Supreme Court Upholds Sec 9D Central Excise & Salt Act; Asks Cigarette Company To Pay Rs 5 Lakh Cost For Cancer Affected Children

A Bench comprising Justice S. Ravindra Bhat and Justice Dipankar Datta also imposed a cost on the appellant cigarette manufacturing companies for unnecessarily protracting the proceedings before the Apex Court. It issued directions to pay a cost of Rs. 5,00,000 to any charitable organisation involved in providing help, assistance and relief to children suffering from cancer. The payment is required to be made within a period of a month and within two weeks thereof the appellants are to produce proof of payment to the Registrar of the Supreme Court.

The appellants had filed writ petitions before the Delhi High Court, inter alia, challenging the validity of Section 9D of the Excise Act. Eventually, the writ petitions were dismissed. The appellants approached the Apex Court, and it remitted the matter back to the High Court for fresh consideration. The High Court considered the challenge to the vires of Section 9D of the Excise Act and found the provision was not ultra vires.

Section 9D provides for relevancy of the statement made or signed by a person before any Central Excise Officer of a gazetted rank during the course of any inquiry or proceeding.

Senior Advocate, Mr. S.K. Bagaria appearing on behalf of the appellants argued that when the matter was remitted for fresh consideration, the High Court could not have limited its decision only to the issue of vires of the provision. He submitted that the High Court ought to have considered the procedural lapses on the part of the department and how the parameters of Section 9D were breached. He emphasised that the High Court had erred in not deciding the other issues raised in the writ petitions.

The Bench observed that the appeals from the order of the appellate tribunal had been disposed of by the Apex Court long back and at the time of hearing of the present appeals, there are no lis pending in respect of the concerned demands. It noted that there were no pending proceedings where the principles laid down by the High Court for invocation of Section 9A of the Excise Act could be implemented. When the Apex Court had remitted the matter to the Delhi High Court, only the civil appeals from the orders of the appellate Tribunal were pending. They were remitted to the Tribunal, which decided in favour of the department. The appeals before the Apex Court challenging confirmation of the demand by the Tribunal also stood dismissed.

Background

The Excise Department raised a demand of Rs. 94,00,00,000 from the appellants on the ground that they have manufactured deceptively similar versions of certain regular brands of cigarettes showing sale price though they were sold through marketing chain at a much higher price. It appears that the difference between the two prices was received by the appellants as flow-back through super wholesale buyers. In 1988, two show cause notices were issued demanding the short payment of excise duty. The notices were issued on the basis of 75 witnesses to establish recovery of higher prices than the declared price and also the flow back of additional amounts. The appellants approached the High Court. 29 witnesses were allowed to be cross examined. Most of them denied the event of flow back. The remaining statements were relied upon by invoking Section 9D of the Excise Act. The appellant had argued that the parameters of Section 9D were ignored by the department. In the meanwhile the Collector of Central Excise passed the orders.

By amending the petitions, the appellants sought to challenge the validity of the Collector’s orders, which was rejected and the appellants were asked to pursue remedy before appellate authority. However, the High Court agreed to consider the limited issue of validity of Section 9D later. Two appeals filed before the appellate authority was disposed of in favour of the department and against the appellants. The appellants approached the Apex Court. The appeals before the Apex Court were dismissed for failure to make the requisite pre-deposit. The appellate authority allowed two appeals in favour of M/s. J&K Cigarettes and M/s. Kanpur Cigarettes Pvt. Ltd. Subsequently the department approached the Apex Court in appeal. While the petitions were pending, the appellants had approached the Delhi High Court by filing the above-mentioned writ petitions.

Case details

GTC Industries Ltd (Now Known As Golden Tobacco Limited) Thr. Manager Legal And Anr. v. Collector of Central Excise And Ors. | 2023 LiveLaw (SC) 107  | Civil Appeal Nos. 8583-84 of 2010 | 9th Feb, 2023| Justice S. Ravindra Bhat and Justice Dipankar Datta

For Appellant(s) Mr. Sanjay Bagaria, Sr. Adv. Mrs. Nisha Bagchi, Adv. Mrs. B. Sunita Rao, AOR Mrs. Sujata S., Adv. Mr. Gunmaya Mann, Adv.

For Respondent(s) Mr. Arijit Prasad, Adv. Mr. C. Bhatia, Adv. Mr. I. Prasad, Adv. Mr. Mukesh Kumar Maroria, AOR

Central Excise and Salt Act 1944 - Supreme Court endorses Delhi High Court judgment upholding Section 9D - Pulls up cigarette company for protracting proceedings - Asks it to pay Rs 5 lakh cost to any charitable organisation involved in providing help, assistance and relief to children suffering from cancer

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