DIGVIJAY CEMENT COMPANY LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) In these two petitions under Art. 226 of the Constitution a short question arises for our consideration. It is as follows: under Rule 56-A of Central Excise Rules 1944 framed under the provisions of the Central Excises and Salt Act 1944 on the two inputs viz. cement and asbestos raw (fiber) which are utilised by petitioner No. 1 company at its Ahmedabad Office for manufacturing finished excisable goods viz. asbestos cement products.

(2.) Introductory facts: A few relevant facts leading to these petitions and the controversy raised therein deserve to be noted at the outset. Petitioner No. 1 is a company incorporated under the Indian Companies Act 1956 Petitioner No. 2 is a director and shareholder of the said company. Both these petitioners are common to both the petitions. Petitioner No. 1 company owns a factory at Digvijaygram (Sikka) in Jamnagar district. It is engaged in manufacture and sale of cement. It also owns a factory at Digvijaynagar Ahmedabad for manufacture and sale of asbestos cement products such as sheets corrugated or plain asbestos pressure pipes roofing accessories and couplings etc. Petitioner No. 1 company holds L-4 licence for manufacture of asbestos cement products. Cement and asbestos are raw materials used in the manufacture of asbestos cement products in the factory at Ahmedabad cement clinker in the form of pallets is transported from Sikka factory to the cement grinding that of petitioner No. 1 in Ahmedabad. The clinker is ground into cement primarily for captive consumption viz. manufacture of asbestos pressure pipes and sheets etc. Petitioner No. 1 company pays excise duty on the quantity of cement cleared from the cement grinding unit.

(3.) The other component or raw material used by the petitioner company for manufacture of asbestos cement products is asbestos raw (fibre). Asbestos raw (fibre) was excisable under T. I. 22F of the First Schedule to the Central Excises and Salt Act 1944 (hereinafter referred to as (the Act) at the relevant time prior to refusing of the tariff items in 1986. The said raw material is imported from Canada U.S.S.R. Brazil U.S.A. etc. So far as other raw material or input which is utilised by the petitioner company for manufacturing its finished excisable products viz. asbestos cement products is concerned it is cement. Cement was at the relevant time excisable under T.I. 23 while the finished excisable products manufactured out of utilisation of the inputs of cement and asbestos raw (fibre) viz. asbestos cement products were excisable under T. I. 23-C as existed at the relevant time. It is therefore obvious that excise duty on such material or component parts viz. cement and asbestos raw (fibre) was payable under different tariff items as compared to the duty that was payable on the finished excisable goods view asbestos cement products. Petitioner-companys contention is that inputs or raw-materials i.e. cement and asbestos raw (fibre) are received into the petitioner-companys factory for the purpose of use in the manufacture of asbestos cement products. That in respect of cement and asbestos raw obtained from outside excise duties were duly paid under the relevant tariff items 23 and 23-F; while in respect of imported asbestos additional duty i.e. countervailing duty equivalent to excise duty was paid. Thus asbestos and cement received in the petitioners factory were duty paid. That the finished excisable product manufactured by the petitioners out of utilisation of these inputs was excisable as seen above under Tariff item 23-C and the finished product was not exempted from excise duty leviable thereon nor was it chargeable to nil rate of duty.