judgement:
ivil Appeal No. 1263 of 1968.
Appeal by special leave from the order, dated November 2, 1967 of the Government of India, Ministry of Finance, Department of Revenue & Insurance, New Delhi in Central Excise Revision Application No. 1323 of 1967.
K. Sen, S.V. Gupte, Rameshwar Nath, Mahinder Netrain and Ravinder Nath, for the appellant.
V.A. Seyid Muhammad and S.P. Nayar, for the respondents.
[ SIKRI, J. delivered the majority Judgment on behalf of himself and BACHAWAT, J. HEGDE, J. gave a dissenting Opinion].
Sikri, J. I have had the advantage of reading the draft judgement prepared by Hegde, J., but, while I agree with him that there is no force in the plea of limitation advanced on behalf of the assessee, in my opinion the appeal should fail on the ground that the excise duty was levied correctly as determined by the Central Government in its order, dated November 2, 1967.
The facts are fully set out in the judgment of Hegde, 21 '.
It is only necessary to mention a few facts in order to make this judgment readable.
The assessee manufactures iron and steel products.
It manufactured wires out of steel rods, which had been imported by it prior to April 24, 1962.
Item 26AA was added to the First Schedule of the (I of 1944) hereinafter referred to as the Excise Act by Finance Act (No. 2), 1962 (XX of 1962) with effect from April 24, 1962.
This reads as under: "26 AA.IRON OR STEEL PRODUCTS, THE FOLLOWING, NAMELY : (i)Bars,rods,coils,wires,joi Five per cent.
ad volorem pl sts, girders, angles,channa us excise duty for the time ls,tees,flats,beams,zeds,tr being leviable on pig iron ough,pilling and all other or steel ingots,as the case rolled forced or extruded may be.
shapes and sections,not other wise specified.
(ii) Plates and sheets, other Seven and a half per cent.ad than plates and sheets inten valorem plus the excise duty ded for for 485 tinning and hoops, and str the time being leviable on ipe, all sorts,including pig iron or steel ingots as galvanised or corrugated the case may be.
and sheets.
(iii) Uncoated plates and Seven and a half per cent.
sheets intended for tin ad valorem plus the excise ning.
duty for the time being le viable on pig or iron steel (iv) Pipes and tubes ingots, as the case may be.
(including blanks there fore)all sorts, whether Five per cent.ad valorem rolled,forged,spun,cast plus the excise duty for drawn,annealed,welded or the time being leviable extruded.
on pig iron or steel ingots as the case may be.
(v) All other steel Five per cent.ad valorem castings,not otherwise sp plus the excise duty for ecified.
the time being leviable on steel ingots. ' The short point that arises is this: What is the duty leviable on the wires manufactured by the assessee out of steel rods which had already been imported ? For the time being I will ignore notifications issued under r. 8 (1) of the rules made under the Excise Act, and the amendments made by the Finance Act (No. 2) of 1962, and Indian Tariff (Amendment Act) 1963 (III of 1963) to the Indian Tariff Act, 1934. ' "Wires".
are mentioned in item No. 26AA(i).Therefore we have to scrutinize the third column of item 26AA(i) for the rate of duty.
Three points need clarification: (a) What is the meaning of or inference derivable from the word 'plus '? (b) What iS the meaning of the formula "the excise duty for the time being leviable on pig iron or steel ingots"? (c) What is the import of the words"as the case may be"? The word 'plus ' in the context indicates that the rate of duty consists of 2 parts: one part is ad valorem duty and the other is the excise duty calculated according to the formula given.
In other words, both duties have to be levied.
I will presently discuss what the formula means but this is clear that the third column contemplates one duty, consisting of two parts, being levied.
Before I discuss the meaning of the formula it will clarify matters if the import of the words "as the case may be" is first ascertained.
These words indicate that a choice has to be made between two types of excise duties excise duty leviable on pig iron or excise duty leviable On steel ingots, Sub items (ii), (iii) and (iv) of item 26AA use the same set of words.
In sub item (v) excise duty leviable on steel ingots is only mentioned.
This sub item consists of steel casting.
This indicates that the duty is being calculated thus because steel castings have been made 486 from steel ingots.
Item 26AA deals with iron 'and steel products.
It seems to me that the context indicates that the words "as the case may be" denote that the excise duty leviable on pig iron is to be charged of the product is an iron product; if it is a steel product then the excise duty leviable on.
steel ingots is to be levied.
In other words, this decides the choice whether item 25 (pig iron) or item 26 (steel ingots) is to be looked at.
Although 1 was not enlightened on the point by counsel during the course of the hearing, I have no doubt that the Excise Department and the trade know how to distinguish a steel product from an iron product.
If there is a dispute on the point it will have to be resolved in the future.
Now to come to the formula "the excise duty for the time being leviable on pig iron or steel ingots.
" Let me give a simple problem in order to illustrate the points which ' arise under this head of inquiry. "A" manufactures a steel ingot 'X ' in May 1961 in Jamshedpur.
He pays excise duty on it in May 1961 as he removes it out of the factory.
Its value is determined at the wholesale cash price at the time of removal in accordance with section 4 of the Excise Act.
Steel ingot 'X ' is sold to a manufacturer "B" in Faridabad who manufactures steel rods ( 'Y ' & 'Z ') out of it in May 1962 and removes them in May 1962.
What is the excise duty payable on steel rods ( 'Y ' & 'Z ') ? Ad valorem duty is easy to calculate.
What about the additional duty ? We know that the steel ingot 'X ' has paid excise duty.
But this does not make any difference.
The additional duty has still to be calculated under the formula.
It is also plain that no excise duty is strictly leviable under sections 3 and 4 of the Excise Act on steel ingot 'X ' as such.
Not only that it does not exist any longer but duty on it has already been paid and further no duty would be leviable under section 4 for it was removed from the factory long time ago in May 1961.
Therefore, it is clear that the formula cannot be concerned with the particular ingot 'X ' at all. ' It seems to me that what it is concerned with is the duty leviable on a hypothetical steel ingot if it had been manufactured or removed at the same time as the steel rods ( 'Y ' & 'Z ') were manufactured or removed.
In the example given above, under the formula the excise duty leviable under item 26 in May 1962 would have to be charged, i.e., 39.35 per metric tonne.
The weight to be taken into consideration would be the weight of steel rods 'Y ' & 'Z ', and not of the steel ingot 'X ' out of which they were made.
It seems to me that this is the true interpretation of column 3 of items 26AA(i).
It simply prescribes a rate of duty as the heading of column indicates.
It is not concerned with actual ingots out of which other articles are made.
It is not concerned with whether that steel ingot has paid excise duty or countervail 487 ing duty or not.
It is a simple formula perhaps inartistically formulated.
It is said that the item should be strictly construed, it being a taxing enactment.
But no rule or principle ,of construction requires that close reasoning should not be employed to arrive at the true meaning of a badly drafted entry in an Excise Act.
I believe I am not stretching the language of the entry against the subject, but it, appears to me that in the context of scheme of the Excise Act this is the only reasonable construction to give to the entry.
If it is permissible to look at the notifications issued by the Central Government which have given reliefs of various kinds, they seem to me to proceed on the interpretation which I have given above.
It will be noted that they do not exempt the article from the levy of duty; they give relief which may in a particular case be the excise duty or countervailing duty levied on the article out of which the assessed article has been manufactured.
To revert to the example given by me above, notification No.70/62, dated April 24, 1962, would exempt manufacturer B '"from so much of the duty of excise leviable on steel rods as is equivalent to .the duty leviable under item 26." Therefore, reading entry 26AA(i) with this notification, manufacturer 'B ' does not pay the whole of the duty leviable on steel rods ( 'Y ' & 'Z ') under col. 3 (item 26AA) because the steel ingot which he has used had already paid the appropriate amount of duty.
I am not able to appreciate how the insertion of item No. 63 (36) in the First Schedule of the Tariff Act or the subsequent amendment of the Indian Tariff Act, 1934, by Indian Tariff (Amendment Act) 1963 throw any light on .the interpretation of item 26 AA(i).
Item No. 63(36) is in respect of the same iron and steel products as are mentioned in item 26AA.
Column 4 (standard rate of duty) reads: "The excise duty for the time being leviable on like articles if produced or manufactured in India, and where such duty is leviable at different rates the highest duty; and the duty so leviable shall be in addition to the duty which would have been levied 'if this entry had not been inserted.
" The effect of this entry is to levy an additional customs duty equivalent to the prevalent excise duty on like articles produced and manufactured.
In other words, if the customs duty leviable under other entries in the Second Schedule on steel rods is 'D ', an additional duty 'E ' has to be levied equal to the excise duty leviable on steel rods, i.e., under item 26AA.
This has been called countervailing duty.
488 The manufacturer India, who used steel rods made in India, and made wires from them was given a certain relief by notification No. 77 of 1962, but the manufacturer in India who used steel rods made abroad to make wires was not first given this exemption.
Later by amendments he was given a similar exemption.
The ' Central Excise Manual (Seventh Edition) at p. 123 states the position thus: "26AA(2) Iron or Steel products falling under item No. 26AA, if made from another article falling under the said item or item No. 63 36) of the First Schedule to the Indian Tariff Act, 1934 (32 of 1934) and having already paid the appropriate amount of excise or countervailing customs duty, as the case may.be, are exempt with effect from 24th April, 1962, from so much of the duty of excise as is equivalent to the excise or countervailing customs duty payable on the said article ' vide Government of India, Ministry of Finance (Department of Revenue) Notification No. 89/62 Central Excise, dated 10th May, 1962 (issued in supersession of Notification No. 77/62 Central Excises, dated 24th April, 1962, as further amended by Notifications No. 93/62 Central Excises, dated 26th May, 1962, and No. 225/62 Central Excises,dated 29th December, 1962.
" The only light thrown by these amendments.
and the notifications referred to above is that it is not the idea to levy excise duty at various stages of manufacture of certain articles and this is achieved by issuing notifications giving appropriate reliefs.
But if there is no relief given by notifications the full duty at the rate mentioned in col. 3 of entry (i) of item 26 AA has to be paid.
