B. SANJANA, ASSIST ANT COLLECTOR OF CENTRAL EXCISE, BOMBAY & ORS. versus ELPHINSTONE SPINNING & WEAVING MILLS CO. LTD,

Citation: [1971] 3 S.C.R. 506 · Decided: 22-01-1971 · Supreme Court of India · Bench: J.M. SHELAT · Disposal: Dismissed

Cited by 7 judgment(s) · cites 3 · see the full citation network in Lexace

Judgment (excerpt)

506 
.N. B. SANJANA, ASSIST ANT COLLECTOR OF CENTRAL 
A 
EXCISE, BOMBAY & ORS. 
\', 
:ELPHINSTONE SPINNING & WEAVING MILLS CO. LTD, 
J miuary 22, 1971 
(J.M. SHELAT AND C. A. VAID!AL!NGAM, JJ.J 
Centrul Excise Rules, 1944, rr. 9, IO und JOA-Scope of. 
·'Lev)", 'Short .f,.evy' 'paid' in r. 10, meuni1111 of. 
Under r. 8 of the Central Excise Rule;, 1944, made under ihe Central 
:Excise and Salt Act, 1944, the Central Government issued a rrotific.ation 
.exempting cotton fabrics from excise duty. 
The. respondents owned a 
.textile mill and factory. 
They manufactured grey cloth which 
was 
remoVed_ from the mill and kept_ in a go<lown anJ later removed to the 
factory for being processecj into leather cloth which was stored in another 
_godown .. in the factory, from where it was taken out as finished product. 
:rbe. removat at each stage was done after filling the prescribed forms 
.and· with the permission of the Excise .Inspector lncharge. 
In each of 
.the forms filled by the respondents upto July 30. 1960. the Excise Jnspcc-
·tof ,had made an assessment shOwing the rate of duty and the amount 
·Of total duty payable as 'nil'. 
Later, the excise authorities thought the 
·gOOds )Vere not _of the description exempted under the notification an<l 
·Oft . NOventber 3, 1961, two notices were issued, calting upon the respon-
-dea(s to make certain payments, one under r. 1 OA and the other under 
·r. 9· Of \he Rules. 
The respondents protested and filed a writ petition in 
the Higb COurt. 
The High Court held that the proper rule applicable 
wl:(s r. tO· bti.t that as the demand notices were not issued within 3 months 
a" required by that rule, tlle notices were illegal and void. 
In appeal to this Court. 
· 
HELD : ( 1) R ;tie I OA cannot apply when a short levy . is made 
ttit~ugh crro'r or misconstruc'tion on the part of an officer as such a cas~ 
is spcF,ifically provided lop by 'r. 10, because, r. JOA deals with residuary 
powers and docs not apply;.wlien specific provision for collection of duty 
is provided for by other rules: J516 H; 517 A; 521 DJ 
(2) The proper provision undet w~ich uction should have been taken, 
if at all, is r .. JO. Under r. IO. when duties or charges have been "'"'''" 
Jevied through inadvertence. error, collusion or misconstruction on the 
part of an officer, the person chargeable with the duty or charge shall 
pay the deficiency on written demand being made within three months· 
from the date on which the duty or charge was paid. 
Though the words 
used are 'shert-levied' and 'paid', in order to attract r. JO it is not _neces-
sary that ~me amount of luty should have been assessed and that 'h~ 
said amount should also 11ave been actually paid. 
Jt will apply 
cv'~n 
10- cases where there has been' a nil assessment. in \.\'hich case. the entire 
duty later on assessed must be consiJcrc<l to be the duty originally 
short-levied. [519 F-G; 520 E-F; 521 D-E] 
(a) The cxpFession 'levy' is not used in the Act or the Roles as 
meaning actual collection. because. s. 3 (I) of the Act uses both the 
expilcsSJons 'levied' and 'collected'. [514 G-H] 
B 
c 
D 
E 
F 
G 
H 
,.
( ··; 
"'Mill 
A 
B 
c 
D 
E 
F 
G 
H 
N. B. SANJANA v. ELPH!NSTONE MILLS (Vaidia/ingam, J.) 507 
( b) The expression 'paid' in r. IO should not be read in a vacuum 
and it will not be right to construe it literally as 'actually paid'. 
The 
word will have to be understood and interpreted in the context in whi~h 
it appears. If the literal const.ruction is accepted, then in a case where 
an assessee, in collusion, manages to have a very petty amount of duty 
assessed, he ·can, if he paid the amount, effectively plead limitation of 
three months, but, when no duty has been levied there would be no 
period of limitation, a result which would be anomalous. Therefore, the 
proper interpretation to be placed on the expression 'paid' is 'sought to 
have been paid.' 
(c) This interpretation will not cause any difficulty in calculatin11 the 
period of three months. The Act and the Rules provide very elabora· 
to:Jy the staae and the time when the duty is to oe paid and that must 
t,;; considered to be the sta1e or time when the duty 'ought to have been 
p.Ud', and the period of three months will be counted from that µme. 
(519 G-Hl 
Gursahai SaiKal v. C.I.T. Punjab, [1963) 3 S.C.R. 893 followed, 
Allen v. Thorfl Electrical lndu.•tries Ltd. (1968) 1 Q.B. 487, referred 
to. 
(3) Rule 9 does not also apply to the facts of the case. 
Rule 9(0 

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