B. Rajendra Oil Mills and Refinery Vs. Union of India and ors. - Court Judgment

Excerpt:
excise - exemption from duty - section 3 of central excise act, 1944 - show cause notice issued by collector stating that as petitioner has cleared certain quantity of 'hardened 'castor oil' without payment of excise duty - petitioner submitted that hardened 'castor oil' is not dutiable - collector overruled contention held that since process of manufacture of hardened 'castor oil' involve manufacture 'clarified oil' and duty is leviable on clarified oil under item no. 12 - assessee raised objection that clarified oil cannot be processed and exempted from duty as per certain notification - explanation contained in notification provides 'bleaching' as one form of processing - raw 'castor oil' undergoes bleaching - mere fact that processing is not done according to 'b.s.s' specification is no ground for saying that it is not a process of bleaching - held, 'clarified oil' produced by petitioner is processed vegetable non-essential oil - assessee cannot claim exemption under notification. - motor vehicles act (59 of 1988)section 149 (2): [v. gopala gowda & jawad rahim, jj] insurers entitlement to defend the action joint appeal by insured and insurer - held, the language employed in enacting sub-section (2) of section 149 appears to be plain and simple and there is no ambiguity in it. it shows that when an insurer is impleaded and has been given notice of the case, it is entitled to defend the action only on grounds enumerated in sub-section (2) of section 149 of the act, and no other grounds are available to it. the insurer is not allowed to contest the claim of the injured or heirs of the deceased on other grounds, which are available to the insured. if insurer is permitted to contest the claim on other grounds it would mean adding more grounds of contest to the insurer and will be negation of the intention of the legislature and annihilate mandate of the provisions of sections 170 and 149 of the act. the insured can pursue appeal only after giving up the insurer as the appellant and not otherwise. in the instant case, the insurer has not withdrawn from party array but has remained prosecuting the appeal with the insured on the grounds which are available only to the insured. therefore, the joint appeal as filed by the insured and the insurer is not maintainable. section 166: [v. gopala gowda & jawad rahim, jj] claim for compensation accident due to mechanical defect in the vehicle held, it is not in dispute that the claimant suffered injuries in an accident, which occurred during the course of his employment, albeit due to his negligence but law does not render him remediless. statutory right is conferred on him, accruing by virtue of his employment under insured to claim compensation under workmens compensation act. the insurer is statutorily duty bound to discharge the liability of the owner of the vehicle, to pay such compensation to the employee, as mandated under the provisions of section 149 of the act. the right of an injured employee or his dependents as the case may be to be compensated, when injury is suffered or death occurs during his employment, is recognised not only under workmens compensation act, but also under benevolent provisions under section 166 and 167 of the m.v. act. the right of driver to seek compensation is not restricted only to the workmens compensation act, it has been enlarged to enable such person to seek just compensation (sections 166 and 168), conferring upon him the right of election engrafted under section 167 of the act to choose either of the two forum. the only defence which the insurer could take is limit of its liability as enumerated under section 147 of the act, leading to contest, inter alia, only between insured and insurer and does not impact claimants right to recover the compensation determined by the tribunal which crystallizes into enforceable right against both. in the instant case, the claimant/driver has exercised right of election under section 167 of the act to seek compensation under section 166 of the act resulting in award passed by the tribunal. therefore, the insured and the insurer have no escape but to discharge the said award as directed. undisputedly, in this case as deduced for proved facts, the vehicle in question was not properly maintained by the owner and despite faulty brake system, the claimant had undertaken the hazardous journey to his peril at the behest of and at the instruction of the owner. the owner is therefore, tortfeasor. section 168: [v. gopala gowda & jawad rahim, jj] insurers limit of liability - held, it is well settled that the liability of the insurance company for payment of compensation can be statutory or contractual. is for the insurance company to show that the insurance policy was a statutory policy and not a contractual policy to restrict its liability. that issue was neither raised before the tribunal nor is raised in this appeal requiring decision. thus, if at all the insurer has any valid ground to restrict its liability, it can proceed against the insured but firstly it has to discharge the award as required under section 149 (1) of the act. where the owner/insured has failed to maintain the vehicle as per prescribed safety standards and has caused the claimant to drive the vehicle with mechanical defects, the owner would be the tortfeasor and the claimant can maintain a petition seeking compensation under the provisions