WESTERN INDIA PLYWOOD LTD. Vs. UNION OF INDIA

JUDGEMENT

(1.) PETITIONER is a company incorporated under the Companies Act and engaged in the manufacture of plywood any hardboard falling under item 16B of Schedule I to the Central Excises and Salt Act, 1944 (for short 'the Act'). Plywood and hardboard had been made excisable by introducing this item with effect from the mid -night of 23/24 -4 -1962. At the stroke of mid -night, the petitioner had stocks of hardboard, said to be untrimmed, already manufactured. Petitioner was asked to pay excise duty on this stock before clearing it. It was paid under protest. Petitioner subsequently applied for the refund of the excise duty so paid on the ground that the stock of hardboard had been manufactured before the crucial time, that is, the mid -night in question, though it was sold and cleared later on. The amount involved in the claim is Rs. 55,427.69 being the excise duty paid on stock amounting to 2,01,809.36 square metres. The third respondent, Asst. Collector of Central Excise, Kozhikode passed Ext. Pl order rejecting the claim of the petitioner. According to him the edges of hardboard in question were trimmed subsequent to the crucial time, that it was a process incidental to the completion of the manufacture of the product namely, hardboard, that this quantity of hardboard was not fully manufactured as contemplated under Section 2(f) of the Act before the crucial time and therefore it was excisable. The order also mentions that the R.G. 1 register entries are made only after trimming is done and the product is not considered as hardboard the moment it comes out of the press. An appeal filed before the second respondent, Appellate Collector of Customs and Central Excise, Madras, was rejected under Ext. P2 order. In Ext. P2 order, the second respondent stated that it is well known that hardboard when it comes out of the mills is bound to have uneven edges from both sides, that it is considered as semi -manufactured, that the first process to make it marketable is to make the edges even by trimming, that the accounting of the goods is also done only after trimming as the same is expressed in terms of square metres which can be worked out only after making the edges even by trimming.

(2.) THE petitioner has filed the present O.P. under Article 226 of the Constitution of India to call for the records relating to Exts. Pl, P2 and P4 and to quash the same and to give a direction to the respondent to refund the amount in question.

(3.) LEARNED Central Government Standing Counsel submitted as follows: Trimming is a process required for the completion of the manufacture of hard -board. Hardboard known to the trade or market is only the trimmed hard -board and not the untrimmed variety. There is no evidence to show that untrimmed hardboard is known to the market.