Bajrang Gopilal Gajabi v. M.N. Balkundri & Ors.

Case Details & Bench

Court: High Court
Hon'ble Judges: V. Balakrishna Eradi
G. L. Oza
Judgment Date: 1986-07-15
Court Decision / Holding: The appeal is dismissed; the appellant’s challenge fails. The Court held that the appellant himself was the manufacturer of the cloth manufactured in the powerlooms and liable for excise duty, and the appeal was dismissed with costs.
Final Disposition: Appeal dismissed

Parties to the Case

Appellants / Petitioners

Bajrang Gopilal Gajabi

Respondents

M.N. Balkundri & Ors.

Legal Representation & Advocates

Counsels for Petitioners

• Rajinder Sacher
• P.K. Ram
• R.D. Suverna
• D.N. Misra

Counsels for Respondents

• Anil Deo Singh
• Mrs. Sushma Relan
• C.V.S. Rao

Case Synopsis & Summary

This appeal concerns excise duty on cloth manufactured in private powerlooms and purportedly purchased by the appellant from those powerlooms. The appellant, Bajrang Gopilal Gajabi (through Navbharat Trading Company), challenged the appellate and revisional orders upholding assessment for excise duty on cloth produced in powerlooms from yarn supplied by Tejpal on behalf of the appellant. The Bombay High Court had found that the appellant’s books of accounts showed he owned the yarn he claimed to have sold to powerlooms and that he afterwards recovered the same yarn in the form of cloth, concluding that the powerlooms manufactured cloth for and on his behalf and that the yarn sale and cloth purchase were a camouflage to obtain cloth manufactured by himself. The Supreme Court, however, held that there was clear evidence on record: the appellant owned the yarn and retrieved that yarn in cloth; the transfer to powerlooms was for the appellant’s benefit, making him the manufacturer of the cloth and liable to excise duty. The Court dismissed the appeal with costs, affirming the decision of the Collector of Central Excise and the Government of India. The judgment clarifies the “manufacturer” for excise purposes in arrangements involving private powerlooms and agent-led yarn supply.

Provisions of Law Cited

Article 133(1)(a) of the Constitution of India

Submissions & Arguments

Contentions of Appellants / Petitioners

The appellant contends that the cloth produced in the powerlooms and purportedly purchased by him from the powerloom owners does not establish him as the ‘manufacturer’ for excise purposes. He argues that yarn was supplied to the powerlooms by Tejpal on his behalf, and the powerlooms manufactured the cloth for and on his behalf, with the owners receiving only labour charges. The appellant maintains that the documentary evidence does not prove he exercised control over production as a manufacturer, and that the inference of camouflage—i.e., that the transactions of yarn sale and cloth purchase were designed to cloakedly obtain finished cloth—lacks support in the material on record. He seeks reversal of the appellate/revisional findings and cancellation of the excise liability on the grounds of evidentiary insufficiency and factual perversion of the High Court’s conclusions.

Contentions of Respondents

The respondents contend that yarn was supplied to the powerlooms by Tejpal on behalf of the appellant, and that the cloth was manufactured by the powerlooms for the appellant’s benefit; the powerloom owners were paid only labour charges, indicating that the appellant controlled and funded the manufacturing process. The authorities assessed and held the appellant liable to excise duty; the High Court and the Department found clear, cogent evidence of the appellant’s ownership of yarn and his receipt of the finished cloth, indicating camouflage to avoid excise liability. The respondents argue that the evidence supports the inference that the appellant used private powerlooms to procure cloth for him, thereby making him the manufacturer and liable for duty. The decision of the authorities and the High Court should be upheld as they rests on credible documentary and testimonial evidence.”},

Extracted Judgment Text

Exact text extracted from official judgment records.