In the result the appeal fails and is dismissed with costs.
Bachawat, J. I agree with Sikri, J. Hegde, J. This is an appeal by special leave.
It is directed against the order of the Government of India in No. 1323 of 1967, dated November 2, 1967 rejecting the appellant 's application for refund of the excise duty paid by him under protest.
In order to appreciate the controversy between the parties it is necessary to set out the material facts.
The appellant is a Company having a factory at Rishara in the State of West Bengal.
It manufactures, among other items, Iron and Steel Products such as Jute Baling Hoops, Wire Ropes, Cold Rolled Strips, Chain Pulley Blocks, Electric Hoists.etc.
Between December 1961 and January 1962 the appellant received various consignments of imported High Carbon Steel Wire Rods.
Its opening stock of imported High Carbon Steel Wire Rods on April 24, 1962 was 489 2,788.401 metric tons.
As before, the appellant manufactured wires from those steel rods even after April 24, 1962.
Finance (No. No. 20 of 1962) imposed for the first time excise duty on the Iron and Steel Products; and by sub el.
(S) of sub section
(2) of section 16 of the said Act an amendment was made to the First Schedule of the Central Excise and Salt Act, 1944 (hereinafter referred to as the Act) incorporating after item 26A item 26AA.
The relevant portion of that entry reads thus: Iron or Steel Products.
The following namely: (1) Bars, rods,coils,wires 5% ad valorem plus the ex joists girders,angels,channels cise duty for the time tees,flats beam,zeds,trough, being leviable on pig iron piling and all other rolled and Steel Ingots as the forged or extruded shapes and case may be.
section not otherwise specified.
Pig Iron and Steel Ingots were already subject to excise duty under Items Nos. 25 and 26 in the First Schedule of the Act.
The rate of duty in the case of the former at the material time was Rs. 10 per metric tonne and that of the latter Rs. 39/35 per metric tonne.
The newly imposed duty under Item 26AA came into force on April 24, 1962.
The Collector of Central Excise, West Bengal, Calcutta by a Trade Notice, Central Excise No. 32 Iron and Steel Products 2/62 dated Calcutta the 16th May 1962 notified the procedure to be followed.
By Notification No. 70/62, dated April 24, 1962 issued in exercise of the powers conferred by rule 8 (1 ) of the rules framed under the Act (to be hereinafter referred to as the rules), the Central Government exempted Iron and Steel Products falling under Item 26AA, if made from Pig Iron or Steel Ingots on which the appropriate amount of excise duty has already been paid, from so much of the duty of the excise leviable thereon as is equivalent to the duty leviable under Item 25 or 26 as the case may be.
On the same day as per Notification No. 77 of 1962, the Central Government exempted Iron and Steel Products falling under sub items (2), (3), (4) and (5) of Item 26AA, if made from articles which have already paid the appropriate duty of excise under sub item (1 ) of the said Item, from so much of the duty of excise as is equivalent to the duty payable under the sub item (1).
Finance (Act No. 2) of 1962 by section 15 amended the First Schedule of the Tariff Act by adding Item No. 63 (36) which deals with imported Iron and Steel Products.
The second column of that entry mentions the various Iron and Steel Products included therein.
The items included therein are the very items set out in Sup CI/69 14 490 Item 26AA of the First Schedule to the Act.
The third column of that Item which specifies the levy reads thus: "The excise duty for the time being leviable on like articles if produced or manufactured in India, and where such duty is leviable at different rates the highest duty so leviable shall be in addition to the duty which would have been levied if this entry had not been inserted." On May 10, 1962, the Government issued a fresh Notification (No. 89 of 1962) under rule 8(1) of the rules in supersession of the Notification No. 77/62 dated April 24, 1962.
By that Notification, the Government exempted with effect from April 24, 1962, Iron and Steel Products falling under Item 26AA if made from another article falling under the said Item and having already paid the appropriate amount of duty from so much of the duty of excise as is equivalent to the duty payable on the ' said article.
On the same day namely May 10, 1962, the Government issued yet another Notification (Notification No. 90 of 1962) under rule 8 (1) under which it exempted Iron and Steel Products falling under Item 26AA specified in column 2 of the table annexed to the Notification if made from Pig Iron or Steel Ingots on which appropriate amount of excise duty has already been paid, from so much of the duty of excise leviable on such products as in excess of the duty corresponding entry in column 3 of the said table.
(Wire) the product with which we are concerned in this case is also included in the table.
That Notification contains a proviso which says: "Provided that if the products are made from pig iron and steel ingots on which appropriate amount of duty has not been paid the excise duty for the time being leviable on pig iron or steel ingots as the case may be shall be payable in addition to the duties specified in the appropriate entry in column 3 of the table.
" On December 29, 1962, the Government issued yet another Notification under rule 8(1) amending the Notification No. 89 of 1962 issued on May 10, 1962.
In the place of words "if made from another article falling under the said item and having already paid the appropriate amount of duty from so much of the duty of excise as is equivalent .to the duty payable on the said article.
", the following was substituted: "if made from another article falling under the said Iterm or Item No. 63(36) of the First Schedule to the Indian Tariff Act 1934 (32 of 1934) and having already paid the appropriate amount of excise or court 491 tervailing custom duty as the case may be from so much of the duty of excise as is equivalent to the excise or countervailing custom duty payable on the said article." By Indian Tariff (Amendment Act 1963) (Act No. 3/63) effective from the 25th January 1963, the Indian Tariff Act 1934 was amended and after section 2, the following section was inserted namely: 2(a) (1).
Any article which is imported into India shall be liable to custom duty equal to the excise duty for the time being leviable on a like article if produced or manufactured in India.
Explanation: In this sub sec.
the expression "the excise duty for the time being leviable on a like article if produced or manufactured in India" means the excise duty for the time being in force which would be leviable on a like article if produced or manufactured in India or if a like article is not so produced or manufactured, which would be leviable on the class or description of articles to which the ' imported article belongs and where.
such duty is leviable at different rates, the highest duty.
(2) The customs duty referred to in sub section (i) shall be in addition to any duty imposed under this Act or under any other law for the time being in force.
" On or after April 24, 1962, the appellants cleared from their warehouse wires produced from the aforementioned imported Steel Rods after obtaining the required permission from the excise authorities and after paying the duty assesse.
On those wires, duty was assessed without taking into consideration "the excise duty for the time being leviable on Pig Iron and Steel Ingots as the case may be.
" At that time the Central Excise authorities proceeded on the basis .that on the stock of wire in question only ad valorem duty had to be levied and not "excise duty for the time being leviable on Pig Iron or Steel Ingots as the case may be." On March 21, 1963, the Inspector of Central Excise attached to M/s. J.K. Steel Ltd., Rishara issued the following notice: "COLLECTORATE OF CENTRAL EXCISE WEST BENGAL No. 6 Range RIS.
I. Date: 21 3 1963.
Circle CGR.
Notice of Demand for duty under rule 9(2) of C.E. Rules, 1944.
492 To M/s. J.K. Steel Ltd., Rishara, Hooghly.
Take notice that on behalf of the Central Government, I hereby demand payment by you of the sum of Rs. 4,18,801/30 N.P. (Rupees four lacs eighteen thousand eight hundred one and paise thirty only) within ten days from the date hereof.
Particulars of Demands Quantity Rate of duty Amount of duty involved Steel Ingot Duty on 6932.964 Rs.39.36 NP Rs.2,72,812/13 M.T.Hoops Per M.T. Steel Ingot Duty on 921.937 Rs.39.36 NP Rs. 36,278/22 M.T.Strips Per M.T. Steel Ingot Duty on 2788.00 Rs.39.36 NP Rs.1,09,710/95 Wire.
Total Rs.4,18,801/30 No. VI/5A/I&S/JKS/CE/63/183, dated 21 3 1963.
Sd/ Inspector I/C Central Excise M/s. 1.
K. Steel Ltd., Rishara.
" The appellants objected to the demand in question as per their letter of March 24, 1963.
They contended that they had not contravened rule 9(2) of the rules nor was there any short levy.
As per his letter of August 26, 1963, the Assistant Collector of Central Excise Calcutta 4th Division confined the demand to that made under serial No. 3 of the notice.
The appellants paid ' the same under protest and thereafter took up the matter in appeal to the Collector of Central Excise who dismissed their appeal as per his order of March 19, 1964, with these observations: "The crucial point of this appeal is whether counter vailing import duty was paid by the appellants on the imported steel rods from which steel wires were manufactured.
The appellants could not produce any documents in support of their argument that either import duty or countervailing duty equivalent to steel ingot rate was paid by them on the iron rods from which steel wires were drawn.
Such duty is leviable on steel rods under tariff item No. 26AA.
As no such duty on steel rods was paid by the appellants, countervailing 493 duty equivalent to steel ingot duty has, therefore, to be paid.
" As against the order of the Collector, the appellants went up in revision to the Central Government.
The Central Government allowed the revision petition to some extent.
This is what the Central Government ordered: "The Government of ' India have carefully considered all the points raised by the petitioners but see no reason to interfere with the Collectors stated that the Steel Wires manufactured out of steel wire rods imported prior to 24 4 1962 on which no countervailing duty was paid, and cleared during the period, from 24 4 1962 to 10 8 1963 were subject to full duty as then leviable under Item 26AA (1) of Central Excise Tariff.
However the demand for differential duty initially made on 2 3 1963 and subsequently amended vide the Asstt.
Collector 's order, dated 26 8 1963 shall be restricted to the clearance effected during the 3 months period prior to the initial service of demand on 21 31963 that is to say, up to 21,12 1962 only as per the provisions of Rule 10 of Central Excise Rules, 1944 which was applicable to this case.
The demand in respect of clearances effected prior to 21 12 1962 is hereby set aside and consequential refund shall be granted to the petitioners.
Subject to the above modifications, the revision application is otherwise rejected.
" Aggrieved by that order, the appellants have brought this appeal.
