UNION OF INDIA Vs. GARWARE NYLONS LIMITED

JUDGEMENT

(1.) SPECIAL leave granted in S.L. P. (C) No. 11008 of 1988.

(2.) THE above three appeals involve a common question of law, namely, whether "Nylon Twine" can be considered as "Nylon Yarn" so as to be covered by Item 18 of the First Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as "the Act") as it stood prior to the Amendment of 1977. "18. RAYON AND SYNTHETIC FIBRES AND YARN <FRM>JUDGEMENT_413_10_1996Html1.htm</FRM>

(3.) THE respondent-assessees manufacture "Nylon Yarn" and "Nylon Twine". THEy are doing so ever since 1962. Under first schedule, Item 18 of the Act excise duty is payable in respect of "Nylon Yarn" as specified therein. THE notification issued under Rule 8 of the Excise Rules provided that "Nylon Yarn", which is meant for use in the manufacture of fishing net and parachute cords is exempt from the payment of so much of excise duty leviable under Item 18 as is in excess of Rupees 4/- per kg. THE assessees contended that "Nylon Twine" manufactured by them is used for the purpose of making fishing nets. Prior to 1975 they were allowed to clear Nylon twine manufactured by them on payment of excise duty as specified under the above exemption notification. THEreafter, when the new item, viz, Item 68 (residuary entry) was introduced in the Act, it was contended by the Excise Authority that Nylon twine manufactured by the assessees was not covered by item 18. According to the Revenue Nylon twine and Nylon Yarn are two different items and Item 18 takes within its fold Nylon yarn only and not Nylon twine. THE authorities claimed excise duty on "Nylon twine" under Item 68. THE assessees paid such duty under protest. THEreafter, the application filed by the assessees for refund before the Assistant Collector failed. He passed an order to that effect on 28-5-1976. THE appeal filed was rejected by Appellate Collector on 28-9-1976. Similarly the Central Government rejected the revision by order dated 31-10-1979. It is thereafter the assessees approached the High Court of Bombay for refund of the amount paid under protest. A Division Bench of the High Court heard and disposed of the petition by judgment and order dated 9-4-1980. Sujata Manohar, J. delivered the leading judgment and Masodkar, J., though for different reasoning, agreed with the conclusion of Sujata Manohar J.