A B c D E ## I -\ BAJRANG GOPILAL GAJABI _v._ M.N. BALKUNDRI & ORS. JULY 15, 1986 [V. BALAKRISHNA ERADI AND G.L. OZA, JJ.] _Central Excise, exigibility to-Yarn supplied by_ _an_ _agent for and_ _on behalf of the_ _appellant to_ _private powerloom owners who_ _were paid_ _only labour charges for weaving the yam into cloth-Whether the_ _appellant or the_ _powerloom owners "manufacturers"' of the cloth sold_ _by ihe appellant for exigibility to Central Excise Duty._ While dismissing, by its order dated 8-4-71, the writ petition filed by the appellant challenging the imdings of the appellate and revisional orders passed by the Collector of Central Excise, Bombay and the Government of India respectively holding that the appellant had been rightly assessed and called upon to pay excise duty in respect of cloth manufactured in some powerlooms and purported to have been purchased by him from the owners of those powerlooms, the Bombay High Court, by its order dated 12th January, 1972 granted certificate of fitness to appeal under Article 133(l)(a) against the said judgment. Dismissing the appeal, the Court, HELD: I. The books of accounts produced by the appellant be fore the excise authorities contained clear evidence of the fact that the F appellant himself was the owner of the yarn alleged to have been sold by Tejpal to the powerloom owners and that the appellant got hack that very· yarn in the shape of cloth after it was woven into cloth. Consequently the appellant himself was the manufacturer of the cloth in question and liable to excise duty in respect of the cloth so got manufactured in the powerlooms of private owners. I 182G-H; 1830 I G CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2124 of 1972 From the Judgment and Order dated 8.7.1971 of the Bombay High Court in S.C.A. No. 148of1967. H A B ###### c D E F G 182 SUPREME COURT REPORTS [1986) 3 S.C.R. Rajinder Sacher, P.K. Ram, R.D. Suverna and D.N. Misra for the Appellant. Anil Deo Singh, Mrs. Sushma Relan and C.V.S. Rao for the Respondents. The Judgment of the Court was delivered by **BALAKRISHNA ERADI,** **J,** We find no merit at all in this appeal which has been filed on the strength of a certificate granted by the High Court of Bombay by its order dated January 12, 1972 under Article 133(1)(a) of the Constitution of India against the judgment of the High Court dated April 8, 1971 dismissing the Special Civil Application No. 148 of 1967 filed by the appellant. The appellant is the sole proprietor of the Navbharat Trading Company, carrying on business in cloth at Ichalkaranji in Kolhapur. The challenge raised by him in the Writ Petition filed in the High Court was against the appellate and revisional orders passed by the Collector of Central Excise, Bombay and the Government of India respectively holding that the appellant had been rightly assessed and called upon to pay excise duty amounting to Rs.53, 190 in respect of cloth manufactured in some powerlooms and purported to have been purchased by him from the owners of those powerlooms. The Assistant Collector of Central Excise, as well as the Appellate and Revisional Authorities have concurrently found that yarn had been supplied to the powerlooms by one Tejpal for and on behalf of the appellant, that the cloth in question was manufactured by the powerloom owners for and on behalf of the appellant himself and that the powerloom owners received only an amount equal to the labour charges. Though, these were findings on pure question of fact, they were challenged by the appellant before the High Court on the ground that they were not supported by any material and were perverse. On that basis it was contended before the High Court that the appellant should be held not to be the manufacturer of the cloth in question and hence not liable for payment of excise duty. ### I / #### \ # • The High Court after a detailed consideration of all the aspects of the case found that the books of accounts produced by the appellant before the Excise Authorities contained clear evidence of the fact that the appellant himself was the owner of the yearn alleged to have been H sold by Tejpal to the powerloom owners and that the appellant got l;\.G. GAJABI _v._ M.N. BALKUNDRI [ERADI, J.] 183 back. that very yarn in the shape of cloth after it was woven into cloth. After referring to the details of the evidence, the High Court observed: "These particulars and details go to show that there was clear and cogent evidence on the record of the department to enable the assessing authorities to make inferential findings that the transactions of alleged sale of yarn by Tejpal to the powerloom owners and the transactions of alleged purchase of cloth by the petitioner from the powerloom owners were camouflage for the petitioner to get powerloom cloth manufactured by himself by employing powerlooms of the powerloom owners." We see no scope at all for interference with the aforesaid conclusion of fact reached by the High Court. The consequential position "r- that emerges is that the appellant himself was the manufacturer of the cloth in question and he must be held to have been rightly assessed to excise duty in respect of the cloth so got manufactured in the powerlooms. The appeal accordingly fails and is dismissed with costs. S.R. Appeal dismissed. / A B ##### c D