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Judgment
A.K. Ganguly, J.—This writ petition is directed against an order dated 22nd August, 1986 passed by the Joint Secretary to the Government of India in the Ministry of Finance in the Department of Revenue, purported to be passed in exercise of powers u/s 35EE of the Central Excise Act, 1944 and also the demand for payment of duty to the extent of Rs. 28,322.78 Ps. raised pursuant to the order dated 22nd August, 1986 for the alleged loss of molasses in the year 1982-83.
The facts of the case are states hereunder:
The Petitioner Company is engaged in manufacturing sugar from sugarcane and producing molasses which is a bye-product of sugar. It is not in dispute that molasses is an excisable commodity under the Central Excise and Salt Act, 1944 (hereinafter called the said Act).
During the relevant crushing season of 1982-83 the Petitioner Company started crushing operation in its factory on or from 25th November, 1982 and huge quantities of molasses were getting accumulated every day with the result that the General Manager of the Petitioner Company by letter dated 3rd December, 1982 wrote to the Controller of Molasses requesting him to send allotment letters in respect of the molasses to various authorities so that the molasses could be delivered to the allotters in time. As no reply was received by the Petitioner Company, by its reminders dated 15th January, 1983 and 2nd February, 1983 the Petitioner Company further wrote to the Controller of Molasses for the allotment of the same and for making arrangement for lifting of the same. By another letter dated 19th February, 1983 the Petitioner Company apprised the Superintendent of Excise, Government of Bihar, Gopalganj about the problem of storage of the molasses. Also by a letter dated 31st January, 1983 the Petitioner Company applied to the Assistant Collector, Central Excise, Muzaffarpur (Respondent No. 3) for permission to store molasses in Katcha pits. Such permission to store molasses in Katcha pits was granted on the Petitioner Company executing a bond and a copy of such bond is Annexure-A to the counter affidavit of the Respondents. The further case of the Petitioner is that as their reminders to the Controller of Molasses to lift the molasses did not produce any result, they filed a writ petition before this Court which was numbered as C.W.J.C. No. 2614 of 1983 for a direction upon the Controller of Molasses and the Excise Commissioner for issuance of a direction to lift the molasses in question. The said writ petition was disposed of on 18th July, 1983 with the necessary direction for lifting of the molasses but the Respondents did not choose to take any further action in the matter. On or about 6th June, 1983 the Petitioner noticed that the molasses kept in Katcha pit No. 5, as a result of the internal heat, developed a lot of over foaming. The matter was then brought to the notice of the Superintendent of Central Excise on the same day by a letter dated 6th June, 1983. On the next day i.e. on 7th June, 1983 the Superintendent of Central Excise along with the Inspector visited the factory premises of the Petitioner and draw samples of molasses from Katcha pit No. 5 and sent the same for chemical analysis to the Custom House, Calcutta. The test report was never made available to the Petitioner. Thereafter the Assistant Commissioner of Excise (Distribution), Government of Bihar having regard to the problem which the Petitioner was facing in storing the molasses in question gave permission to the Petitioner to destroy the burnt out molasses in his presence. Pursuant to the said direction on 15th December, 1983, 9174.85 quintals of molasses stored in Katcha pit No. 5 which, according to the Petitioner Company got burnt, was thrown away and destroyed under the supervision of the State Excise authorities but in the absence of the Central Excise authorities. As a result of the destruction of the aforesaid quantity of molasses the Petitioner asserted that they suffered a loss of Rs. 55,049.10 Ps. Thereafter on 12th January, 1984 a notice was issued by the Superintendent of Central Excise, Gopalganj to the Petitioner asking them to show cause why the Central Excise duty amounting to Rs. 30,601.78 Ps. be not levied on them for the aforesaid destroyed molasses. Pursuant thereto, the Petitioner filed a reply to the show cause before the Assistant Collector, Central Excise, Muzaffarpur, inter alia, to the effect that the molasses stored in pit No. 5 was destroyed for no fault on the part of the Petitioner but as a result of natural phenomenon. However, the explanation given by the Petitioner in the show cause was not considered satisfactory and the Respondent Assistant Collector by an order dated 14th June, 1984 held that the demand of excise duty to the extent of Rs. 30,601.78 Ps. was justified. Against the said order the Petitioner Company filed an appeal u/s 35 of the said Act.
The appellate authority upheld the stand of the Petitioner Company and allowed the appeal with consequential relief. Thereafter on 22nd May, 1985 the Petitioner received a notice from the Under Secretary to the Government of India in the Ministry of Finance in the Department of Revenue asking it to show cause to the Central Government within 30 days from the date of receipt of the notice why the order in appeal passed by the Collector (Appeals) be not set aside and the order dated 14th May, 1984 passed by the Assistant Collector be not restored. Again the Petitioner filed a reply to the said show cause notice before the Joint Secretary to the Government of India, Ministry of Finance (Department of Revenue), New Delhi on 14th June, 1995 and the said proceeding was finally decided by an order dated 22nd August, 1986 rejecting the explanation given by the Petitioner. However, the loss upto 2 percent of the stored quantity was allowed to the Petitioner and the said order directed the Assistant Collector to consider the factual position and modify the demand suitably.