The questions that arise for decision in this appeal are: (1) What is the true scope of entry No. 26AA of the First Schedule to the Act ? (2) In considering the scope of the said entry, can the Notifications issued by the Government on or after April 24, 1962 be taken into consideration? (3) Is the demand barred by limitation under rule 10 of the rules ? One other question had been raised in the grounds of appeal namely that the order of the Central Government is vitiated as it had contravened the principles of natural justice.
That contention was not pressed at the hearing.
In the context of this case that contention loses much of its significance If we accept the appellant 's contention as regards the scope of entry 26AA then ' the fact that the Government 's illegal is immaterial illegal is immaterial.
If 494 on the other hand we accept the interpretation placed by the Revenue on that entry remand of the case to Central Government serves no purpose.
I shall now proceed to consider the questions earlier formulated for decision.
According to the assessee the true import of the clause in column 3 of entry 26AA is that goods mentioned in column 2 of that entry are dutiable at 5 per cent ad valorem plus the excise duty for the time being leviable under the Act on pig iron or steel ingot used in the production of those goods.
Shri A.K. Sen, the learned Counsel for the assessee urged that the expression leviable in that clause means leviable under the Act; in other words dutiable under the Act; the words 'Pig Iron ' and 'Steel Ingots ' referred to therein is the Pig Iron or the Steel Ingot used in manufacture of the articles on which duty is sought to be levied; otherwise the word leviable becomes inappropriate.
In other words according to him the second limb of the levy under that clause is attracted only when any pig iron or steel ingot dutiable under the Act is used in the manufacture of any article dutiable under sub cl.
(1) of entry 26AA.
As the steel bars used in manufacturing the 'wires ' with which we are concerned in tiffs case were not made out of steel ingot dutiable under the Act, as they were imported bars, that part of the levy is not attracted on those wires.
The contention for the Revenue is that the expression "the excise duty for the time being leviable on Pig Iron or Steel Ingot as the case may be" sets out only a measure; the rate at which the duty is leviable; it has no reference to any particular material; it is merely a yardstick.
The argument of Dr. Syed Muhammad, learned Counsel for the Revenue proceeded thus: The entry in question deals with two classes of products i.e., iron products and steel products.
The assessing authority has first to decide whether a particular article is an iron product or steel product.
If he comes to the conclusion that it is a steel product then he should assess the duty payable firstly by determining the ad valorem duty payable on it, thereafter he must find out its weight in metric tons and add to the ad valorem duty the amount payable as excise duty under entry 26 of the First Schedule on steel ingot of that weight.
If the intention of the Parliament was as suggested by the learned Counsel for the Revenue then column 3 should have read thus: "5 per cent ad valorem plus excise duty at the rate for the time being leviable on pig iron or steel ingots as the case may be.
" 495 It is difficult to interpret the words "for the time being leviable" as indicating a rate.
The expression "leviable on pig iron and steel ingots as the case may be" in my opinion has reference to pig iron or steel ingots dutiable under the Act.
In fiscal legislation the terms "rate" is a familiar term.
In fact entry 5 of the First Schedule dealing with salt speaks of "rate fixed annually by a Central Act".
Therefore it would have been the easiest tiring for the Parliament to convey its intention without ambiguity.
At this stage it may also be noted that the clause in question refers to "the excise duty" and not excise duty in general.
The definite article "the" has considerable significance.
It refers to some particular excise duty.
If the second part of the clause merely refers to a rate than the article "the" has no place in that context.
It was urged on behalf of the Revenue that to accept the contention of the assessee and to hold that the second part of the.
clause refers to the steel ingot used in the production of the "wires" is .to read into the clause the words "used in the production of the article in question.
" It was said that such a construction is impermissible.
Therefore we should not accede to that contention.
I am not prepared to accept that reasoning.
In fact in my opinion to accept the construction contended for on behalf of the Revenue, it would be necessary for us to include the words "at the rate" after the words "excise duty" and before the words "for the time being".
No such difficulty arises if we accept the interpretation placed by the assessee on that clause.
The expression "the excise duty for the time being leviable" by necessary implication refers to an. article dutiable under the Act.
That must necessarily be the article which is one of the components ' of the article on which duly is sought to be levied.
In the instant case that must be the steel ingot used in the production of the "wires" with which we are concerned in this case.
As laid down by this.
Court in C.A. Abraham vs I.T.O., Kottayam and Anr.(1) "In interpreting a fiscal statute the Court cannot proceed to make good deficiencies if there may be any; the court must interpret the statute as it stands and in case of doubt in a manner favourable to the tax payer.
" This Court also laid down in Commissioner of Income Tax vs Karamchand Premchand Ltd., Ahmedabad(2) that if there is any ambiguity of language in a fiscal statute, benefit of that ambiguity must be given to the assessee.
At this.
stage I am tempted to recall to my mind the well known observations of Lord Russel of Killowen in Inland Revenue Commissioners vs Duke of Westminister(3) viz.: (1) ; S.C.607,612 (2) ; , 742.
(3) [1936] A.C.1, 24.
496 "I confess that I view with disfavour the doctrine that in taxation cases the subject is to be taxed if in accordance with a Court 's view of what it considers the substance of the transaction, the Court thinks that the case falls within the contemplation or spirit of the statute.
The subject is not taxable by inference or by analogy, but only by the plain words of a statute applicable to the facts and circumstances of his case.
" About a century ago Lord Cairns in Partington vs The Attorney General(x) observed: "As I understand the principle of all fiscal legislation it is.tiffs: If the person sought to be taxed comes within the letter of the law he must be taxed however great the hardship may appear to the judicial mind to be.
On the other hand, if the Crown, seeking to recover the tax cannot bring the subject within the letter of the law, the subject is.
free, however apparently within the spirit of the law the case might otherwise appear to be.
" Unless I am satisfied that the only reasonable interpretation that can be placed on the clause in col. 3 of entry 26AA is that placed by the Revenue, it is not possible to justify the impugned levy.
There is yet another difficulty in accepting the interpretation tried to be placed by the Revenue on entry 26AA.
According to books on steel making pig iron is the intermediate form through which almost all iron must pass in the manufacture of steel (see "The Making, Shaping and Treating of Steel" edited by Harold E. Mcgannon at p. 384).
Therefore every steel product is also.
an iron product.
If the second part of the clause in column 3 of entry 26AA refers to .a rate and not the duty leviable on the material used in the manufacture of the dutiable article under that entry then the question arises whether the rate in question is that at which duty is leviable on steel ingot or that leviable on pig iron.
That part of the clause refers to two different materials dutiable at different rates.
If on the other hand it refers.
to the material from which the article on which duty is sought to be levied is made the proximate raw material and not the material from which that raw material is made, then there is no difficulty in finding out the amount.
Dr. Syed Muhammad was not able to tell us how the assessing authorities classify articles into iron products and steel products.
It is not his case that there is any recognised basis for doing so.
It is also not his case that there is any prescribed procedure for deciding that question.
His explanation that it is done on the basis of the practice prevailing in the trade is far from satisfactory.
(1) , 122.
497 He was not able to tell us how we can ascertain that practice or what that practice is.
If his contention is correct then the power of the assessing authorities to determine the nature of an article is an arbitrary power.
It is undefined and unguided.
The determination may vary from officer to officer.
It is doubtful whether such a power is a valid power.
That apart legislature is not likely to have conferred such an arbitrary power on the authorities.
That difficulty will not arise if the duty under the second limb of the levy in column 3 of entry 26AA is determined on the basis of the actual material used.
For the purpose of interpreting the clause in question, reference may also be made to entry 63(36) in the First Schedule to the Tariff Act.
It may be remembered that entry as well as entry 26AA in the First Schedule of the Act were enacted simultaneously under Finance (No. Both these entries came into force on the same day namely on 24th April 1962 The Act and the Tariff Act are cognate legislations.
In other words they are legislations which are pari materia.
They form one code.
They must be taken together as forming one system and as interpreting and enforcing each other.
It is proper to assume from the surrounding circumstances, that these two entries were introduced in pursuance of a common purpose, that purpose being that the articles listed in entry 26AA whether produced out of indigenous Pig Iron or Steel Ingot or made out of imported Pig Iron or Steel Ingot must bear the same amount of duty.
If the interpretation placed on entry 26AA by the learned Counsel for the assessee is accepted then it would be seen that entry by itself would not impose the duty contemplated by the second part of the clause in col. 3 of entry 26AA on imported Pig Iron or Steel Ingot.
Evidently in order to equalise the duty on articles made out of indigenous material as well as imported material entry 63 (36) of the First Schedule to the Tariff Act was enacted.
In other words that entry imposes countervailing duty and not additional duty.
It was conceded by the learned Counsel for the Revenue that the duty levied under entry 63(36) of the First Schedule of the Tariff Act is only a countervailing duty.
If that be so, that duty cannot be considered as an additional duty over and above the duty imposed under entry 26AA of the First Schedule of the Act.
But it would be an additional duty if the interpretation of entry 26AA canvassed on behalf of the Revenue is accepted because according to the Revenue the rate prescribed in that entry is equally applicable to all articles mentioned therein whether manufactured from indigenous or imported material.
If that be so the duty collected under entry 63(36) of the First Schedule under the Tariff Act will be an additional duty and not a countervailing duty.
It is true that despite entry 26AA of the First Schedule to the Act and entry 63(36) of the First Schedule 498 of the Tariff Act if pig iron or steel ingot imported before April 24, 1962 is used in the manufacture of an article dutiable under entry 26AA only the ad valorem duty prescribed under that entry can be levied on that article.
It may be that the legislature intended it to be so or there is a lacuna in the provision.
In either case the effect is the same.
I now come to the question whether in interpreting a taxing entry I can take any aid from the various steps taken by the Department in implementing that levy, I have earlier referred to a large number of Notifications issued under rule 8 (1 ) of the rules.
The parties have also produced before us the instructions issued by the Department on May 16, 1962 in the matter of implementation of entry 26AA.
I have now to see whether any aid can be taken from these instructions as well as the Notifications for finding out the true scope of entry 26AA.
So far as the instructions issued by the Department are concerned there is hardly any doubt that the same are wholly irrelevant.
