Case: Orient Paper Mills Ltd Vs. Union Of India

2. The appellant is a public limited company incorporated under the Indian Companies Act, 1913, and an "existing company" within the meaning of the Indian Companies Act, 1956. It is carrying on business, inter alia, of manufacturing and sale of various kinds of paper at its factory at Birjrajnagar in the district of Sambalpur in the State of Orissa. In particular, it manufactures "packing and wrapping paper", "printing an writing paper" and "machine glazed paper popularly known a "M. G. Poster paper". Upto February 28, 1961, the date on which the Finance Bill of that year was introduced in Parliament, "printing and writing paper" and "packing and wrapping paper" were subject to excise duty at the rate of 22 np per kilogram, though the former was chargeable under item 17 (3) and the latter under item 17 (4) of the First Schedule to the Act. The Finance Act of 1961 raised the excise duty payable under item 17 (4) to 35 up per kilogram with effect from March 1, 1961. From March 1, 1961, to August 1, 1961, the excise officers levied duty on "M. G. Poster paper under item 17 (3) i. e., at the rate of 22 np per Kilogram. In other words during that period the excise authorities treated "M. G. Poster paper" as "printing and writing paper". Subsequently, the excise authorities began to treat this paper as "packing and wrapping paper" and insisted on the appel ant paying duty thereon under item 17 (4). The appellant paid duty at that rate under protest and thereafter applied to the Assistant Collector for refund on the ground that the duty on that paper should have been levied under Item 17(3) and consequently the duty collected was in excess of that leviable under law. The Assistant Collector rejected that claim. Consequently, the appellant went up in appeal to the Collector of Central Excise, who rejected its appeal. Then the matter was taken up in revision to the Government of India. The Government declined to interfere with the orders of the Collector.      3. The orders made by the Collector in the various appeals and those made by the Government in the revisional applications are similar in all the cases. Therefore it would be sufficient if we refer only to those made in one of the cases, viz., in CA 659 of 1965.      4. The contention of the appellant before the Assistant Collector, the Collector as well as the Central Government was that "M. G. Poster paper is a "printing and writing paper" and it was considered as such, by the Indian Tariff Board, in the Tariff Commission Report published in 1959 and in the specifications published by the Indian Standards Institution, Further it was dealt as "printing and writing paper" in the annual rate contracts entered into between the appellant and the Government of India for supply of papers and paper-boards to the Government. This contention does not appear to have been examined either by the Collector or by the Central Government. The Collector rejected the appeals of the appellant with these observations:-observations:-      "Thecrucial point in appeal is whether the paper declared as M. G. Poster paper should be assessed as packing and wrapping paper, other sorts under tariff item No. 17 (4) or as printing and writing paper, other sorts under tariff item 17 (3).      "The Central Board of Revenue have already made it clear that all types of poster paper of whatever colour including white should not be treated as printing and writing paper but as packing and wrapping paper. As such, the Poster paper has not been wrongly assessed.      "I have carefully gone through the available records of the case. Considering all the facts and circumstances, I do not find any reason to interfere with the order passed by the A. C. appealed against. His order is therefore confirmed."It is seen from his order that the only found on which the Collector rejected the appeals of the appellant was that the question was covered by the direction issued by the Central Board of Revenue-hereinafter referred to as the Board.

Reasoning: 8. If the power exercised by the Collector was a quasi judicial power-as we hold it to be-that power cannot be controlled by the directions issued by the Board. No authority however high placed can control the decision of a judicial or a quasi judicial authority. That is the essence of our judicial system. There is no provision in the Act empowering the Board to issue directions to the assessing authorities or the appellate authorities in the matter of deciding disputes between the persons who are called upon to pay duty and the department. It is true that the assessing authorities as well as the appellate authorities are judges in their own cause; yet when they are called upon to decide disputes arising under the Act they must act independently and impartially. They cannot be said to act independently if their judgment is controlled by the directions given by others. Then it is a misnomer to call their orders as their judgments; they would essentially be the judgments of the authority that gave the directions and which authority had given those judgments without hearing the aggrieved party. The only provision under which the Board can issue directions is Rule 233 of the Rules framed under the Act. That rule says that the Board and the Collectors may issue written instructions providing for any supplemental matters arising out of these Rules. Under this rule the only instruction that the Board can issue is that relating to administrative matters; otherwise that rule will have to be considered as ultra vires Section 35 of the Act11. The rule laid down in the above decisions is fully applicable to the facts of this case. It is obvious as well as admitted that both the Collector and the Central Government proceeded on the basis that the direction given by the Board was decisive of the matter, The revision applications filed before the Government were heard and decided by one of the members of the Board. He appears to have proceeded on the basis that in view of the directions given by the Board nothing more need be said as to the point in dispute. It is regrettable that when administrative officers are entrusted with quasi judicial functions, oftentimes they are unable to keep aside administrative considerations while discharging quasi judicial functions. This Court as well as the High Courts have repeatedly tried to impress upon them that their two functions are separate; while functioning as quasi judicial officers they should not allow their judgments to be influenced by administrative considerations or by the instructions or directions given by their superiors. In this case both the Collector as well as the Central Government have ignored the line that demarcates their administrative duties and their judicial functions12. Dr. Syed Mohammed did not try to justify the directions given by the Board nor did he contend that that direction has any force of law. On the other hand, his main contention was that the grounds urged before this Court were not at all taken before the Collector and the Central Government and therefore the appellant should not be permitted to take those grounds in this Court. We do not think that Dr. Syed Mohammed is right in his contention. Before the Central Government the appellant had definitely contended that no copy of the report relating to chemical examination of "M. G. Poster paper" had been given to the appellant and therefore the same could not have been taken into consideration. At that stage the appellant could not have known that the statement of the Collector relating to chemical examination of "M. G. Poster paper" was incorrectFrom these notes it is clear that at any rate the correctness of the direction issued by the Board was put in issue during the hearing of the revision applications.That apart, we are clearly of the opinion that even if the question of the legality of the directions issued by the Board had not been taken before the authorities under the Act, as that direction completely vitiates the proceedings and makes a mockery of the judicial process, we think we ought to consider the legality of that direction. For the reasons already mentioned, we hold that that direction was invalid and the same has vitiated the proceedings before the Collector as well as the Government13. Both the appellant as well as the Revenue invited us to decide the case on the basis of the material on recordOrdinarily this Court does not go into questions of fact. That is the duty of the authorities under the Act. We see no exceptional circumstances in this case requiring us to deviate from the ordinary rule.