Thereafter on 20th November, 1986 the Petitioner received a demand notice for payment of duty to the extent of Rs. 28,322.78 Ps. from the Inspector of Central Excise, Daltonganj for the destruction of the burnt quantity of molasses as stated above. Thereafter this writ petition was filed before this Court on 5th December, 1986 and the same was admitted on 7th January, 1987 and the operation of the impugned orders including the notice of demand was stayed.
The stand which has been taken by the Respondents before this Court is that molasses being an excisable goods, it is liable to assessment of duties under tariff item No. 15 CC of Central Excise Tariff as it existed at the material time. The further contention of the learned Counsel for the Respondents is that every manufacturer under the Central Excise Law is duty bound to make suitable arrangements for the safe storage of excisable goods. Judging by that standard, Katcha pit is not a safe place for storage of molasses.
The Respondents contended that the Petitioner Company stored molasses in the Katcha pit after execution of a bond with an undertaking that it will not claim any remission of duty or loss in case of loss of molasses stored in Katcha pit. Further case of the Respondents is that the Company without informing the Central Excise authorities destroyed the burnt out molasses and as such they have committed violation of Rule 49 of the Central Excise Rules. Since the Petitioner Company did not obtain permission from the Central Excise authorities prior to the removal of molasses without payment of duty, the impugned order has been correctly passed imposing upon the Petitioner Company the duty which has been subsequently demanded pursuant to the same. Learned Counsel for the Respondents further submitted that the instant writ petition is barred inasmuch as there is a remedy by way of appeal which is available to the Petitioner before the Excise and Customs Tribunal from the impugned order.
This Court is of the view that once a writ petition has been admitted as far back as on 7th January, 1987 when the question of availability of alternative remedy was raised by the Court on 16th December, 1986 as would appear from the order-sheet, to dismiss this writ petition today, on the ground of non-exhaustion of alternative remedy, will be inappropriate and will not be a proper exercise of jurisdiction of this Court. Reference in this connection may be made to the judgment of a Division Bench of this Court in the case of Tata Engineering and Locomotive Co. Limited and Anr. v. Union of India and Ors. reported in 1994 (2) BLJR 1395 (paragraph 14).
Therefore, this Court proposes to decide the points at issue in this case.
It is not in dispute that at the material time molasses was an excisable commodity. Consequently it follows that the obligation of safe storage of molasses lies with the manufacturer. The difficulties faced by the Petitioner Company for storage of molasses are all questions of fact and cannot be decided here. Assuming arguendo, that such difficulties are genuine, even then that cannot absolve them from the obligation of payment of Central Excise duty on manufactured goods. It is also obvious that molasses could not be safely stored in Katcha pits. It could be so stored only on the undertaking and execution of the bond in Form B-2 which has been disclosed by the Respondents in their counter affidavit as Annexure-A. From the terms of the said bond and undertaking it is clear that storage of molasses in Katcha pits was done at the risk of manufacturer and they undertook to pay full central excise duty on such molasses in the event of its deterioration, loss or damage. Now, after the loss of the said commodity, it is not open to the Petitioner to turn round and say that those conditions in the bond are not binding on the Petitioner. This stand of the Petitioner Company is a completely abrupt and inconsistent stand which no Court can countenance and specially when the jurisdiction of the writ Court is discretionary. Reference in this connection may be made to the judgment in the case of Smt. Rukmanibai Gupta Vs. Collector Jabalpur and Others, In paragraph 10 of the said judgment it has been held that "the writ jurisdiction under Article 226 of the Constitution is not intended to facilitate avoidance of obligation voluntarily incurred."
Liability to pay central excise duty being a tax liability, there cannot be any equity about the same in law. Now whether or not the molasses got destroyed by way of auto combustion or whether they would have been destroyed even if they were kept in steel tanks are such disputed questions of fact as to squarely fall beyond the arena of the writ Court. Equally beyond the domain of this Court is the question whether molasses ceased to be marketable at the time of their removal by way of destruction. The presence of the central excise authority at the time of the destruction, therefore, assumes great importance. But, for inexplicable reasons, the Petitioner Company, apart from writing a letter on 16th November, 1983 to the central excise authorities, did not do anything to ensure their presence on 15th December, 1983 when the molasses in question were thus removed. Adverse inference in the impugned order, for the aforesaid act, has been rightly drawn against the Petitioner Company.
In this case the learned Counsel for the Respondents cited several rulings of the Tribunal. But this Court, is unable to follow them in the facts of the present case and specially in view of the execution of bond by the Petitioner. In any event, those decisions of the Tribunal are not binding as precedents on this Court.
For the reasons aforesaid, this writ petition is dismissed. All interim orders are hereby vacated. There will be no order as to cost.