In Craies on Statute Law Sixth Edn.
at page 131 it is stated: "Explanatory notes regarding the working of an Act issued by a government department for the assistance of their officials are inadmissible for the purpose of construing the Act." .
The same conclusion was arrived at by this Court in Commissioner Income ' Tax, Madras vs
K. Srinivasan and K. Gopalan.(1) At pages 502 503 of that report it is observed: "He,(learned Counsel for the assessee), however, drew our attention to the directions contained in the Income tax Manual in force for a number of years and contended that the department itself placed on sub sections (3) and (4) of section 25 the same construction as was placed on them by the senior Judge in the High Court and that was the true construction of these two sub sections.
This argument in our opinion, has no validity.
The department changed its view subsequently and amended the manual.
The interpretation placed by the department on these sub sections cannot be considered to be a proper guide in a matter like this when the construction of a statute is involved.
" Therefore I have to exclude from consideration the instructions issued by the Government.
This takes me to the Notifications issued by the Government under rule 8(1) of the rules.
Under section 38 of the Act all rules (1) , 502 503.
499 made and notifications issued under the Act shall be made and issued by publication in the official Gazette.
All such rules and notifications shall thereupon have effect as if enacted in the Act.
The rules made have to be placed on the table of the Parliament.
The Parliament can amend those rules.
Section 3 8 is of no assistance.
to us in the present case because the notifications referred to earlier are not those issued under the Act.
They are notifications issued under rule 8 (1) of the rules.
Therefore their relevance has to be considered without taking any assistance from section 38.
In Halsbury 's Laws of England 3rd edn.
36 at page 401 it is observed: "Where a statute provides that subordinate legislation made under it is to have effect as if enacted in the statute, such legislation may be referred to for the purpose of construing a provision in the statute itself.
Where a statute does not contain such a provision, and does not confer any power to modify the application of the statute by subordinate legislation, it is clear that subordinate legislation made under the.
statute cannot alter or vary the meaning of the statute itself where it is unambiguous, and it is doubtful whether such legislation can be referred to for the purpose of construing an expression in the statute, even if the meaning of the expression is ambiguous.
" No decision of this Court or of any of the High Courts in this country dealing with tiffs aspect has been brought to my notice.
Even the Counsel for the parties were not definite about the stand that they should take.
They were changing their position again.
and again.
On this question the opinion in English courts is not unanimous.
That question came up for consideration as early as in 1871 in Ex Parte Wier In re Wier.(1).
Sir G. Mellish L.J. delivering the judgment of the Court observed: "We do not think that any other section of the Act throws any material light upon the proper construction of this section,.
and if the question had depended upon the Act alone we should have had great doubt what the proper construction was; but we are of opinion that, where the construction of the Act is ambiguous and doubtful on any point, recourse may be had to the rules which have been made by the Lord Chancellor under the authority of the Act, and if we find that in the rules any particular construction has been put on the Act, that it is our duty to adopt and follow that construction.
" (1) Ch.
Appeal Cases (Vol. 6) p. 879.
500 In Re: Normal Ex parte Board of Trade (1) Lord Esher,M.R.Observed: "It was urged that we ought to hold the Act to be retrospective by reason of the rules and forms which have been made under it, and which have a statutory force; and it is said that shew that that the trustee must go back in his accounts to matters which happened before the Act came into operation.
But, when we look at the forms, we see that they are in express terms headed so as to relate to transactions taking place after the coming into operation of the Act; and, therefore, they supply no reason why we should depart from the ordinary rule that an Act is not retrospective.
" From these observations, it is clear that Lord Esher did take into consideration the subordinate legislation in considering the principal Act.
In Billings vs Reed,(2) Lord Greene stated that: "The fact that the object .of this Act was in substance what I have suggested can be seen from a consideration of the way in which the scheme has been framed pursuant to the Act itself and with the tacit approval of Parliament as provided in the Act.
At any rate, we are entitled to look at the scheme for the purpose of seeing the kind of practical treatment of these questions which Parliament has authorised.
" From this observation, it is seen that the learned Judge did look into the subordinate legislation in finding out the object of the Act.
In Hale vs Bolton Leathers Ltd.,(8) Somervell L. J. observed: "The county court judge was referred, as we were, to various paragraphs in the regulations made under the Act of 1946.
He took the view that these regulations could not affect the construction of the Act.
The regulation making power is conferred by section 89, sub section 1, proviso (b), and is as follows: 'regulations may make such transitional 'or consequential provisions as appear to the Minister to be necessary or expedient, having regard to the repeal of the said enactments in relation to diseases and to injuries not caused by accident, including provision for modifying or winding up any scheme made thereunder. ' We agree that these regulations could not contradict the Act.
(1) , 373:.
(2) (3) , 505.
501 They might, we think, properly be referred to as working out in detail the provisions of the Act consistently with its terms.
" In Howgate vs Ganall and .Anr.(1) Barry J. observed: "I cannot, of course, have recourse to these schemes as a guide to the correct interpretation of the Act under which they were made, but I am, I think, entitled to consider them for certain limited purposes.
In Billings vs Reed(1) Lord Greene H.R., .said, in reference to a scheme made under the Act: 'The fact that the object of this Act was in substance what I have suggested can be seen from a consideration of the way in which the scheme has been formed pursuant to the Act itself and with the tacit approval of Parliament as provided in the Act.
At any rate we are entitled to look at the scheme for the purpose of seeing the kind of practical treatment of these questions which Parliament has authorized.
It is abundantly clear from the wording of the various schemes made under the Act that the Minister, with the tacit consent of Parliament has throughout considered that 'war injuries ' may be sustained outside the United Kingdom . . " The decision in Hales vs Bolton Leathers Ltd.(a) to which references has been made earlier was taken in appeal to the House of Lords.
The judgment of the House of Lords is reported in [1951] A.C.p. 531.
Dealing with the question whether subordinate legislation could be taken into consideration in interpreting the principal Act lord Simonds said: "I much doubt whether I am entitled.
to look to the regulations for guidance on the eaning of the word in sub section
(1), but I will say something on this point later.
" Reverting back to that topic again (at p. 541 of the report) the learned Judge observed: "First, if I may look at the regulations made under section 55, sub section
(4), to assist in the interpretation of the word, I agree with my noble and learned friend Normand, in thinking that they assist or at least are consistent with this interpretation." Lord Normand one of the other Judges who heard the appeal observed: "The National Insurance (Industrial Injuries) (Prescribed Diseases) Regulations, 1948, were made under (1) , 274.
(2) (3) 505.
502 section 55, sub section 4, and though in my opinion they cannot control the construction of the Act, it is yet of some importance to consider whether they fit into the construction which I think the Act properly hears." Lord Oaksey in the same case was positive that the regulations could be looked into for certain limited purposes.
This is what observed: "I agree with your Lordships in thinking that the regulations themselves (National Insurance) (industrial Injuries) (Prescribed Diseases) (Regulations 1948) cannot alter the meaning of the words of the statute, but they may, I think, be looked at as being an interpretation placed by the appropriate Government department on the words of the statute." Therein Lord MacDermott also took the assistance of the regulations while considering the statute.
Lastly we come to the decision of the Chancery Division in London County Council vs Central Land Board(1).
Danckwerts J. in that case referred to the regulations made under the Housing Act, 1936 while construing the provisions of the Act.
From the above decisions, it is clear that several judges in England have referred to the subordinate legislation made under a statute for the purpose of interpreting that statute though for the limited purpose of know how the department which was entrusted with the task of implementing that statute had understood that statute.
In the case of fiscal statutes, it may not be inappropriate to take into consideration the exemptions granted in interpreting the nature and the scope of the impost.
In the matter of fiscal legislation the initiative is in the hands of the executive.
Under article 112(1) of our Constitution, the President shall in respect of every financial year.
cause to be laid before both the Houses of Parliament a statement of the estimated receipts and expenditure for that year.
Under sub article (3) of article 113 no demand for a grant shall be made except on the recommendation of the President.
In the matter of taxation very large powers are left in the hands of the executive.
Generally speaking the question of exemption is left to the discretion of the Government.
It ought to be so because the exercise of that power depends on various circumstances some of which cannot be anticipated in advance.
But yet the levy and exemptions are parts of the same scheme of taxation.
The two together carry into effect the purpose of the legislation.
For finding out the true scheme of a taxing measure we have to take into consideration not merely the levy but also (1) 503 the exemptions granted.
This Court in Kailash Nath and another vs State of U.P. and ors.
(1) held that the exemption granted in pursuance of a notification issued under the.
U.P. Sales Tax Act must be considered as having been contained in the parent Act itself.
This is what this Court stated therein: "This notification having been made in accordance with the power conferred by the statute has statutory force and validity and, therefore, the exemption is as if it is contained in the parent Act itself.
" I do not think it is necessary for me to decide in this case the general question whether subordinate legislation can be used for interpreting a provision in the parent Act.
I am not unaware of the danger in accepting that it could be so done.
But for the present purpose, it is sufficient to hold that for finding out the scope of a particular levy, notifications issued by the executive Government providing for exemption from that levy can be looked into as they disclose the overall scheme.
Even according to the learned Counsel for the Revenue the notifications referred to earlier were issued with a view to avoid double taxation.
If that is so, the exemption granted under those notifications provide a clue as to the scope of the levy made under Item 26AA.
We have earlier seen that on the very day, the levy came into force the Government had issued two notifications i.e., Notifications Nos. 70 and 77 of 1962.
Under Notification No. 70 it exempted Iron and Steel Products falling under item 26AA if made from Pig Iron or Steel Ingots on which the appropriate amount of duty has already been paid, from so much duty of the excise leviable thereon as is equivalent to the duty leviable under Item 25 or as the case may be under Item 26.
Under Notification.
No. 77, it exempted Iron and Steel Products falling under subitems Nos. 2, 3, 4 and 5 of Item 26AA, if made from articles which have already paid appropriate duty of excise under subitem (1) of the said item from so much of the duty of excise as is equivalent to the duty payable under the said sub item (1).
These Notifications clearly indicate that under Item 26AA, there was no intention to levy double excise duty on the same material.
