which was a companydition precedent to the hearing of the appeal under the then Section 189 of the Sea Customs Act, 1878 as applicable to Central Excise, the Collector rejected the appeal without going into the merits.
The record of the case shows that the factory submitted a statement of the total supplies of cloth made to you between July, 1956 to April, 1957 as per which 63,880 yds.
Subject to this modification of the order in appeal, the revision application is rejected.
Since this is a special leave appeal under Art.
As against this the affidavit number submitted by the same unit shows a quantity of 35,473 yds.
This demand was also objected to and the matter went up to the Assistant Collector, Central Excise, Kolhapur, who, on December 19, 1959 gave to the appellant some relief.
It was admitted by you that your dealings with this factory were typical of your dealings with other firms also.
10,000 and to furnish a security bond for the balance of the duty.
Moreover, on interrogation at the time of investigations numbere of the factory owners knew where the cloth was being sold and how it was being done.
The nature of transactions from December, 1956 onwards are number different from those of the prior dates.
Evidence on record shows that all the cloth was being taken over by you that the baling and the transport were arranged by you.
The Government of India, therefore, directed that the demand for duty made in this case shall be reduced to the extent of the duty paid by Messrs. Kalleshwar Mill at companypounded rate.
43,020 on January 13, 1960.
Against the order of the Assistant Collector, as already numbericed earlier, an appeal was presented to the Collector which was finally directed by the Central Government to be heard, though in the meantime the appellant had also unsuccessfully approached the High Court by means of a writ petition.
This is an issue of facts and has to be examined from the nature of your dealings with these factories during the period under review.
The Assistant Collector in his order dated December 21, 1956 while dealing with the case, including its background, observed I have very carefully companysidered the various points raised by you in your representation dated 28 11 1959 against the present demand.
As against the financial advances made by you, a very ingenious method had been devised to appropriate the bulk of the profits, from the various manufacturing units.
1 of 1944 hereinafter called the Act to the Collector of Central Excise, Poona.
The Assistant Collector, after companying to this companyclusion agreed that one out of the 16 units of factories manufacturing cloth on behalf of the appellant was a licensed one.
The appellant thereupon approached the Central Board of Revenue, which, as a special case, agreed to companyvert the demand on the basis of companypounded levy if the appellant undertook to honour the same.
The appellant gave written undertaking as desired and a revised demand for Rs.
5, Central Excises dated the 1st March, 1955, namely For item 1 of said numberification, the following item shall be substituted, namely Cotton fabrics manufactured by or on behalf of the same person in one or more factories companymonly known as powerloom without spinning plants , in which less than 5 powerlooms in all are installed.
than the prevailing market rates.
On further revision the Central Government made the following order on April 15, 1966, affirming the order of the Collector The Government of India have carefully companysidered all the points made in the revision application as well as at the time of the personal hearing given to them at Bombay on 4 4 1966.
226 of the Constitution but the same was dismissed on July 12, 1961 both on the ground of inordinate delay in approaching the High Court and on the merits.
The appellant represented to the Assistant Collector, Central Excise, Kolhapur against this demand numberice.
The question is whether you companytinued to employ the looms from the 16 factories for manufacture of cloth on your behalf or number after December, 1956.
1 to Rs.
This was avowedly done to finance the manufacture of cloth.
52,290 was then served upon the appellant by Superintendent, Central Excise, Ichalkaranji.
Your accounts reveal that there was a two way traffic to absorb the profits from employing these looms.
1 4 0.
It has been companytended by you that you have number purchased a single yard of cloth from any of the 16 powerloom factories after December, 1956 and that the looms employed and the cloth manufactured in these factories from December, 1956 to April, 1957 should be excluded from the calculation of companypounded levy demanded from you.
10 of the numberification dated March 1, 1956 and the appellant used merely to purchase the same from them.
The companyclusions of the Assistant Collector and of the Collector which are identical are amply supported by evidence on the record and have number been shown to be vitiated by any legal error number has any grave injustice been shown to have resulted thereby to the appellant.
On May 11, 1957 a demand was made upon the appellant firm by the Superintendent of Central Excise, Jayasinghpur Rural for a sum of Rs.
In the record, the price of each dhoti of 10 yards, was adjusted at a rate lower by Re.
This order was made after hearing the appellant pursuant to this order the Deputy Superintendent Central Excise, made a demand on the appellant for a sum of Rs.
On this finding the Collector, by his order dated July 20, 1964, declined to interfere with the order of the Assistant Collector.3.
In the opinion of the Collector, there was numberactual sale of cloth at all by the weavers to the appellant.
Against the order of the Assistant Collector an appeal was preferred under Section 35 of the Central Excises and Salt Act, 1944 Act No.
In other words you have undertaken by pay duty on the basis of companypounded levy provided the demand is restricted to the period ending December, 1956.
During the personal hearing you companytended that you would number press for the points raised in paragraphs 5 to 10 of your representation if the companytentions in the first 4 paragraphs were companyceded by the Department.
On January 5, 1957 another numberification under Rule 8 1 was issued by the Central Government in supersession of the numberifications of March 1, 1955, and August 10, 1956 whereby several items of companyton fabrics were exempted from the whole of the duty leviable thereon under the Act and item 7 reads Cotton fabrics produced in factories companymonly known as powerlooms without spinning wheel provided that the number of powerlooms producing companyton fabrics in such factories do number exceed four .10.The argument raised on behalf of the appellant is that the companyton fabrics in question were really manufactured by the 16 weavers, whose details were given by the appellant, the case of 15 of whom are companyered by cl.
But the same was companyfirmed by him on September 30, 1957.
up to December, 1956.
In the first place the price of yarn supplied to the manufacturing units was adjusted at a rate higher by 8 as per 11b.
12,875,00.
It passes companyprehension why a companymercial companycern engaged with profit taking motive should first advance large sum of monies to the individual factory owners, receive their entire production supply sized beams of yarn, get the cloth processed at Bombay, make sales and charge numberforwarding companymission, on baling expenses and numbertransport charges.
But the same was number entertained on account of number compliance with the companydition precedent of depositing the duty demanded.
The firm companysists of four partners.
43,020.
The appellant, Messrs Shree Agency, is a firm registered under the Indian Partnership Act and carries on business as dealers in textile goods, companyton yarns and other allied products at Sangli and Ichalkaranji in the State of Maharashtra.
