AJUDHIA TEXTILE MILLS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) By this writ petition under Article 226othe Constitution of India, the petitioners have prayed that the demand notice No. GL-Demand/63/353, dated the 8th March, 1965, Annexure ' C , whereby respondent No. 2, Deputy Superintendent of Central Excise BCM MORV Delhi, demanded the sum of Rs. 42,557.94 on account of duty payable on cotton yarn by the petitioners for having cleared 307904 kgs. of single cotton yarn above 16s but below 34s cleared in hanks from 17th August, 1962, to 26th November, 1962, and 9909 kgs. of single cotton yarn upto 163 cleared in hanks during the same period, be quasbed as the same is illegal, ultra virea and void.

(2.) The case of the petitioners is that the Finance Bill of 1961 provided for a duty of excise being levied on cotton twist, yarn and threads, all sorts, in or in retation to the manufacture of which any process is or dinarily carried on with the and of power. The said provision was given effect to by the addition of entry No. 18-A to the first schedule to the Central Excise and Salt Act, 1934, (herein to be called 'the Act') The petitioners, however, contend that at the time of discussion of the Bill in Parliament the then Finance Minister In his speech on the budget proposal of that year stated that that antry would not apply to yarn in hanks used in weaving on handlooms such as Dhoties, Sarees and other common vartities of cloth. Accordingly, pursuant to the statement made by the Finance Minister the Government issued notification No. 48/61, dated the 1st March, 1961, exempting cotton yarn, if issued out of factory in hanks from the whole of the excise duty leviable thereon. The petitioners stated that the above-said notification was followed by a scries of notifications. The petitioners contend that the position in regard to levy of excise duty on cotton yarn immiately after the issue of notification No. 169/62, dated 15th September, 1962, Annexure 'A' was that single yarn, whether grey or bleached and grey multiple fold yarn, if cleared out of the factory in hanks of 17 or more counts but less than 35 counts and yarn of less than 17 counts, was granted complete exemption from doty. It is further contended that the cotton yarn of that type, if cleared out of the Factory in any other form, was subject respectively to duty of 13.5 naye paisc and 10 naye paise.

(3.) The petitioners submit that the above position was adopted and followed by the Department right from 1st March, 1961, till about the middle of August, 1962, allowing a clearance of hank yarn either free of duty or on the concessional rates of duty depending on the terms of the particular notification in force at the time of the particular clearance, irrespective of the length of yarn on a particular hank or the type of real, namely, whether plain or crossreeled. In other words, the case of the petitioners is that from 1st March, 1961, till about the middle of August, 1962, single yarn irrespective of the length of the yarn on a particular hank or the type of the reel was allowed to be cleared with out imposition of excise duty if the yarn was in hanks of less than 17 counts.