The intention appears to be that if one article is made out of another article both of which are subject to excise duty, the excise duty paid on the raw material should be deducted in putting the excise duty payable on the finished product.
In addition these Notifications clearly show that the Pig Iron and Steel Ingot mentioned in el.
3 of entry 26AA are those used in the manufacture of the article on which duty is sought to be levied under that entry.
(1) A.I.R. 1957 S.C.790.
504 In this connection we may also refer to Notification No. 89/62.
Notification No. 77/62 referred merely to Iron and Steel Pro,ducts falling under sub items 2, 3, 4 and 5 of item 26AA manufactured out of articles falling under sub item (1) thereof.
That Notification by itself was not all comprehensive.
It did not take in other articles made out of Pig Iron or Steel Ingot.
It is that reason Notification No. 89/62 was issued on May 10, 1962 under which exemption was given with effect from April 24, 1962 to all Iron and Steel Products falling under Item 26AA if made from another article falling under the said item and having already paid appropriate amount of duty from so much of the duty of excise as is equivalent to the duty payable on the said article.
Notifications Nos. 70, 77 and 89 exempted payment of excise duty on an article to the extent duty had been paid on the raw material used in the manufacture of the article dutiable under entry 26AA.
All these Notifications proceeded on the basis that the second limb of the levy in column 3 of entry 26AA refers to the duty payable on the Pig Iron or Steel Ingot, as the case may be used in the manufacture of an article dutiable under 26AA.
But the above Notifications do not deal with the countervailhag duty levied under entry 63(36) of the First Schedule to the Tariff Act.
This was clearly an omission.
To make good that omission the Government amended Notification No. 89/62 by its order, dated December 29, 1962.
The amended Notification in addition to the exemption already given under Notification No. 89/62 also exempted from the payment of duty any article falling Within any of the sub items in item 26AA if made from an article on which countervailing duty has been paid under item 63(36) of the First Schedule to the Tariff Act from so much ,of the duty of excise as is equivalent to the countervailing custom .duty payable on the said article.
This Notification clearly shows that the countervailing duty in question was levied on the basis that the excise duty contemplated by entry 26AA will not apply to articles made out of imported Pig Iron or Steel Ingot.
Further if the legislature intended the duty under entry 63(36) to be an additional duty, the exemption granted would nullify the legislative mandate.
To summarise the effect of the Finance (No. 2) Act of 1962 and the various Notifications issued for the purpose of implementing the scheme under that Act is that excise duty is leviable at the rate mentioned in column 3 of Item 26AA on pig iron or steel ingot used in the production of the article on which duty under entry 26AA is sought to be levied but to the extent .any excise duty or countervailing custom duty had been paid on any of the material used in the manufacture of any of that article, the ,same is exempt.
From this scheme it is clear that when Item 26AA 505 speaks of , 'the excise duty for the time being leviable on Pig Iron or Steel Ingots: as 'the case may be" it refers to the excise duty payable on ' the Pig Iron or Steel Ingots used in the production of the article dutiable under that item.
From the above discussion, it follows that the wires which are the subject matter of the levy impugned in this case are not liable to pay the duty in dispute in this case.
At one Stage it was contended on behalf of the assessee that the levy under sub item (1) of Item 26AA comes into effect only when an article is made directly from out of Pig Iron or Steel Ingot as the case may be and not otherwise.
It is not necessary to examine the correctness of this contention because at no stage the assessee had challenged his liability to pay ad valorem duty .under
Item 26AA.
He paid the same without objection nor had he claimed refund of the same.
I shall now take up the question of limitation.
The written demand made on March 21, 1963 purports to have been made under rule 9 (2) of the rules.
Therein the assessing authority demanded steel ingot duty which according to it the assessee had failed to pay.
Quite clearly rule 9(2) is inapplicable to the facts of the case.
Admittedly the assessee had cleared the goods from the warehouse after paying the duty demanded and after obtaining the permission of the concerned authority.
Hence there is no question of any.
evasion.
Despite the fact that the assessee challenged the validity of the demand made on him both the Assistant Collector as well as the Collector ignored that contention; but when the matter was taken up to the Government it treated the demand in question as a demand under rule 10.
The Government confined the demand to clearances effected after December 21, 1962.
The demand so modified is in conformity with rule 10.
But the contention of the assessee is that the demand having been made under rule 9 (2) and there being no indication in that demand that it was made under rule 10, the Revenue cannot now change its position and justify the demand under rule 10; at any rate by the time the Government amended the demand, the duty claimed became barred even under rule 10.
We are unable to accept this contention as correct.
There is no dispute that the officer who made the demand was competent to make demands both under rule 9(2) as well as under rule 10.
If the exercise of a power can be traced to a legitimate source, the fact that the same was purported to have been exercise under a different power does not vitiate the exercise of the power in question.
This is a well settled proposition of law.
In this connection reference may usefully be made to the decisions of this Court in B. Balakotaiah vs The Union of India and Ors.
(1) and (1) ; 3sup.
CI/69 15 506 Afzal UIlah vs State of U.p.(1).
Further a common form is prescribed for issuing notices both under rule 9(2) and rule 10.
The incorrect statements in the written demand could not have prejudiced the assessee.
From his reply to the demand, it is clear that he knew as to the nature of the demand.
Therefore I find ass suesseeance in the plea of Limitation advanced on behalf of the For the reasons mentioned above, this appeal is the Revenue is directed to refund the excess duty paid under protest.
ORDER In accordance with the opinion of the appeal is dismissed with costs.

summary:
The appellant was a manufacturer of iron and steel products.
It was importing steel rods from which steel wires were manufactured.
April 24, 1962 Finance Act (No. 2) 1962 imposed excise duty on iron and steel products by introducing item 26AA in the Central Excise and Salt Act, 1944.
Under that item, on wires, 5% ad valorem plus the excise duty for the time being leviable on pig iron and steel ingots as the case may be was payable.
Pig iron 'and steel ingots were already subject to excise duty under items 25 and 26 respectively.
On the same day, the first Schedule of the Tariff Act 1934 was amended and two Notifications Nos. 70 and 77 were issued in exercise of the powers conferred by r. 8(1) of the rules framed under the Excise Act.
In the Tariff Act item 63(36) which deals with imported iron and steel products was added to the First Schedule by.
Finance Act (No. 2),.
1962.The items included therein are the very items set out in item 26AA of the Excise Act.
The standard rule of duty is mentioned as 'the excise duty for the time being leviable on like articles if produced or manufactured in India. and the duty so leviable shall be in addition to the duty which would have been levied if this entry had not been inserted.
Under Notification 70, the Central Government exempted iron and steel products falling under item 26AA if made from pig iron or steel in gots on which the appropriate amount of excise duty has already been paid,from so much of the excise duty leviable thereon as is equivalent to the duty leviable under item 25 or 26 as the case may be.
Under Notification 77, the Central Government exempted other iron and steel products falling under sub items (2), (3), (4) and (5) of item 26 AA if made from articles which have already paid the 'appropriate.
excise duty under sub item (1) of item 26AA, from so much of the excise duty as is equivalent to the duty payable under sub item (1).
This notification was later superseded by another Notification No. 89.
by, which the Government exempted with effect from April, 24, 1962, iron and steel products falling under item 26AA if made from another article falling under the said item and having already paid the appropriate amount of ' duty, from so much of the excise duty as is equivalent to the duty payable on the said article.
On and after April 24, 1962, the appellant cleared from its warehouse wires produced from the imported steel rods.
The required permission from the excise authorities was obtained and the duty assessed was paid ', At that time the excise authorities proceeded on the basis that only ad valorem duty had to be levied and not 'excise duty for the time leviable on pig iron or steel ingots. ' On March 21, 1963, the assessing authority issued a written demand under r. 9(2) demanding steel ingot duty which, according to the authority the appellant had evaded to pay.
The appellant paid the duty demanded under protest 482 and appealed to higher authorities.
The Government, in revision.
treated the demand as one under r. 10, because, there was no question of any evasion by the appellant, and confined the demand to clearances effected after December 21, 1962.
In appeal to this Court against the order of the Central Government, the.
appellant contended that: (1) The clause 'excise duty for the time being leviable under the Act on pig iron or steel ingots ' is attracted only when any pig iron or steel ingot dutiable under the Act is Used in the manufacture of any article dutiable under item 26AA (1), and, as the steel bars used in the manufacture of wire were imported and were not made out of steel ingots dutiable under the Act, that loan of the levy was not attracted to the wires; and (2) The demand by the Central Government was barred by limitation under r. 10.
HELD: (1) (Per Sikri and Bachawat, JJ.) The excise duty was levied correctly as determined by the Central Government.
Item 26AA prescribes a rate of duty as the heading of its column 3 indicates.
The rate consists of two parts, one part is the ad valorem duty and the other excise duty.
The context indicates that the words 'as the case may be ' denote the excise duty leviable on pig iron under item 25 is to be charged if the product is an iron product; if it is a steel product then the excise duty leviable on steel ingots under item 26 is to.
be levied.
The weight to be taken into consideration for determining the excise duty would be the weight of the products made out of iron steel ingots and not that of the pig iron or steel ingot out of which they were made.
That is, the duty will be the duty leviable on the hypothetical piece of pig iron or steel ingot 'as the case may be of the same weight as the particular products to be assessed.
The duty is not concerned with the actual price of pig iron or steel ingot out of which other articles are made, and it is not concerned with whether any excise duty or countervailing duty was paid on the pig iron or steel ingot used.
Therefore it is irrelevant whether the article out of which the assessed article was manufactured was imported or not.
[486 A B; F H; 487 B E] The effect of item 63(36) in the Tariff Act, is to levy a countervailing duty as an additional custom duty equivalent to the prevalent .excise duty on like articles produced and manufactured.
The manufacturer in India, who used steel rods made in India and made wires from them was given a certain relief under Notification 77, but the manufacturer who used steel rods made abroad was not given this exemption.
Later by Notification 89, and suitable amendments, he was also given a similar exemption.
But the item in the Tariff Act does not throw any light on item 26AA(1) of the Excise Act.