of the act, instead of seeking compensation under the workmens compensation act. on facts, held, the material evidence on record, particularly, with regard to the income of the claimant, his age, medical evidence and the evidence relating to pecuniary loss has not been considered by the tribunal in the correct perspective, which has resulted in passing of the impugned award, disproportionate to the pecuniary loss and the loss of future income of the victim. the settled principles governing determination of compensation has been given a go-bye. compensation of rs.4,15,150/- awarded by the tribunal was enhanced to rs.8,20,000/-. - it held that the show cause notice clearly called upon the petitioner to show cause why the oil manufactured by him should not be held liable to duty and that in any event there was no prejudice to the petitioner on account of technical defect, if any, in the show cause notice. both the appellate and revisional authorities have clearly held that clarified oil is a marketable commodity and, therefore, it constitutes goods attracting the duty under the act.jeevan reddy, j.1. this writ petition is directed against the order of the government of india in a revision petition filed by the petitioner. the petitioner is messrs. rajendra oil mills & refinery, hyderabad. it is engaged in the manufacture of `industrial hard oil', which is used as a raw material in the manufacture of soaps. the petitioner says that the `industrial hard oil' is manufactured out of raw castor oil, and that the `industrial hard oil' is popularly known as `vegetable tallow' or `hard lump', but that it is not known as 'processed vegetable non-essential oil' in the market. the petitioner says that the raw castor oil is subjected to a process of clarification and then hydrogenated at a melting point over and above 45 degrees and converted into hard lumps, which are unfit for human consumption. according to the petitioner this `industrial hard oil' or `hard lumps', as it may be called, is not dutiable under any of the provisions of the central excises and salt act, 1944. the authorities, however, took a contrary view and sought to levy the duty under tariff item no. 12. this is the controversy in the writ petition. 2. the proceedings commenced with the issuance of a show cause notice issued by the collector, central excise, dated 3rd february, 1976 stating that inasmuch as the petitioner has cleared during the period 21-2-1975 to 25-10-1975 certain quantity of hardened castoroil without payment of central excise duty, he should show cause why duty at the rate of rs. 100 per m.t. should not be demanded under tariff item no. 12 read with rules 10 and 9(2) in respect of the said hardened castor oil manufactured and cleared by it. the petitioner submitted an explanation to the show cause notice. according to hardened castor oil is not dutiable either under item no. 12 or item no. 13. the collector, central excise, by his order dated 16th june, 1976 overruled the objections of the petitioner and held that since the process of manufacture of the hardened castor oil involves the manufacture of processed v.n.e. oil, what is called the 'clarified oil', duty is leviable on that clarified oil under item no. 12. the petitioner filed an appeal before the central board of excise and customs inter alia contending that while the show cause notice proposed to levy duty upon the hardened oil, the order under appeal says that duty is leviable on the intermediate product namely 'clarified oil'. it was contended that clarified oil not dutiable, and further that clarified oil is not goods since it is not marketable. another contention raised was that the clarified oil, which is vegetable non-essential oil, cannot be said to be a processed vegetable non-essential oil and is therefore exempt from duty by virtue of notification no. 33/73 dated 1-3-1963. the appellate authority negatived all these contentions. it held that the process employed by the petitioner for obtaining clarified oil is in effect and in truth 'bleaching' referred to in the aforesaid notification. it also held that the clarified oil is a marketable commodity and therefore goods. with respect to the complaint as to the shift in ground of levy of duty, the appellate authority held that there was no violation of principles of natural justice and that even if there is any omission, it is merely technical. it held that the show cause notice clearly called upon the petitioner to show cause why the oil manufactured by him should not be held liable to duty and that in any event there was no prejudice to the petitioner on account of technical defect, if any, in the show cause notice. on revision the government adopted the same reasoning and dismissed the revision. 3. in this writ petition mr. p. ramachandra reddy, the learned counsel for the petitioner, raised three contentions. 1. that the clarified oil is not a 'processed vegetable non-essential oil' within the meaning of exemption notification no. 33/63 and therefore entitled to exemption. 2. that the clarified oil is not a marketable commodity and, therefore, not goods produced or manufactured and, therefore, no levy can be made. 3. in any event under clause (b) of notification no. 33/63, clarified oil is entitled to exemption because it is used in the manufacture of soaps falling under tariff item no. 15. 