[487 H; 488 A B] Assuming that it is permissible to look at the notifications issued by the.
Central Government for interpreting item 26AA, they proceed on the interpretation of the item that it refers to a rate.
The Notifications do not exempt an article from the levy of duty; they give relief which may in a particular case be the excise duty or the countervailing duty levied on the article out of which the assessed article has been manufactured.
The rule that a fiscal enactment should be strictly construed does not mean that close reasoning should not be employed to arrive at the true meaning of a badly drafted entry in an Excise Act.
[487 A C] Per Hegde, J. (dissenting): The expression leviable of pig iron and steel ingots as the case may be ' has reference to pig iron or steel ingots dutiable under the Excise Act.
Therefore.
the wires which 'are the subject matter of the impugned levy in the present case, are not liable to pay the duty in dispute as they were made out of imported steel rods and hence not dutiable under the Excise Act.
[495 A B; 505 B] 403 If the item 26AA refers to a rate Parliament would have conveyed such intention without any ambiguity as it has done in item 5.
The words used are 'the excise duty '.
If the clause refers to a rate the article 'the ' has no place in the context.
The expression 'the excise duty for the time being leviable ' by necessary implication refers to an article dutiable under the Act That must necessarily be the 'article which is one of the components of the article on which duty is sought to be levied, that is, in the instant case, the steel ingot used in the production of wires.
Moreover pig iron is the intermediate form through which iron must pass in the manufacture of steel.
Therefore, every steel product is also an iron product.
If the clause in item 26AA refers to a rate and not to the duty leviable on the material used in the manufacture of the dutiable article, then the question would be whether the rate is that at which duty is leviable on steel ingot or that leviable on pig iron.
If it merely depends on the practice prevailing in the trade then the power of the assessing authorities to determine the nature of an.
article would be an arbitrary power, and the legislature is not likely to have conferred such an arbitrary power on the authorities.
If on the other hand.
the item refers to the material from which the article on which duty is sought to be levied is made the proximate, raw material and not the material from which that raw material is made, then there is definiteness for the purpose of finding out the amount.
[495 A C, E F; 496 E G; 497 A B] Observations in C.A. Abraham vs I.T.O. Kottayam ; , 771; C.I.T.v.
Karamchcmd Premchand, Ahmedabad; , , 742; Inland Revenue Commissioners vs Duke of West minister , 24 and Partington vs The Attorney General, , 122, applied Entry 63(36) in the Tariff Act and item 26AA in the Excise Act were enacted simultaneously, came into force on the same day from one code and are pari materia.
They were introduced in pursuance of a common purpose, namely, that the articles listed in item 26AA, whether produced out of indigenous pig iron or steel ingot or made of imported pig iron or steel ingot must bear the same amount of duty.
The duty levied under item 63(36) being a countervailing duty it cannot be considered as an additional duty over and above the duty imposed under item 26AA of the Excise Act.
[497 C E, F G] For finding out the scope of a particular levy, notifications issued by the executive Government providing for exemption from levy can be looked into as they disclose the overall scheme.
The notifications Nos. 70, 77 and 89 were issued with a view to avoid double taxation, and the exemption granted provides a clue to the scope of item 26AA.
The effect of Finance Act (2), 1962, and the various Notifications is that excise duty is leviable at the rate mentioned in item 26 AA on pig iron or steel ingot used in the production of the article on which duty under item 26AA is sought to be levied but.
to the extent any excise duty or countervailing custom duty has been paid on any of the material used in the manufacture of the article, the same is exempt.
Therefore, when item 26AA speaks of 'the excise duty for the time being leviable on pig iron or steel ingots as the case may be ' it refers to the excise duty payable on pig iron or steel ingots used in the production of the article dutiable under that item.
[503 C E; 504 G H] Kailash Nath vs State of U.P.A.I.R. , followed.
(2) (By Full Court): If the exercise, of a power can be traced to a legitimate source, the fact that it was purported to have been exercised under a different power does not vitiate the exercise of the power.
In 484 the present case, a common form is prescribed for issuing notices under rr.
9(2) and 10 and the incorrect statements in the written demand did not prejudice the appellant as shown from its answer to the demand: Therefore, though the demand was made under r. 9(2), the Revenue could change its position and justify the demand under r. 10.
[484 E; 505 D H; 506 A B] B. Balakotaiah vs Union of India ; and Afzal Ulah vs State of U.P. ; , referred to


judgement:
Appeal No. 1631 of 1967.
Appeal by special leave from the order dated May 11, 1967 of the Allahabad High Court in Civil Misc.
Writ Petition No. 1647 of 1967.
S.V. Gupte 'and D.N. Mukherjee, for the appellant.
M.K. Ramamurthi, Shayamala Pappu and Vineet Kumar for respondent No. 2.
The Judgment of the Court was delivered by Vaidialingam, J.
In this appeal, by special leave, the appellant challenges the order of the Allahabad High Court dated May 676 11, 1967 dismissing Civil Miscellaneous Writ Petition No. 1647 of 1967.
The facts leading up to the filing of the said writ petition by the appellant under article 226 of the Constitution, may be briefly stated.
The appellant is an existing company under the and has its registered office at Calcutta.
The company was and is being managed by Martin Burn Ltd., Secretaries and Treasurers.
The company carries on the business of generation, distribution and supply of electricity within its licensed area in the city of Agra and its environs in the State of Uttar Pradesh On a reference made by the Government of Uttar Pradesh regarding a dispute that had arisen between the electricity undertakings managed by Martin Burn Ltd., of which the appellant was one, and their workmen about the demand of the workmen for supply of uniforms, free of charge, the Chairman, Martin Electricity Supply Company Adjudication Board made an award on February 20, 1947 in and by which certain types of workmen were directed to be supplied with uniforms.
The said award remained operative till April 15, 1950 on which date it was terminated.
Though the award had been terminated, the appellant continued the practice of supplying uniforms to its workmen.
Subsequently, again, a dispute was raised by the employees of the electricity undertakings managed by Martin Burn Ltd., regarding the supply of uniforms to some categories of workers.
The said dispute was referred by the Government of Uttar Pradesh, by order dated March 15, 1951, for adjudication to the State Industrial Tribunal, Uttar Pradesh, Allahabad.
The said Industrial Tribunal passed an award dated November 29, 1952 holding that the same categories of workmen to whom uniforms had to be supplied as per the award dated February 20, 1947 were entitled to be supplied with uniforms.
Though this award remained in operation only for a period of one year, the appellant continued to supply uniforms till 1953 after which year the supply of uniforms was discontinued.
Nevertheless, the appellant again resumed supplying uniforms from May 1961.
On December 31, 1961 twenty three employees of the appellant, including the second respondent herein, filed a joint petition before the Labour Court, Meerut,.
under section 6 1 1(2) of the Uttar Pradesh (hereinafter referred to as the Act) claiming that they were entitled to recover the money equivalent to the cost of uniforms which had not been supplied to them during the period 1954 to 1960.
The said petition was numbered as Case No. 1 of 1962.
According to these employees, the employer had failed to supply them uniforms which they were entitled to get and in consequence of such failure the workmen had been put to expense by purchase of clothes to be used while rendering service in the company.
They claimed that the benefits 677 which they were entitled to get should be computed in terms of money to enable them to recover the cost of uniforms from the appellant.
The appellant filed a written statement on January 27, 1962 disputing the claim of the workmen and denying its ii, ability to either supply uniforms or pay the money value of the On February 22, 1964 the application filed by the workmen was taken up by the Labour Court for heating, but as none appeared on behalf of the workmen who were the applicants when the case was called on for hearing the Labour Court Meerut dismissed the application for non prosecution.
The actual order passed by the Labour Court was as follows: "Case called on for hearing.
No one is present on behalf of the applicant, nor 'any request for adjournment has been received.
The application is dismissed as not having been prosecuted.
No order as to costs.
" On or about January 1, 1965 seven employees of the appellant, including the second respondent herein, filed seven separate applications before the Labour Court, Meerut, again under section 6 H(2) of the Act.
The seven applications had been numbered as Case Nos. 217 to 223 of 1965.
The application filed by the second respondent was Case No. 217 of 1965.
The second respontdent, in particular claimed that he was a mains coyly from April 13, 1950 to September 15, 1959 'and that he was entitled to be supplied uniform by the appellant.
As the uniform had not been so supplied he pleaded that he was entitled to recover a sum of Rs. 390/ as cost of the uniforms which the management should have supplied during those years.
All the applicants, including the second respondent, had also stated in their respective applications that they had moved before the Labour Court a similar application, under section 6 H(2) of the Act, but, unfortunately that had been dismissed for default on February 21, 1964 and hence the fresh applications were being filed.
The appellant flied on or about April 7, 1965 separate objections denying the claim made by the applicants.
We are not, at this stage, concerned with the various pleas taken either by the employees, in support of their claim, or by the appellant, in denial thereof.
It is only necessary to state that the appellant pleaded that the fresh applications, filed by the workmen, were not maintainable in view of the fact that identical applications, claiming the same reliefs, had been dismissed on February 21, 1964 by the Labour Court.
If the workmen were aggrieved by that said order, the proper remedy that should have been adopted by them was by taking action under r. 16(2) of the Uttar Pradesh Industrial Disputes Rules, 1957 (hereinafter referred to as the rules).
Not 678 having adopted the procedure indicated therein, the management pleaded that it was no longer open to the workmen to file a second application and the Labour Court had no jurisdiction to entertain the same.
The Labour Court had, by its order dated August 27, 1965 consolidated all the seven applications.
On the basis of the objection raised by the appellant to the maintainability of the applications filed, issue No. 5 was framed in the following terms: "Whether the present applications of the workmen under section 6 H(2) are not maintainable for the reasons given in para 5 of the written statement of the employers ?" and this issue was treated as a preliminary issue 'and arguments heard on the same By order dated February 10, 1967 the Labour Court held that the applications filed by the seven workmen, including the second respondent were maintainable.
The Labour Court has expressed the view that the order passed on February 21, 1964 was one dismissing the applications, filed by the workmen, for default and such an order was not contemplated by sub r.
(1 ) of r. 16 of the rules, and hence the workmen were not bound to take 'action under sub r.
(2) of r. 16.
In consequence the Labour Court held that the applications filed by the workmen were competent and directed the applications to be posted for further hearing.
Though the order had been passed in Case No. 217 of 1965, the Labour Court directed that the finding given on issue No. 5 would govern Cases Nos. 218 to 223 of 1965 also.
The 'appellant challenged this finding of the Labour Court before the High Court of Allahabad in Civil Writ No. 1647 of 1967.
A Division Bench of the High Court, by its order dated May 11, 1967 summarily dismissed the writ petition.
Mr. Gupte, learned counsel for the appellant and Mr. Ramamurthy, learned counsel for the second respondent, urged the same contentions that were urged on behalf of their clients before the Labour Court.
Therefore the question that arises for consideration is whether the view of the Labour Court that the second application filed by the second respondent herein is maintainable, is correct.
Section 6 H of the Act deals with recovery of money due from an employer.
Section 6 H more or less corresponds to section 33 C of the .
Sub section
(2) of section 6 H, with which we are concerned, is as ,follows: "(2) Where any workman is entitled to receive from the employer any benefit which is capable of being computed in terms of money, the amount at which such benefit should be computed may, subject to any rules 679 that may be made under this Act, be determined by such Labour Court as may be specified in this behalf by the State Government, and the amount so determined may be recovered as provided for in sub section (1 ).
" As we have already mentioned, the second respondent, along with certain others, had filed an application on December 31, 1961 claiming identical relief that is now claimed in Case No. 217 of 1965.
That application was dismissed as not having been prosecuted, on February 22, 1964.
The second application was filed on January 1, 1965.
We shall now refer to the relevant rules.
Rule 9 empowers a Tribunal or Labour Court to accept, admit or call for evidence at any stage of the proceedings before it and in such manner as it may think fit Rule 10 relates to the issue of summons for production of any books, papers or other documents as the Labour Court, Tribunal or Arbitrator feels necessary for the purpose of investigation or adjudication.
Rule 12 relates to procedure at the first hearing.
It states that 'at the first sitting of a Labour Court or Tribunal, the Presiding Officer shall call upon the parties in such order as he may think fit to state their case.
Rule 16 provides for the Labour Court or Tribunal or Arbitrator proceeding ex parte, as follows: "( 1 ) If, on the date fixed or on ,any other date to which the hearing may be adjourned, any party to the proceedings before the Labour Court or Tribunal or an Arbitrator is absent, though duly served with summons or having the notice of the date of hearing, the Labour Court or Tribunal or the Arbitrator, as the case may be, may proceed with the case in his absence and such order as it may deem fit and proper.
(2) The Labour Court, Tribunal or an Arbitrator may set aside the order passed against the party in his absence, if within ten days of such order, the party applies in writing for setting aside such order and shows sufficient cause for his absence.
The Labour Court, Tribunal or an Arbitrator may require the party to file an affidavit, stating the cause of his absence.
As many copies of the application and affidavit, if any, shall be filed by the party concerned as there are persons on the opposite side.
Notice of the application shall be given to the opposite parties before setting aside the order.
" Sub rule (1 ) deals with the absence of a party on the date fixed, or on any other date to which the hearing may be adjourned, though he has been served with summons or he has notice of the date of hearing.
Under the circumstances it provides that the 680 Labour Court, Tribunal or Arbitrator, as the case may be "may proceed with the case in his absence and pass such order as it may deem fit and proper".
It is to the setting aside of such an order that may have been passed under sub r. (1 ), that the procedure is indicated in sub r.
According to Mr. Gupte, learned counsel for the appellant, the order passed on February 22, 1964, by the Labour Court is one contemplated by sub r.
(1) of r. 16, in which case the provisions of sub r.
(2) are attracted and the second respondent, if he felt aggrieved by that order, should have filed an application under sub r.
(2), within time, to set aside that order.
We are not inclined to 'accept this contention of Mr. Gupte.
As pointed out earlier by us, the order passed on February 22, 1964, is one dismissing the application as not having been prosecuted, for default of appearance of the second respondent.
We will presently show that the order of February 22, 1964 cannot be considered to be one contemplated to have been passed under sub r.
( 1 ) of r. 16.
Sub r.
( 1 ) refers to a party being absent on the date fixed, or on any other date to which the hearing has been adjourned, and such party having been duly served or having notice of the date of hearing.
The said sub r.
(1 ) indicates as to what is to be done .under such circumstances.
We have referred to r. 12 which provides for what the Labour Court or Tribunal should do at the first hearing.
Neither the Act nor the rules empower a Tribunal or Labour Court to dismiss an application for default of appearance of a party.
Rule 16 (1 ) is the only provision for what is to be done when a party is absent.
That provision, which clearly enjoins the Labour Court or Tribunal in the circumstances mentioned therein "to proceed with the case in his absence" either on the date fixed or on any other date to which the hearing may be adjourned, coupled with the further direction "and pass such order as it may deem fit and proper", clearly indicates that the Tribunal or Labour Court should take up the case and decide it on merits 'and not dismiss it for default.
Without attempting to be exhaustive, we shall just give an example.
Where a workman, after leading some evidence in support of his claim, absents himself on the next adjourned date with the result that he does not lead further evidence, the Tribunal is bound to proceed with the case on such evidence as has been placed before it.
It cannot dismiss the application on the ground of default of appearance of the workman.
This will be an instance of "proceeding with the case in the absence of a party" and giving a decision on merits.
If such an order is passed by the Tribunal in the absence of one or other of the parties before it, a right is given to such party to apply under sub r.
(2) for setting aside the order that has been passed in his absence in the case in terms of sub r.
The application must be filed within the period mentioned in 681 sub r.
(2) and the party will have also to satisfy the Tribunal or Labour Court that he had sufficient cause for his absence.
The necessity for filing an application for setting aside an order passed in the case in the absence of 'a party, as contemplated under sub r.
(2) of r. 16 will only arise when an order on merits affecting the case has been passed in the absence of a party, under sub r.
(1 ) of r. 16.
An order dismissing a case for default or non prosecution, does not come under sub r.
( 1 ) of r. 16 and to such an order sub r.
(2) has no 'application.
We have already indicated that the order passed on February 22, 1964 by the Labour Court cannot be considered to be an order contemplated under sub r.
(1 ) of r. 16.
If that is so, the second respondent was not bound to file an application within the time mentioned in sub r.
(2) for setting 'aside the order dated February 22, 1964.
Therefore the fact that a previous application, filed by the second respondent, was dismissed for non prosecution on February 22, 1964 is no bar under r. 16(2) to the filing of the present application, Case No. 217 of 1965.
It follows that the objections raised by the appellant to the maintainability of the application filed by the second respondent have been rightly rejected by the Labour Court and the High Court.
The appeal fails and is dismissed.
The appellant will pay the costs of the second respondent.

dataset_name: IN-Abs

summary:
The second respondent originally filed an application for certain reliefs against its employer (the appellant company).
The Labour Court dismissed the application as not having been prosecuted for the default of the appearance of the applicants.
The second respondent filed a second application claiming the same reliefs.
The management objected to the maintainability of the second application contending that if the workmen were aggrieved by the earlier order, the proper remedy that should have been adopted by them was by taking action under r. 16(2) of the Uttar Pradesh Industrial Disputes, Rules, 1957.
The Labour Court rejected the objection, and the appellant challenged the decision in a writ petition to the High Court.
The High Court dismissed the writ petition.
HELD: An order dismissing a case for default or non prosecution, does not come under sub r.
(1) of r. 16 and to such an order sub r.
(2) has no application.
Neither the Act nor the rules empower a Tribunal or Labour Court to dismiss an application for default of appearance of a party.
Rule 16(1) is the only provision providing for what is to be done when a party is absent.
That provision, which clearly enjoins the Labour Court or Tribunal in the circumstances mentioned therein "to proceed with the case in his absence", either on the date fixed or on any other date to which the hearing may be adjourned, coupled with the further direction "and pass such order as it may deem fit and proper", indicates that the Tribunal or Labour Court should take up the case and decide it on merits and not dismiss it for default.
The necessity for filing an application for setting aside an order passed in the case in the absence off a party, as contemplated under sub r.
(2) of r. 16 will arise only when .an order on merits affecting the case has been passed in the absence of a party, under sub r.
( 1 ) of r. 16.
[680 E; 681 A B]


judgement:
Criminal Appeal No. 129 of 1966.
Appeal by special leave from the judgment and order dated March 21, 1966 of the Calcutta High Court in Criminal Revision No. 309 of 1966.
521 A. K. Sen, P.K. Chatterjee, M.M. Kshatriya and G.S. Chatterjee, for the appellants.
B. Sen and P.K. Chakravarti, for the respondent.
The Judgment of the Court was delivered by Shah, J.
Mahendra Lal and Probhat Kumar Sarkar were the promoters, and Almohan Das was the first Chairman of the Board of Directors of the Great Indian Steam Navigation Company Ltd. Messrs. Das Brothers of which Almohan Das was the sole proprietor became the managing agents ' of the Company in 1945.
On July 2, 1951, Das Group Ltd. of which also Almohan Das was the principal Director took over the managing agency.
The Registrar of Companies, West Bengal filed a complaint in the Court of the Chief Presidency Magistrate alleging that sometime between March 1, 1945 and December 31, 1947 a sum of .Rs.
7,23,031 9 6 was advanced by the.
Company to the managing agents Messrs Das Brothers; that on July 2, 1951 Messrs Das Brothers resigned from the managing agency and Messrs Das Group Ltd. took over the managing agency; that Almohan Das was at all material times a director of the company and also a director of Messrs Das Group Ltd. and the sole proprietor of Messrs Das Brothers; and that the complainant had reason to believe that Almohan Das with other directors of the company had committed offences under sections 86 D and 87 D of the Indian Companies Act, 1913.
The complainant requested that a through investigation .be made in the matter.
The Chief Presidency Magistrate, Calcutta, referred the case to the police for investigation.