4. we shall deal with the second contention of the learned counsel first. both the appellate and revisional authorities have clearly held that clarified oil is a marketable commodity and, therefore, it constitutes goods attracting the duty under the act. we see no reason or ground to depart from this finding, nor any material has been placed before us that the clarified oil is not a marketable commodity. the second contention of the learned counsel is accordingly rejected. 5. for a proper consideration of the first and third contention urged by the learned counsel, it is necessary to read the exemption notification being notification no. 33/63 dated 1-3-1963. it reads as follows: 'exemption to certain unprocessed and processed v.n.e. oil. - in exercise of the powers conferred by sub-rule (1) of rule 8 of the central excise rules, 1944, the central government hereby exempt the following vegetable non-essential oils, falling under item no. 12 of the first schedule to the central excise and salt act, 1944 (1 of 1944) from the whole of the duty of excise leviable thereon - (a) all sorts of vegetable non-essential oils, other than processed vegetable non-essential oils; (b) vegetable non-essential oils, falling under item no. 12 of the first schedule to the central excises and salt act, 1944 (1 of 1944), whether produced in the factory of production of the excisable goods specified below or elsewhere, if used after it is processed in the manufacture of - (i) goods falling under item nos. 13, 14 and 15 of the first schedule to the central excises and salt act, 1944, and (ii) artificial or synthetic resins falling under item no. 15a of the said schedule: provided that, in respect of vegetable non-essential oils produced elsewhere than in the factory of production of the said excisable goods, the procedure set out in rule 56a of the central excise rules, 1944, is followed: provided further that no such exemption shall be allowed in respect of vegetable non-essential oils used in the manufacture of finished excisable goods if such finished excisable goods produced by the manufacturer are exempted from the whole of the duty of excise leviable thereon or are chargeable to nil rate of duty. explanation. - for the purpose of this notification 'processed vegetable non-essential oil' means a vegetable non-essential oil which has undergone, subsequent to its extraction, any one or more of the following processes, namely: - (i) treatment with an alkali or acid; (ii) bleaching; (iii) deodorization. 2. notification no. 50/63 shall come into force on 1-3-1963 (notification no. 33/63-c.e., dated 1-3-1963 as amended by notification no. 50/63-c.e., dated 7-3-1963; no. 14/64-c.e., dated 15- 2-1964; no. 110/65-c.e., dated 16-7-1965 and no. 181/71-c.e., dated 9- 10-1971).' 6. the first contention of mr. p. ramachandra reddy is that the clarified oil, which is now held leviable to duty, is not a processed vegetable non-essential oil. while it is not disputed that it is a vegetable non-essential oil, the dispute is whether it is processed or not. upon this question again both the appellate and revisional authorities have held, on a consideration of the process employed by the petitioner for obtaining the clarified oil, that it is in effect and in truth a bleaching process. now the meaning and expression of the words 'processed vegetable non-essential oil' is mentioned in the explanation contained in the notification, according to which 'bleaching' is one form of processing. in this case it is held that the raw castor oil undergoes bleaching by treatment with activated bleaching earth and carbon and that the mere fact that the processing is not done according to b.s.s. specifications is no ground for saying that it is not a process of bleaching.' may be the processing on a limited scale, but, it has been held, it is bleaching all right. this is again a concurrent finding and we see no reason to depart from the said finding. if so it must be held that the clarified oil produced/manufactured by the petitioner is a processed vegetable non- essential oil and, therefore, it cannot claim exemption under the aforesaid notification. 7. now coming to the third contention, the submission is that inasmuch as the clarified oil is used in the manufacture of soaps falling under tariff item no. 15, it is entitled to exemption under clause (b) of the aforesaid notification. firstly this contention was not urged before any of the authorities below. secondly it may be noticed that the clarified oil is not used directly in the manufacture of soaps. from the clarified oil, the hardened oil is obtained and then the hardened oil is used in the manufacture of soaps. hardened oil itself is a marketable commodity. it is open to the petitioner to sell it as hardened oil, without using it for manufacturing soaps. in such a situation it cannot be said that clarified oil is used in the manufacture of soaps. this is the view taken by the bombay high court in indian vegetable products limited v. union of india and others - 1980 e.l.t. 704 and we agree with that view. 8. for the above reasons, the writ petition fails and is accordingly dismissed with costs. the petitioner is granted two months' time for paying the excise duty due in this behalf. 9. the learned counsel for the petitioned makes an oral request for leave to appeal to supreme court under article 133 of the constitution of india. we are however not persuaded that this case involves a substantial question of law of general importance which needs to be decided by the supreme court. the oral request is accordingly rejected.