In the course of investigation of the complaint referred to him, Sub Inspector J.N. Mukherjee filed a First Information against eight persons (including the five appellants in this appeal) charging them with having, conspired to commit criminal breach of trust in respect of the company 's funds, falsification of accounts and making false returns, balance sheets and accounts, and in furtherance of the object of the conspiracy with committing offences punishable under sections 409 and 477A I.P. Code and under section 282 of the Indian Companies Act, 1913.
After investigation, Sub Inspector Mukherjee submitted on February 29, 1958, a report under section 173 of the Code of Criminal Procedure in the Court of the Chief Presidency Magistrate for those offences against seven persons including the five appellants.
The Presidency Magistrate, 9th Court, to whom the case was transferred for trial, rejected the contention raised by counsel for the defence that to a charge made against a director in relation to 522 the affairs of the company, the Indian Penal Code can have no application, and the prosecution, if any, may be instituted under the provisions of the Indian Companies Act alone.
The Magistrate also held that it was open to the police officer to whom the case was referred for investigation to submit a charge sheet of his own initiative and that the Court had jurisdiction to enquire into the charge so made without the sanction of the High Court.
A revision application was filed in the High Court of Calcutta against that order, but the application was rejected.
Proceedings were then resumed by the Magistrate on December 5, 1961, and a large number of witnesses were examined before him and several documents were tendered in evidence.
On December 3, 1965, the Presidency Magistrate committed the accused to stand trial for offences under sections 120B read with 409 & 477A I.P. Code before the Court of Session.
He observed: ". having regard to the entire evidence on record and facts and circumstances of the case, I am convinced prima facie that good grounds exist for framing charge under section 409 I.P.C. against accused Almohan Das with charge under section 120B read with section 409 I.P. Code aaginst (1) Almohan Das, (2) Sisir K. Das, (3) Nara Singha Pal, (4) Mohendra Lal Kundu and (5) Provat Kumar Sarkar, another charge under section 467 read with section 34 I.P. Code against (1) Almohan Das, (2) Nara Singha Pal, and (3) Mohendra L. Kundu for forging Ext.
5, and last under section 477A against (1) Aimoban Das, (2) Nara Singha Pal, (3) Mohendra Lal Kundu,(4) Provat Kumar Sarkar and (5) Sisir Kumar Das in respect of falsification of shareholders minute book (Ext. 18) purporting to ratify the action of Almohan Das regarding the funds of the G.I.S.N. & Co. Ltd." Against this order, a revision application was filed in the High Court of Calcutta which was 'rejected in limine.
Against the order passed by the High Court, this appeal has been filed with special leave.
In the present case the order of commitment was made under section 207A of the Code of Criminal Procedure.
Normally the High Court in a revision application filed against the order of commitment under section 207A will not enter upon a reappraisal of the evidence on which the order of commitment is made.
The High Court would be justified in exercising its revisional jurisdiction where a substantial question of law arises on which the correctness of the order of commitment may be effectively challenged, where there is no evidence on which the order of commitment could be made, where there has been denial of a right to fair 523 trial, where there is reason to think because of failure to comply with the rules of procedure or conditions precedent to initiation of criminal proceedings, where by ignoring the substantive law which constitutes the offence, or misconception of evidence on matters of importance grave injustice has resulted, and on similar other grounds.
But in other cases, interference with the order of the Magistrate committing the accused for trial may not be justified and the trial before the Court of Session should be allowed to run its course.
Counsel for the appellants submitted that there was no evi dence on which the order of commitment could be made.
We do not think that there is any ground for so holding.
It was the prosecution case that in order to commit criminal breach of trust in respect of an amount exceeding Rs. 5 lakhs by allowing it to remain with Messrs Das Brothers the previous managing agents of the company of which Almohan Das was the sole proprietor and from whom Messrs Das Group Ltd. took over the managing agency a conspiracy was entered into between the seven named persons, and the minutes book of the meetings of the Board of Directors and the shareholders ' minutes book were fabricated and criminal breach of trust was committed in respect of the funds belonging to the Company.
It is true that in the balance sheet Ext.
137 for the year ending December 31, 1952, on the assets side is an item 'Sundry Advances (Unsecured) ' inclusive of Rs. 5,78,941 7 0 due by a firm in which a director of the Company was a partner.
But this, it is the case of the prosecution, was not supported by any resolution passed by the Board of Directors.
By letter dated June 21, 1956, the Additional Registrar of Companies asked the Company to furnish a certified copy of the minutes of the Board of Directors .in which the loan had been made to the managing agents of the Company.
In reply thereto by letter dated July 12, 1956, the Managing Agents wrote that as the money was held by the managing agents and was not given or treated as a loan, there was no resolution of the Board of Directors in that connection.
On September 29, 1956, the Additional Registrar of Companies again wrote a letter .to the Company enquiring whether the amount of Rs. 5,78,941 7 0 which was lying with the previous managing agents of the Company Messrs Das Brothers had since been realised, and if so, the evidence adjusting the liability,.
and if not, to intimate with material evidence whether any steps had since been taken by the Company for the realization of the dues and how the matter stood.
in the course of the investigation the officer in charge attached a directors ' minutes book Ext.
5 which contains the minutes of a resolution authorising Almohan Das to retain the funds of the Company.
Therefore, there was some evidence on which the 524 charge for fabrication of the Director 's Minutes Book may be sustained.
In dealing with the charge for fabricating the Shareholders ' Minutes Book the learned Magistrate has observed that the materials on the record made out a strong prima facie case that the Shareholders ' Minutes Book Ext.
18 is also a forged document.
The circumstances which lent colour to the prosecution, in the view of the learned Magistrate were (1) that Ext.
18 starts from February 28, 1945, although the Company was incorporated in 1942, (2) in many meetings the signatures of the shareholders were not taken although in some meetings the shareholders signed the minutes book, (3) resolutions of Amaresh Pramanick and Sudhir Kanti Sarkar are not incorporated in the minutes book, (4) some portions in the last page in the agreement (Ext. 20) with the managing agency firm Das Group appear to have been erased out and the agreement was thus tampered with, (5) the minute book Ext.
18 does not incorporate 'the relevant questions, and there appeared tampering with pagination, (6) the evidence of P.Ws. 6 & 16 regarding their presence or absence, and (7) the testimony of P.Ws. 15 & 24 suggested that most of the persons shown to have attended meetings were at the "back and call of the accused Almohan Das".
Whether this evidence may justify a conviction cannot be enquired into at this stage.
The evidence was prima facie sufficient to frame a charge.
The Presidency Magistrate was of the view that a case for framing a charge for committing the case to the Court of Session was made out and the High Court has summarily dismissed the revision application in exercise of its jurisdiction.
It was contended before us that under section 209(1) of the Code of Criminal Procedure, a charge may be framed only if in the view of the committing Magistrate the evidence on record is sufficient to justify conviction of the accused.
Section 209 of the Code provides: "When the evidence referred to in section 208, subsections (1) and (3), has been taken, and he has (if necessary) examined the accused for the purpose of enabling him to explain any circumstances appearing in the evidence against him, such Magistrate shall, if he finds that there are not sufficient grounds for committing the accused person for trial, record his reasons and discharge him, unless it appears to the Magistrate that such person should be tried before himself or some other Magistrate, in which case he shall proceed accordingly." 525 In terms section 209 applies to cases which are instituted otherwise than on a police report.
But the principle underlying that section applies to cases which are instituted on a police report.
A Magistrate holding an enquiry is not intended to act.
merely as a recording machine.
He is entitled to sift and weigh the materials on record, but only for seeing whether there is sufficient evidence for commitment, and not whether there is sufficient evidence for conviction.
If there is no prima facie evidence or the evidence is totally unworthy of credit, it is his duty to discharge the accused: if there is some evidence on which a conviction may reasonably be based, he must commit the case.
The Magistrate at that stage has no power to evaluate the evidence for satisfying himself of the guilt of the accused.
The question before the Magistrate at that stage is whether there is some credible evidence which would sustain a conviction.
We do not agree with counsel for the appellants that there was no evidence on which a charge could be framed against the appellants or that the evidence was so totally unworthy of credit ' that an order recording the conviction against the accused could not be made thereon.
The appeal fails and is dismissed.
We trust that the case which has been held up for a very long time will be taken up by the Court of Session for trial with the least practicable delay.
R.K.P.S. Appeal dismissed.

summary:
On a complaint filed by 'the Registrar of Companies, and after an investigation by the Police ordered by the Chief Presidency Magistrate, Calcutta, proceedings were instituted against the appellants for conspiring to commit criminal breach of trust in respect of a company 's funds.
After a large number of witnesses were examined and several documents were tendered in evidence, the Magistrate committed the accused to stand trial for offences under section 120B read with Sections 409, 477A I.P.C. before the Court of Sessions.
A revision application against the order of committal was rejected in limine by the High Court.
In appeal to this Court it was contended on behalf of the appellants that there was no evidence on which the order of commitment could be made and that under section 209 (1) Cr.
P.C., the charge may be framed only if in the view of the committing Magistrate the evidence on record is sufficient to justify conviction of the accused.
HELD: Dismissing the appeal: On the facts, it could not by said that there was no evidence on which a charge could be framed against the appellants or that the evidence was so totally unworthy of credit that are order recording the conviction against the accused could not be made.
Although in terms section 209 'applies to cases which are instituted otherwise than on a .police report, the principle underlying that section also applies to cases which are instituted on a police report.
A Magistrate holding an inquiry has to see whether there is sufficient evidence for commitment, and not whether there is sufficient evidence for conviction.
If there is no prima facie evidence or the evidence is totally unworthy of credit, it is his duty to discharge the accused: if there is some evidence on which a conviction may reasonably be based, he must commit the ' case.
[525 A C] Normally the High Court in a revision application flied against the order of commitment under section 207A will not enter upon a reappraisal of the evidence on which the order of commitment is made.
The High Court would be justified in exercising its revisional jurisdiction where a substantial question of law arises on which the correctness of the order of commitment may be effectively challenged.
But in other cases the trial before the Court of Session should be allowed to run its course.
[522 G 523 B]